Tag: Mindset

Announcing the 2021 Virtual Bubble Mastermind – January 16-17

https://youtu.be/0RIq0WOmOfs

We’re talking to Ryan, he’s one of my, accredited investors, been in a bunch of deals with me. he came down to the hui mastermind retreat in Honolulu, Hawaii last year. once you give us a little quick take on, what did you like about it? and then, , I’ll give you the big news man.

. So I loved it last year. I can’t wait to do it this year. So basically these people, I could relate to them a lot more. They were all hard workers. They understood the long-term play. , they had the capital to up, what they wanted to do. everyone in their group had their own little experiences and experiments going on.

So some people that are looking into tiny homes, some people are, looking maybe into, office space. Some people are doing, still single family homes and others are doing syndications. So you get a very broad range of what everyone’s doing. and it rarely intersects with, exactly what I’m doing.

I would be doing like for instance, of what I brought to the table, last year was I had just gotten into an Island syndication. so I wanted to bring details to everyone there and you can share your experiences and people can ask you questions that you may have not have thought of. And, because they have that experience as well.

Yeah. And that’s the thing, folks like our group is I think the only group out there that’s pure passive investor groups, most real estate. I actually, I stopped going to real estate conferences because I started to realize they’re all fake either. They’re trying to sell some gurus $30,000 course, or they’re just a bunch of newbie syndicators trying to get into game.

And, yeah, just. On some podcast or something like that. I noticed that this was an experienced group. a lot of them had already been in, some syndications. some were good, just getting started off, which is fine too. but. got help on both ends, so I could see what others were doing from the get-go.

And I realized that they had capital, they had, the desire to just be passive. and then I saw, obviously people ahead of me who had been doing it longer, who had been in more deals and I could peek around the corner and see what I should be looking out for what’s next. and that’s mainly what I like.

I like to get that notion of what’s next. and how to look ahead. I’ll be doing the same thing. We’ll be filtering investors. And only those who meet the certain criteria of your passive investors will be getting into this year’s event. But I got some bad news, man. What’s that? you’re not going to be able to, come to Hawaii this year because the, all that’s been going on, the whole pandemic thing.

So you just want me to come. no, not you and everybody else are going to need to stay at home and attend this thing virtually, but yeah. How is that going to work? , I’m in a bunch of other masterminds and we are all, things I paid 25 grand I’m in a few of these and I’m taking the best practices from those events.

the reason why I spend that much money to go to those types of events. And I’m sure why you came to Hawaii was so that you could build a relationship with other people. so I seen ways to do this virtually right, using a lot of zoom breakout rooms, but I have a lot of work that I have to do to bring the bright people in, ask people the right questions to curate the right speaking slots as we go around this event.

Okay. It will be virtual this year, Martha Luther King, January, , there’ll be probably a couple of days, no more than six hours a day, in the first half of the day, since I know how things are hard. And this is what’s nice about our in-person meeting, that we won’t be able to do.

As you get to detach and it’s, it’s, it was the time at the bar. It was the time hanging out. That was the cool time. But we’re going to try and mimic this as much as possible. And I would say like most online events search it like death by speakers, A bunch of power points, but the majority of the interaction is going to be, you guys are going to be talking to other members, either on a one-to-one basis like this, or in a small groups.

no more than 12 people in a group. So you’re going to really get to know each other personally. I like that, I think. Yeah. Okay. So you’re going to have breakout rooms with smaller groups of people. I think that’s going to increase the focus as well. I think it’s easy to get caught up in trying to talk to everyone when there is like a larger group at a big table.

I noticed that. So I think it is, that is going to be helpful. Yeah. And that’s the hard thing about even in-person events, right? Like when you. And most of us in our group are introverts. You’re at your ranch for right to, I want to be, yeah. Yeah. you’re an evolvement shiver. So what I noticed being an introvert too, is like, when you find somebody cool to talk with you just spend a lot of time with it.

And you don’t talk to everybody else. So these breakout rooms, common to , facilitate them is going to be cool because. going to give you enough time. You don’t have 10 minutes to interact with somebody, get a good vibe, see if you want to interact with them again in the future.

Take that content, but it’s also going to maximize your time so you can interact with as a lot of people in this that’s okay. That’s true. I think it’s gonna, it’s obviously I think it will be, so how will it be organic? Like I think, in person you It would just be like randomly, you would meet some people and see if you would connect with them.

how is it going to work here? Are there going to be like groups that you choose to be in or they’re going to be focus groups or, yeah. So I’m going to do a little bit of random, matchmaking for sure. But for the most part, I want to give people somewhat of a guideline of what to talk about instead of just pop you guys into a group, because that’s a little awkward, right?

here is the start of the, family office, Ohana virtual mastermind, the bubble of 2021. This is what I’m going to call it. I’ve got, I’m starting to build a list of different topics here. This list will obviously grow as the weeks go by as we get closer to the event. But there’s very common topics that I see coming up, right?

the guy who has a high net worth doesn’t have very much liquidity, but has a lot of money in their home equity or their 401k. Are they taking money out of their 401k slowly. So that unique it out. So their AGI doesn’t come up over $300,000. That was something we talked about this past year that I would say half of the people in the Roman, I’m sure half of the people in the virtual mastermind are having the same issues.

So getting those people together and for those people who don’t have those issues, we’ll put them in another group for general networking, Or infinite banking. I don’t know if you’ve set yours up yet, that was a big thing for a lot of people, hardly setting that up and everybody has a different situation in terms of net worth, how many kids they have, where they are with a career, what is their liquidity look like?

How much money do they net at the end of the year. And what do they want to deployment strategy for investments are going to be, so what I, when people sign up and they apply, one of the biggest thing is I’m going to have a long, pretty long intake form. So that I know where everybody’s net worth their liquidity, what problems they’re having.

So that when we go to the itinerary, I can match people up specifically in the right groups or with the right people. That makes sense to, yeah. That’s going to be really helpful. It’s going to take a lot of planning. Yeah. That’s a lot of work on your end. there’s a common amount of problems and issues people have.

And for example, infinite banking, there’s some experts in the crowd. There’s some people that have never heard of it. The experts I’m going to hook up with, I’m going to have some people at my current mastermind to play elders and bring up some people with that are in the middle.

But I’m going to jump to the breakout room with the complete newbies and teach it from the start. So this will this format will continued throughout the weekend. Okay. Yep. That we might even do a little bit of a Texas hold on. This is a fun game or something like that.

That’d be awesome. I think games are, I was going to say like the activities and the games, especially in person last year, that was, those were great. that really helped start talking to people and just. Feel people out at least, in terms of not just real estate, but just in what type of person they are.

Yeah. it’s going to be a super sleek use of Google documents. And because one thing I can do is you have your, you’re just totally random networking and you have these more specific itinerary based, topic discussions, but in the middle, you have this form of. maybe there’s different breakout rooms that people wanted learn about or talk to other peoples in the peers.

So I can build a Google document with the breakout room, breakout one and rename it to, 401ks breakout to rename it, to taking money out your retirement account, breakout three to, legacy planning. What are you doing in your ear? Revokable trust or trust? What kind of caveats that you’re putting in there?

Who wants to talk about oil and gas or land conservation Eastman’s right. And just a general hallway. Yeah. I think like that, to your previous point, that was important for me is like tax strategies. since, I’m single, I don’t, there’s no kids, so it’s, I don’t get a whole lot of tax help.

those were great strategies for me last year. And I’d really like to see and check in, what have people been doing or out about them? Did anyone go for it? I know that we were still researching oil and gas last year. and then obviously, yeah, the hallway too. I think it might be good to force people to rotate into the hallway every so often to just relax and take a break from learning and, absorbing information at least.

Yeah. and in the new version of zoom right now, you have the ability to navigate yourself through the breakout room. So if you’re not, if something’s not working for you, you can move around wherever you want or leave that option open for people. But, going back to the taxes, right? Like the using real estate professional status, 750 hours with active participation and using all these passive losses, you’re getting via costly innovations and bonus depreciation for this deals.

you understood it, right? you’re there in person, you got the concepts. So what we would probably do for you now is puts you in a group of the experts, That get it. And you guys have passive losses to use. and then, puts you in the people that are on the same level.

So you can guys can talk shop. I might stick with the new people and teach them this concept of this simple passive cashflow gravy train as I’ve trademarked it. Yeah, because that was me. that was me last year, actually. I had no idea about it. I’d never heard of these things. and so I was new and now that I know about it and I’ve actually been looking around, it’d be great to even get more information about people who’ve already done. we’ve got people in the group have gotten short-term rentals to let this, enact their real estate professional status.

They can offset their passive losses . to the ordinary income, you, my friend are single, so it’s going to be hard for you to do it, but we’ll connect you and maybe the other single people too. Even if they’re not single, it’s still, I think it’s still useful. I think, yeah, I can still find relatable people.

And again, the big part for me is probably, I guess the hallway, it might be helpful to have a room to just talk about. Like a general room. there’s no forced topic, but it’s also not like a hallway where you just kinda hang out and talk about like the weather. I don’t know, but really a big part, a big draw for me is, like hearing, like for instance, I think, one person was doing like Airbnb’s, with tiny homes and I was like, that’s awesome.

And he was just wrapping it up. So I’d love to connect with him again and say, Oh, how’d that go? how’s it looking now with COVID, things like that. Yeah, and I’m going to be going out to certain members on specific topics that they’re doing like that. And they can need a breakout room also.

that way they can work their membership or their admission rate, a little bit lower, on a scholarship. So that’s a big thing I’m doing in the family office. Ohana is I’m having people join up for another year or more senior kind of helping the event go. So it’s just not me doing it all.

we’re going to have definitely had helpers here, but like more facilitators too. I’m hoping to that also, we’re trying to build this community here of high net worth the credit investors to on the road to financial freedom. One thing I’d also like this year is, I’m not married, but I, I do have a girlfriend and she wants to get into real estate.

she likes the idea of like mailbox money, passive income. that’s why she has you, man. plenty right there. You just go to work every day.

yeah, maybe it is, but, she, that’s an ordinary, I am, it’s more passive on her part. but yeah, I, I think it’s beneficial here. do you think there would be. for people who do have spouses or significant others, are there going to be rooms for them or can they join?

that’s a great idea and what I know I’m going to do is we’re going to have a topic called reluctant spouse syndrome. where I’m going to give the high level very quick presentation. But again, the format of this thing is to break out into a room to talk story.

Get best practices from the other members. I’m going to pull people in and find those people in the group that have gotten their spouse over the hall. And from that means they maybe talk to them for 2000 hours and they finally get it. Or they found some kind of quick, medium, right?

Like me, I don’t have my spouse co-sign any of my documents because I don’t want to waste my time. Every single time I do this. So I found the happy medium, but it’s different for everybody. And I think in that situation, you’re going to be able to talk to people who have gotten over the situation, or you got in, going through that heart struggle with, your significant other going through it.

we’ll probably allow maybe that might be a good evening time event for. We have the spouses join us and they can interact with the other spouses too. when we did the in-person thing. There were a few couples that came, that brought their, a reluctant spouse along because it just happened to be in a boy and they got shipped people to Hawaii.

when they met a lot of the other investors such as yourself and they got it right, they saw how are very, High level group, did this, and it wasn’t just about making money. It was about from creating a legacy and wealth building audit.

And I think that to have the spouses come in and interact, mix it up with the other spouses and folks like yourself, I think that’s bold. And we’ll definitely try and do stuff like that. Great. Yeah. that’ll help because right now, she only hears me talk and so I think it’s.

It’s refreshing to maybe get her some more exposure in terms of more experienced people. Other people are also getting there. yeah. that’d probably be the good cocktail event for sure. Cool. . Any other questions, man? I think this can be a super fun event. Martin Luther King weekend. So you’ve got that Monday off. Okay. But we’ll probably do it on the Saturday and Sunday and the first half of the day. Awesome. Awesome. And then how are you going to, cause typically like when everyone was in Hawaii, you had, everyone was in the same time zone.

So how are you going to coordinate everyone to be together when they live. in different areas. I’m going to suck it up and try and wake up extra early and I’ll be started at like really early, just so that we can stay on that first half of the day for you, for yourself. I think most of us are in the mountain or Pacific time zone, centrally located.

So that kind of started in the morning and then go to a little bit after lunchtime. But so you have the time to do whatever you need to do for the rest of the day, but I think it is important to Break away from your normal day to day in immerse yourself. That’s the big thing is immersion.

yeah, I think it’s cool this time with that, you don’t have to get on a plane, and go, and what I’ll probably do also is build an itinerary of these different topics that we are talking about. so if something doesn’t pertain to you or you want to cherry pick, you got to go do the laundry or something.

You gotta run Aaron. Right? Mr. Ordinary income, man, you gotta do something. I gotta go look at work stuff. Yeah. You gotta go do work stuff. You can cherry pick when you want to do that. So you don’t miss out something that you really want to learn about. And that’s huge. That is. Yeah. But I think when people realize that quality of people in this group.

if they haven’t already, they’re going to see they’re going to, their eyes are going to really open. Just like how yours when you came down? Yeah, that was huge for me. I think that’s when it became really evident that you’ve put a lot of work in, into creating a group and it’s yeah.

it’s, everyone wants you to win and everyone’s on a team together and everyone’s going to help you out. yeah, it’s a great group. , I’m going to do my best, trying to filter the right people into the group. There’s always a chance. Not many people make it, get past my filters, but I think this is where I’m going to go past you.

You’re going to make it in. You’ve been around a while. I know you personally, I think this is where I rely on like immediate, right? We all need to be watchdogs, potentially a bad actor or a shady character who could come in. Could infiltrate the group. But for the most part, everybody are pure passive investors.

They’re all working to build their own personal family office and it’s more of an abundance mindset. That’s what I found in competitive. Yeah. we’ll, send this out to folks and, hopefully they learned from your good questions. You gave me a good one. That was good.

But any last words, my friend, that’s all I got. Thanks a lot, Lane.

Soft Skills and Spouse Advice for the Socially Awkward with Brady Helkenn

https://youtu.be/OBCC_EwR1bo

On today’s show, we’re going to be helping the socially awkward folks like myself, who are self-proclaimed introverts, try and be a little bit smoother and a little bit more effective in terms of networking. And just getting along with people at work. I am bringing on an it guy turned of social coach on today’s podcast to give us some pointers and some things to be aware of.

So if you guys, Hear me talking about a lot of being an accredited investor and finding deal flow is mostly about networking and getting to know other passive investors so that you can become a better past investor yourself. But to do that, you have to make relationships organic, real relationships with other high net worth of credit investors.

A lot of this, again, like I say, all the time, it’s not going to be at their local REIA or at the free, internet, Facebook groups or other forums out there because those groups are typically filled with, guys who are trying to make their first hundred, $200,000 network. but how do you, when you finally get in the right room, like maybe we do a simple passive cashflow outing.

Maybe I come to San Francisco or Seattle. When you finally get in a group with our tribe, how do you make the most of it? So we’re going to be a lot of the soft skills are going to talk about the survey and I hope you guys enjoy.

All right. Hey, simple passive cashflow listeners. Today. We are going to be talking to Brady Helton, who is a X I T professional, but he is focusing on teaching other it professionals and other smart guys, the soft skills, like clear communication, responsiveness empathy. And we’re going to be doing a deep dive with this.

So this is going to be a good one. For those of you guys who have day jobs, which is most of you. A lot of folks in the simple passive cash on nation are high-paid professionals. You guys realize that your time is better spent at your day job going after that next promotion. It ain’t going to be forever.

most of you guys I noticed can get financially free in five to 10 years, but it’s definitely a time better spent there than screwing around with some Burr property or, your fourth or fifth turn key rental that’s for sure. But, Brady, thanks for jumping on it. Of course. Yeah. So a lot of our groups, a lot of engineers in our investor club for some strange reason, maybe because I am, but, I guess w why don’t you take us through, what is like the biggest mistakes that you see other it professionals, or let’s just put in general, like smart people, right?

Dentists doctors, they need to have bedside manner. W what are the biggest mistakes that you see just as start us off and we can maybe isolate a few of these or within this next podcast? Yeah, I would say the biggest thing that tends to be the root problem here is when you get really good in any particular field, you start to learn the jargon and use the jargon, but you don’t necessarily keep a sense.

Of what the other person in a conversation knows and doesn’t know, and too often, particularly for, engineers and other, process oriented individuals, we tend to think in terms of the tasks that we have to do, we tend to think a little bit more in acronyms and other terminology and it’s comfortable for us.

And we don’t. Go through the effort to make ourselves uncomfortable enough to translate our jargon into something the other person can understand. And when we don’t do that, it tends to break rapport and make for rather stilted conversation, short conversations, not a lot of popularity within the workplace, et cetera.

Yeah. it just goes to show that you, the person you’re talking to on the other end, they are not an expert as you may be. And it comes across as number one, you don’t have empathy over the other person, their shoes. And number two, you could just be like you breaking, It’s the idea of almost like a lack of sensitivity. you could make an argument, in fact, that it is almost inconsiderate to spout jargon at another person who you didn’t check to see whether or not they would even understand the jargon. You’ve made an assumption about it. And then you launch in and you get a lot of hurt feelings that way you get a lot of ruffled feathers.

You get a lot of conflict in a workplace where you might come across as condescending or as an asshole or whatever. There’s any number of extra elements that come into play because. All the person on the receiving end has to go on is the words that you’re saying and the tone you’re using, and if you’re really short and succinct about it and almost impatient about it, because it seems obvious to you and you’re making all of these assumptions.

You can have a completely different reaction from them than what you would be expecting.

It’s just, what is the acronym? Picnic problem? Not you good Peter found in seed or something? Yeah, probably. Yeah, probably between a monitor and chair or something like that. Yeah. But yeah. what are things that have people to be on the lookout that they do? Cause there’s a lot of smart people that listen to this podcast.

And sometimes it can Def, a lot of introverts too, but I think sometimes the smarter you get the less self-aware you are at least some incense. Yeah. And I think about it as a lot of people will make the assumption that the go to the effort of translating for somebody else is something that somebody who’s more extroverted would go through.

the reason why, one of the reasons why I suspect the proportion of individuals that have trouble with clear communication with avoiding jargon tends to come from like engineers and it people and other really technical industries, or because there’s probably a somewhat higher proportion of introverts there than extroverts.

And a common misconception is that you’ve got to be extroverted in order to get along with other people and establish rapport. But interestingly, somebody who is an introvert actually has a lot more empathy for somebody else. They just don’t necessarily know how to tap into it. So the effort that you go through to translate for somebody else is actually easier on an introvert than for an extrovert in a way, because you can internalize the emotion of what the other person’s feeling.

You just don’t know how to do that. They’re just not an introvert. Just. Also just tends to be listing or not talking all the time. And then when you want to say something, oftentimes again, in technical fields, you want to be precise about what you’re saying, but there’s so much effort on being precise that you don’t necessarily keep in mind what they’re going to understand or not understand about your precision.

Oftentimes translating it in a way that loses a tiny bit of the meaning, but becomes much easier to understand is a lot better than giving the precise terminology or acronym to what is happening or what this thing is. And it goes over somebody’s head instead. So it’s the main thing that stops introverts, I think is the initial effort.

It takes to think not only about the other person, but then to go out of your way. To accommodate them because that in a way is what you’re doing. You’re accommodating somebody else explicitly to translate something that you take for granted into words or ideas that the other person will understand easily.

It’s well received when you do this, but it takes a lot of effort. There’s a hump to get past. And sometimes it’s just an ego thing. A good example of this is, I guess in art, our industry, we make a lot of fun about doctors because doctors in our realm are horrible investors. They’re really smart people, but they’re absolutely the worst investors.

They invest in some of the worst stuff. And. It’s funny when I get a doctor that is clued in on this true that you see some doctors who are very intelligent people and I’m just, I don’t really want to isolate the doctors completely. It’s, it’s every smart profession, You get a smart person and they come into a realm such as investing and they’re complete knew about it.

Newbie. And yet they believe that they can learn it like that, or they already know have a pretty good understanding. But part of it is Eagle and being able to start at the infancy stage, realize that you don’t know what you don’t know, just stage one, and then realize that there a whole bunch of other stuff you need to learn to even start to build an understanding.

it’d be talk to us. I’m sure you run a lot of bootcamps with folks. What can you say about people with that type of products that one’s a little bit harder to work around, right? It is more fundamental. I wouldn’t necessarily say that it’s harder because it sounds deceptively simple to avoid jargon, but in practice it’s so much harder because there is the value system that somebody holds internally that really ultimately dictates whether or not they go through the effort to avoid Charcot.

So it is deceptively simple, but quite difficult. To actually change in practice because they have to change themselves their values. And when we talk about something like ego, it’s much the same idea. There’s a fundamental way that we view ourselves that you can’t be on autopilot with you. Can’t just let that be and carry on with the day-to-day stuff and expect that not to influence everything you do.

And all of your results in your life. It all comes down to your value system, your viewpoint, and how willing you are to change that. And I cover a topic that I consider a difference. I did not create these concepts. These actually came from a book Carol Dweck mindset, that I would recommend would be good reading for people, but there’s this concept of growth versus fixed mindset that is.

The technical terminology, which is to basically say, when we talk about smart people, when we talk about educated people, when we talk about people that are really good at this, we are labeling them. We are labeling them though with fixed attributes. If you are not smart, then you must be dumb. So there’s a lot of those backhanded compliments that tend to start coming in, where you go, somebody gets a hundred percent score on a test and you go, congratulations.

You’re so you’re a genius. And then they don’t really feel great about that. They actually feel pressured now and nervous because if they don’t get a hundred on the next test, then what does that say about them? So that’s that idea of the fixed mindset. A growth is about the effort about the journey that we’re taking, about where we are trying to reach with our effort and our energy and our focus.

And that’s what I helped to craft. And it correlates with ego because. I put that on a spectrum between solution focused and ego focused as two ends of a spectrum. And the bootcamp that you mentioned briefly teaches throughout those six weeks of recurring theme of being solution-focused because you can enjoy praise.

You can enjoy the nice things that come from. No, it feels good to know that I have this PhD. It feels good to know that I hold this kind of salary, this kind of prestige. You can enjoy those pleasures, but don’t let them affect your decisions. The decision should be influenced by a solution approach. What is the solution that I want to do if you’re unhappy with something in your life right now, if you’re unhappy with something in your career, in the workplace that you want to change.

It is infinitely better to treat that as a problem that has a solution than to react from your ego, to react from your emotions, to react from how other people should treat you, because you have accomplished X, Y, Z. So you talked a lot about like handling rejection and confrontation. And that kind of reminds me about when you go into a confrontation or some kind of conflict that again, Like he mentioned, it’s all about the, what is the solution that you want them to be off the cuff?

Maybe you can go more into detail about that. When you focusing on a solution with a conflict, it tends to dampen down your emotional reactions from a place of ego. So if you’re giving, we can call it investment advice. If you’re giving investment advice to somebody and they’re not listening to you.

They’re not taking your advice. you’d alluded to, like doctors might be, proportionally higher, at being terrible investors kind of thing. And if there’s ego involved and they’re rejecting your advice and they don’t want to do the investments that are a good recommendation or coming up in group conversations, because they think this is going to work better, you’re in a conflict.

And as an expert in investment, or if we talked about the engineer, Or if we even talk about the doctor, imagine a doctor with a patient and the patient is going, yeah, I know I need to exercise or haha. And they’re brushing off the doctor’s advice. There’s that prick to our pride as an expert, that’s somebody is not taking our advice, but if we’ve maintained our focus on the solution, we will react and respond differently to that person in the room differently than if we reacted out of her pride, wounded pride.

Offense, et cetera. So that’s where that kind of ties in the main thing that we want to focus on from the solution is mastery over our own emotion, not letting our emotions rule us.

Yeah. I think the example that I see, I personally go through is I tell people, and if you do the math, Investing via a retirement fund, doesn’t make too much sense because you gotta wait till you’re seven years old to get the money you’re going to you’re in a lower tax bracket today, tax brackets are go down in the future.

And when you invest via retirement funds, you don’t get any of the passive losses to potentially offset your W2 income. when people, I guess they go the other way, I could probably be like, whatever, man, you’re the expert. You can do it. Do it. Do whatever you want.

That’s the prick, right? That you’re mentioning. So maybe walk me through it, how I should work through that solution or get to the solution because I guess the solution I want them to do, what’s what makes sense. I guess I think the, what this boils down to is that there’s a different concept that I can intermingle in here.

And that’s the idea of separating the two kinds of power, because when we think of power, we just think of one kind of power. Which is social power influence over another person. And if you look at your goal or your objective as trying to get somebody else to do something, then you’re already setting yourself up potentially for failure, because all you can do is influence them.

You can’t control them. But the thing that you can control is personal power. And that is your reactions to something that is your decisions on how you’re going to respond. How are you going to move forward? So you feel that prick of wounded pride, you exert personal power by choosing to adopt a solution approach rather than reacting from her pride.

That’s the first thing you can control your reaction. You can’t control what they decide to do though. So now we’re talking about social influence. What I would actually say to you in this situation and what I usually would say to somebody else in a similar situation of what do I do? I want them to do this reevaluate your true goal, your true objective, because your true goal and objective should be something you have control over.

Not something you can only influence your goal should be something you can actually reach and guarantee that you can reach. That’s where confidence comes from. That’s where that. Certainty in your path and what you’re going to do comes from, so your goal could be to exhaust all options. You can take to influence this person to take sound advice, and take a sound approach.

That could be the objective, because if they listen to you at some point, and then they follow your advice, that’s fantastic. That’s a great outcome, but you still win. Even if they don’t. Because you’ve taken all logical steps to try and coach them the right way to follow the right advice and the right steps.

So you will still win because you could control that. You can control all of the suggestions and pathways that you could eliminate for them. It’s up to them to use their personal power, to decide, to take your advice or not. So whether it’s. A doctor teaching about diet and exercise, getting them to make that path.

having somebody get their retirement funds out of the clutches of the government, it’s not about the other person. It’s about me, exhausting, all my options to get there. And if not be okay with it, is that kind of the answer? Yeah. Because if you think about it through to a logical conclusion, you can end up with doctors that become suicidal.

If you really think about it in a life and death struggle kind of situation, you’ve got somebody having diagnosed with cancer and they have to take certain medications or go through certain treatments, and then you have the patient refuse to take those treatments. And the doctor in that room is going to go, you are most likely going to die then.

And if you keep your focus on saving that life would, you can only influence you can’t control that you get somebody that now has a lot of baggage to take around and try and process. But if their goal actually is to make sure that they educate as much as they can to say, Hey, look, these are your risks though.

you’re an adult. You have to decide for yourself what you’re going to do, but I need you to know at least. What’s at stake. And if they keep their focus on that, they can control that they don’t have unresolved baggage to fight through. They knew they did everything they could to try and save this person.

Now it’s a life or death struggle situation that really exemplifies the emotion that we go through. But it really also illustrates the grounding we should pursue because you can’t borrow other people’s troubles. And here’s another example that comes up a lot. actually have a big article that I update from time to time about the reluctant spouse syndrome, where an investor has a spouse that is a partner in life that isn’t quite on board with getting off the beaten path of traditional investing and not buying a house to live in.

you guys can check this out@simplepassivecashflow.com slash spouse. But so let’s walk through this. somebody wants to go into an investment or maybe not buy a house to live in, Maybe rent for awhile and it clashes with the other person. And. To me, the worst case scenario is when I throw my hands up in the air.

And I say, sorry, man, that’s your problem? It’s the other, the spouses is on, is disinterested in a way, but holding to their truth, how would you navigate that specific scenario? In that case, I would say, hold to your truth. There’s a fine line. And here’s where a lot of people who are technical, but not necessarily empathetic or externally empathetic, I should say visibly empathetic will struggle because it is a fine line.

You can have the same content, but the message and the wording and the tone changes everything. We’re talking about establishing rapport. We’re talking about already. if the timing isn’t right, or if there’s a personal conflict, that’s preventing this person from moving forward with something you think is a good idea.

We’ve already covered what that looks like. It’s not a good fit. If you can’t prioritize this, then it’s. It’s not going to work out. You’re going to make a different decision. All I can do is give you an educated sense of what your options are. And if you don’t pick that up and run with it, I can only give you your options.

I can only educate you. I can’t force you to do something against your wishes, right? You can’t control them, but there’s a distinction between throwing up your hands and going, whatever, I can’t tell you what to do. There’s a dismissal to it. There is a reaction to the emotion that is coming into the tone and to the wording, because your emotions at that exact moment have the better of you rather than the other way around.

There’s no solution there because the solution is whether or not you’ve exhausted all options. And if you throw your hands up in the air before you’ve exhausted all options, then you have failed something that you actually have direct control over. You can exhaust those options. And what that ends up looking is just illuminating to them.

What would be a process that they can, should you change your mind or here’s an article you should read, or here’s a podcast episode you should listen to that really talks about this kind of concept and this kind of concern that you’re running into right now. And how do you reconcile it?

Like you can provide them options for them to come back later. It takes little effort on your part, but it’s a solution approach. It’s something that you can offer them that whether they take it or not, doesn’t matter, but the delivery is establishing that rapport. The delivery is making that ally on the other side of the communication, rather than using a rejection from emotion.

If you have mastery over your emotions, you can address that situation. A myriad number of ways. That gives them a good feeling at the end of the day. Even if it doesn’t financially work out for them to want to do the investment advice for them to purchase this, to do that, whatever. And this is true for doctors with advice.

It’s true for engineers with, unreasonable deadlines and I’ve managed her breathing down their neck. Like no matter what conflict you’re looking at, you can react emotionally, or you can feel the emotion. Recognize it for what it is, ask yourself, but what am I going to do about it? Because reacting just from the emotion you go, I can’t do anything about it.

And you just throw your hands up in the air, but you ask yourself after you recognize the emotion, what can I do about this? And you’ll have a couple of things usually that spring to mind and you can still do, and you can close the book too. You’re going to be like, Hey, if it doesn’t feel like it’s a good fit, I can’t change your mind on that.

Here’s some resources for you to check out. Or find me if continuing down this road is going to ruin the relationship even further. Maybe that’s a smart choice, that circumstance. and to that point, if you’re giving investment advice, you’re not a family therapist, You’re not a relationship therapist, a marriage counselor, or anything like that.

So also recognizing where our strengths are and where they’re not. I will say this is a common story is something like innate, like infinite banking using whole life insurance to bang from yourself. It’s a little complicated topic and some spouses would dig their feet in and say no.

And the, the kind of the more financially minded spouses. No sit I’m frustrated and I’m trying to China teach them about this. They want to listen. They don’t want to watch the damn webinar to learn about it. And they say no, and then they just let it cool down for a few days. And they said, yeah, they said just do it sometimes.

Sometimes that can be the path forward, but this is just me being an observer for other people to see how it works. and when we see situations like this, that we want to influence, there is a strategy we can still employ. If you see that as a recurring theme, And you can recognize you don’t have the control to change them or change their situation, but you do have networking partners, referral partners, individuals that specialize in, maybe.

persuasion and conversational therapy or whatever, right? Some kind of sense of you’re having a financial conflict. How do you resolve these kinds of financial conflicts with your spouse? Because if you’ve got somebody that really wants to do it, and then the spouse is in the way, then that person that really wants to do it is not going to go against their spouse, but they would love to figure out a way that they can communicate differently with their spouse to maybe persuade them.

That is certainly something they would be interested in that isn’t necessarily your strengths, but there are people that do that. And that’s where the, the idea of an understanding of what you can and cannot work. What’s your expertise in ledger and what isn’t, your expertise plays a crucial role.

And by offering, even if the connection doesn’t work out, just the offer of connecting them with that kind of resource to help them find a solution for themselves. When’s you that kind of rapport? I think the goal is the rapport, right? in going back into the example of an it solution where it’s very binary, you as the expert, know what the problem is, and it can be very frustrating, especially in that case.

switching gears here a little bit, I’m big on, building networks of other high net worth investors, getting in the room of the right people, which is usually not the vocal Rhea, the free, groups online. We’re just more about wholesaling and flipping in getting their first hundred, $500,000 net worth.

But. And that’s a big part of it. I think, getting into the right network. And that’s why I’ve created the simple passive cashflow nation and the mastermind. But I guess Brady, once you are in the right room, I will some tips on someone who is a little socially awkward from a technical background to get all their comfort zone and intermingle and put their best face forward, My main advice is to play to your strengths, which might sound a little confusing perhaps to somebody who is very heavily introverted. But I had mentioned this earlier in the episode where we were talking about introverts, having particular empathy that even extroverts do not possess. Because an extrovert can be a social butterfly and foot around the room and chitchat with everybody.

And they look like the life of the party and somebody who’s heavily introverted, not only will feel envious, looking at that example, but feel lacking. Like they can’t do that. And that is doing an apples and oranges comparison. You look at somebody that’s social butterflying around the room and you go, I can’t do that.

And you start to shut yourself down and you don’t go up and talk to anybody. That is what we end up seeing in those kinds of situations, but that’s not your strength. Their strength is as an introvert, for example, is not your ability to flip between 20 different conversations. In 10 minutes, your strength is really deeply understanding one conversation, being able to really tap into another person.

And that is something the extrovert can’t pull off. The extrovert usually gets bored too easily and flips to the next conversation. You have a much. Stronger opportunity for connection rapport and building a strong ally in that room than even the extrovert can do. The extrovert could collect 15, 20 different business cards and not necessarily have any real follow through with any of them, but the introvert could get one card, maybe two, that actually goes somewhere because there was a deeper, meaningful connection that was happening.

It takes a courage to do that. You have to get up the nerve to come up and talk to somebody, but. Devote yourself to that realize that your strength is to be able to understand this other person and make an ally. And I think in our group, I would say 80% of the people are introverts. If let’s say at least you got a pretty good shot of talking to somebody who is glad that if you’re talking to them, you think the first move and then something else that of came to mind was in a.

I, when I go to, conferences, industry events, and I make a point to go more deep into one or a few people than to run around the room and wastes my business cards. and it’s funny cause everybody sees those people’s fluttering around the room and you also see this in the virtual setting today, or when there’s not as many in-person events.

I see it. I see it on my Facebook feed. I know you guys are out there. You guys are in every single Facebook group out there. I know cause I am too. And Facebook alerts me and I see those type of people that would skin that’s the cheap, easy, free folks who they flutter around to every single group. Ask the question.

You’re asked a question to ask a question in there. there are transitory to all these groups, but they’re not a resident of any one or two, and I think it’s different. I know the truth is those people. They never really get anywhere. Let’s say never reinvest their money into one group of people, time and money wise.

that’s, I think that’s how it recreates itself in the virtual world that we also unfortunately are living into. and there’s also a corollary, it’s a little bit of a cliche, but it’s an interesting mental trick that I would recommend to somebody, because. Whether it’s in a virtual, zoom call where there’s open breakout rooms and you have to pick a breakout room to go into or something like that.

Or, you get assigned to a breakout room. Or even if we think about an in-person thing and you’ve got 15 people lined up against the wall and nobody’s talking, cause everybody’s nervous. Just remember. And this is true. If you’re the one that has the courage to go up and actually initiate the conversation, you’re scared as all hell of how that’s going to go.

But in that instant that you’re doing the approaching to somebody else in that moment, they’re more afraid of you than you are of them. That’s the cliche. And by having that leap of faith, that courage to actually be the one to go up and initiate, you have now proven that you’re just ever so slightly less afraid of this conversation than the person who didn’t get that courage up to do it.

And as a result, You’re almost guaranteed to actually have a really good conversation because they’re just happy that you started it. Yeah. And I think a great opening pickup line is like, Hey, I’m new here. I’m still trying to learn. yeah. Tell me about yourself. And I’m interested in learning too.

it’s rare that you find people that. Don’t have that ego or the I’m all-knowing, I’m the best doctor on the best dentist and the best it guy. I know.

but yeah, let’s so Brady runs a pretty good boot camp specifically surrounding, progressing your career and all these little social tweaks. great. I really liked the group coaching setting that you do too. We can do this and they can keep beta group ourselves, but it’s probably the most, best way you’re going to be able to get some people around you and that as close to one-on-one coaching, without the price of that, you can get like insult virtual, right?

Say, no, you start it with pentatonic, but you guys, what’s the URL, right? If people want to get ahold of you or. Yeah, my website is infinitech.ninja. So I N F I N I T E C h.ninja. and , the name was created around the idea that we are helping texts, particularly whether we’re talking it or programmers and developers.

If you’re in the tech industry, And that we have infinite potential, but we just need to untap it. So Infinitech, and then I call our graduates from the bootcamp tech ninjas, because there’s a resiliency and a versatility and agility to the mindset that I coach on these concepts that really prepares people to face down just about anything, because really tapping into our personal power and not getting bogged down by what we can’t control.

And I’ve spoken about this before this concept of binary skillsets that are contrasting it’s like the seven foot or in basketball that can also dribble and shoot or the super strong guy. Who’s also fast. If there are an introvert out there and you shut up and actually listen to people, is there a normal tendency, but you’re also able to navigate social norms.

You become what you become one of these rock stars and guns Lakers in the world, and you just rise above everybody else in career and networking. And it’s because it’s rare that binary skill sets is rare. and it’s something that I’ve worked on myself. Cause I was, you ask anybody who knows me.

I’m one of the most socially awkward people in the world. but I kind of work on it. That’s really how I’ve been able to work on all these business development relationships and partnerships and find, and build the group. And, Brady will call me so that I’m confident. yeah, cause I put in the FM work.

And that’s what I encourage. Everybody else should be doing a jumped, do the bootcamp. I would definitely recommend it. And I liked something else that you mentioned in there, like the introvert who can start a conversation and actually communicate effectively with another person does so much more powerfully and meaningfully than the extrovert.

And part of that is because of what you had mentioned about listening. We tend to as introverts, I count myself among them shut up and listen more than we want to talk necessarily. But the extrovert by the opposite end of the spectrum, can’t wait to get in their piece. So they’re not necessarily actively listening.

So you get that game of telephone that happens almost in that social butterfly where they’re not even necessarily understanding what the other person just said because they were brushing up for their next statement. The introvert is actually paying attention and listening to the content and gets closer to the spirit of what was trying to be communicated.

So that’s how you establish those allies. I think it feels better than being listened to, and it makes you want to know this person somewhere. And if you’re doing that for business, you’re more likely to do business together.

All right. again, the URL infinitech.ninja and a bird and use these skills when you guys are in our mastermind groups and. we’re going to be doing the retreat this year. Virtually it’ll be the bubble, the virtual bubble this year, but, yeah. easily skills, bring your ego down, be open, be the first person to show weakness and you don’t know anything.

It’s what I’d say, but, thanks, Brady. Really appreciate that.

Is Now a Good Time to Invest?

https://youtu.be/xOXUo3KoZ4c

I am curious on your positions now, given the uncertainty of future economic conditions, I am feeling like, know when to hold them is a smart idea for a few months. What are your thoughts? So I used to think this back in 2012 and then 2015. And then 2016 and then 2018 and 19 as I was buying properties that cashflow, as we said on the last slide, you only buy properties that are positive cashflow and can pay professionals to run it for you.

If you don’t have enough money for vacancy repairs, cap, ex professional property managers and the occasional oops. You should have bought the property. You’re not cashflow positive in the true sense of the word, just because you’re renting a property out for $2,000 and your mortgage is 1500. Doesn’t mean you’re cash flowing 500 bucks.

That is absolutely wrong. In fact, in that kind of situation, probably negative cashflow when you’re accounting for real repairs, expenses, maintenance cap, ex vacancy, and property management. So if the way I see it, like most people don’t invest like this, right? They don’t invest for cashflow, which don’t found this me.

But when you’re investing for cashflow, I don’t see any reason why the economy is going up and down. I mean, you’re just kind of dollar cost averaging. You’re just picking up more and more assets that make money on a monthly basis. Most cashflow investors are pretty immune to the economy and after going through a pandemic and seeing my collections.

Pretty much across 3,500 units stay above 90% where breakeven point is in the low fifties and sixties. I mean, I’m pretty confident that this workforce housing investing for cashflow is the way to do it a lot better than investing in something silly, like Airbnb short-term rentals or something like commercial storefronts, where the restaurants go out of business.

I think we’ve seen the strength of workforce housing. People need a place to live.

How the Repo Market Led to Printing Billions of Dollars

https://youtu.be/XE947Ea1DOQ

0:00
So I dug into what the repo market is. And just to keep it super, super simple, it’s basically a pawn shop for banks. So imagine a pawn shop, you’re short on cash, and you’re like, Okay, what do I have, I got a watch, and you go down to the pawn shop, and you basically sell it to the pawn shop operator, but you have the ability to redeem it in a certain period of time and they charge you interest for the use of the money but presumably, whatever you are Hawking your asset for is important enough that the premium you have to pay to get access to that is there and of course, the the rate that you pay is, you know, kind of based on the risk. 

So anyway, so banks are showing up in the repo market, and they’re bringing in their treasuries and they’re Hawking them they don’t want to sell their treasuries or they don’t want to be divested of who have the right to get them back it basically saying the banking system is low on cash that’s what activity in the repo market is and just like maybe you’re not proud to tell all your friends Hey, I had to Hawk my watch right the banking system they’re not like proud that they had to go Hawk their treasuries to raise cash. It’s an indication of dollar shortage in the system and the Fed accommodated that by printing a lot of dollars.

Should You Buy or Rent?

https://youtu.be/dHWnZuVhPUI

Should we pay off rental properties first before primary residence, ultimately, where should the debt be? So overall, I don’t really believe in owning and primary residence, unless you have too much money. You don’t know what to do with it. I’m a believer of renting. I wrote a big article on this. It’s simple, passive cashflow.com/home.

I mean, do the math for yourself guys? Actually, I have a calculator for this. It’s at that URL symbol pass the cashflow.com/home, but it’s this big calculator I created where you’re able to put, you know, what is your rents? What is your mortgage payments? And then it kind of compares the equity build up.

And then what would happen if you would’ve just done something simple, like buy some rental properties, how much the equity would grow and it kind of compares the two scenarios. And whenever you’re trying to figure what should I do? I would recommend just putting it on a spreadsheet and figuring out what the math says first.

So whether you pay off the rental properties or the primary residence, it really doesn’t matter from like a numbers perspective because. Once you buy a property, it just goes in your portfolio anyways, the way I see it. But from a liability standpoint, I would rather encumber my rental properties with debt first because that’s the higher liability, but you know, here’s the problem.

This is why you don’t really want to. Pay off your debt, because especially if you own your primary residence and you want to outright every litigator out there knows exactly what, where you stand with your debt. There’s like things I subscribe to that I can kind of pinpoint how much equity everybody has in their house.

I mean, that information is out there for the taking. And when you pay off your primary residence, I mean, you’re a sitting duck for all this liability. Of course, there’s other things that you can do that we talk about our masterminds, like your vocable trusts and doing that some homestead stuff. But I think you’re going about this, the wrong way of like, well, what should I pay off?

What you want to be doing is. You want to be looking at your return on equity? There’s my handy-dandy chart that I show a lot of people, but you know, when you first had that rental, you’re making a lot of money, maybe 30% on your rentals, but as the appreciation happened and you paid down your mortgage and maybe you paid additional payment, don’t do that.

Because your return on equity is going down. And most people like after they own it, a decade or two, they’re making like single digits in terms of return on equity. I have a calculator on this@simplepassivecashflow.com slash R O E. I’ll put it into the Facebook group here too. So you guys can download that.

That’s the name of the game as investors return on equity case in point here, I mean, I’m living in this house. That my landlord owns outright. They are getting almost like one or 2% return on equity. I mean, heck for that much pain in the butt worrying, if I’m going to move out or not, they probably better be off in a saving spot and making I’ll be double what they are now.

It makes no sense to me, but Hey, I’ll rent from people like that and I’ll be on the winning side of it.

2020 Real Estate Crash – Save Money or Invest Now?

https://youtu.be/Dp5O508bTys

0:00
It seems like everyone is talking about the market being at peak right now. And personally, I think things rings true for multifamily, even more so than other asset classes, given the situation, how do you personally decide how much to invest in opportunities today versus staying liquid to invest potentially greater opportunities in one or two years, my investment philosophy is when I have liquidity, I’m going to invest it again, some of the rules that I follow is I don’t invest more than five or 10% of my network into any one thing to get diversification that way.

I’m spreading around my portfolio in two big ways. The first way is different geographic areas. And then the second is different asset classes. I mean, most of my holdings are in apartment complexes and some mobile home parks. But I haven’t really branched out too much into self storage or some different asset classes, I definitely have done a bunch of development. And getting more into that. 

But diversifying into different opportunities is is a good way, I think for anybody. And that’s what I’m doing for myself. As far as A, B and C class properties. I think I’m kind of moving on from class C and Class C, I think everybody gets a little blue eyed over there, you can get 10 plus percent cash flows, but it’s a hard clientele like classy tenants, they’re hard because they don’t have too much cash savings and collections is very difficult for that type and often new trading a lot of sweat equity, especially as offered Of course, for that, but even as an LP investor investing in C class deals, cash flow is very hiddenness. 

One way I balanced staying liquid, I use infinite banking. So if you guys want to learn more about that go to simple passive cash flow, calm slash banking, but it’s a technique that a lot of wealthy families will do to use life insurance as a means to not pay taxes because it’s a little tax loophole. You don’t pay taxes on life insurance, and when it is life insurance, it is very hard to get sued for that money.

How to Lead a Fulfilling Life w/ Mariko Frederick

https://youtu.be/hthUUGjsxUs

Hello, simple passive cashflow listeners. Today. We are talking to Merico Frederick, give me a little bit different today, a little bit more touchy, feely. I’m not too much of real estate or wealth building today, but we’re Rico does work with a lot of high end professionals, Olympic and professional athletes, CEOs of seven and eight figure businesses.

And she is a transformational speaker and performance coach. And she is founder and CEO, so pro priority and, that she would bring her on and kind of talk about some findings, with folks that are, you know, sort of listeners of this podcast and insights. but welcome. Merico. Thank you. Thank you for having me on today.

Yeah. So let’s get right into it. you know, you, you and I were kind of talking before and, you know, you, you work with a vast variety of high level performing folks. I would say the people that kind of listen to this podcast primarily are working professionals, but man, these guys are high performing folks making over a hundred, 200, 300,000 a year.

various level of white collar jobs or medical professionals. yeah, let’s talk about some of those, the findings from, you know, kind of those, that cohort. Sure. how can we go deeper into that? So Merico w you know, a lot of these people, they, they come to you. What is the first motivation that they’re feeling that kind of triggers them to find somebody like yourself?

Yeah, their finger on exactly what it is. So Merico, so a lot of people are coming to you for help getting unstuck. What are some of the motivations that maybe if somebody is listening right now that they’re feeling that kind of triggers a lot of your clients to find you in the first place? Sure. So most of my clients have a feeling inside.

They can’t put their finger on it, but they just know they’re meant for more. They feel like they have another purpose purpose. Most of my clients, very well financial we’ve done big things in their life. Still fight that or they’re meant to do. And so they, I love working them because that’s something I’m able to help them with is discover exactly what they’re meant to do before they leave this world.

Is there any, some kind of like a trigger, cause I know when people kind of find simple passive cash flow or they start to do that dive late into the evening on Google. How do I quit? My job it’s usually because of some big event. Is, is that some of your findings or is it just a general buildup over time?

I’d say there’s two types of people. So one type is they know they’re meant for more. And they’re really seeking me out to figure out what that is. I do a lot of work by referrals. the other is

they have accomplished so much in their life, but they feel unfulfilled. And so on the outside, when you look at their life, they have made, You know, very good money and they have accomplished things that not a lot of people in the world can say they’ve done. And yet still feel like quote, empty inside or they’ll come to me and say, I kind of fell dead inside and that’s not something they can talk about because on the outside, their life looks really great.

Now, what are some of the barriers for why someone would, you know, not kind of white knuckle it, or keep, keep moving forward? I mean, I think a lot of us have this mindset or at least I do that. Hey, life’s, life’s tough. Suck it up, you know? Yeah. And so a lot of those people have done that. They’ve gone through that part and that’s why they’re so successful is they did get through that.

They do have a really solid mindset around money, but what about the rest of their life? What about their legacy before they leave this world? Because once you have attained a certain amount of money, it’s like, okay, but what’s next? I have all this money. I have these accolades now, what do I do? How do I feel fulfilled?

How do I wake up in the morning and really feel happy with my success? No. I think a lot of barrier is, is for a lot of people, as you know, just time, you know, especially if they have a family, you know, to go spend some time when somebody’s kind of talking these issues out or not, they’re not really issues.

Right. They’re just, they’re kind of more barriers. And like, how would you say, like how, how does this kind of work into someone’s busy schedule? Oh my gosh. So great question. When we’re thinking about abundance. one of the things I learned when I died, well, I usually don’t say that I died because there is no death.

When I left this world, I’ll tell you I never more alive. but when I left this world, it realize there’s a lot that happens when you, when you leave this world. But one of the nuggets that I brought back was that we tend to and specific money cage. Oh, abundance is part of a creative energy. And so we, you know, if you’re really thinking I’m a little bit conscious, you can say, okay, money is created not.

when you think of music, poetry, that’s creative energy. And right now, especially during the pandemic, we’re not worried that we’re going to run out of music. We’re not worried that we’re going to run up, run out of poetry or artists, but we’re worried that we’re going to run out of money. And interesting money in my experience in, in, in death is that money, is it?

Same category? as abundance, abundant creative energy, right? So whether you’re creating music or creating money, it’s the same energy, it’s the same concept and we have access to it. And so just the way that it really has to do with your mind and your beliefs around. And so I would say that most people on the planet have some thinning belief.

Funny and that they either money has, it’s hard to earn. That’s a belief. It’s not a true one. Or money is hard to come by. And those are not true. And when you leave this world, you realize all that, right? And then it’s like, Oh my gosh. I was believing in, in, in, in lack. And so when I came back, I realized that abundance is literally all around us.

And so to answer your question, you really have to be tuned into it. You have to change mindset, you change your conversation about money from the moment you wake up moment and you go to bed. And just to give people a little bit context, you know, you kind of referring to, how you kind of your near death experience, Rica doesn’t really like to get into it, but for the most part, you know, she had, she had Lyme disease and, you know, kind of had this epiphany, kind of in, in, in the low period of that.

So, was that kind of epiphany kind of, came at to you at a certain point? Or was it, you know, did it take days to sort of. come together for you. Okay. Both. So when I came back during my death, I had what I call a download. It felt like I was being, first of all at my death, didn’t feel I’m sure I wasn’t.

So it happened at home. So I wasn’t connected to, you know, machinery at a hospital. but my husband will tell you it wasn’t very long, you know, may have been just a matter of minutes, but on my end it felt like I was there for 800 years. So for me it felt like I lived a whole lifetime there. so when I came back, I had gotten kind of what I call a download.

I’d gotten a lot of information to bring back and they told me it wasn’t my time. I had to go back and help people. So when I came back, I understood it, but I’ll bet it took me a good decade to unpack it and be able to understand it in a way that I was living it. Plus I went through a long term illness and so I understood it on one level, but how do I make it?

How do I live it? Right. That took a decade. Yeah. Would you say it was more, you needed to help people or was it that you needed to make a bigger impact or legacy in the world? Which of the. The two did it skew towards

Hm, legacy, definitely. I know that I’m here to impact a lot of people. I know that when I came back, I knew I was here to, to, to help millions of people around the world. Now that said, when you come back and you can’t even stand up or go to the bathroom on your own, I had to kind of, I had to kind of, I had to understand in a way that I was a time, which I needed to.

People I think because, because the big of what I was here to not moment coming back after the spread. Yeah. And I think, you know, most of the people I’ll have the nice, they’ll do free calls for, you know, new folks that we do a pipeline club. I mean, you guys can send up for that. It’s simple, passive cashflow.com/club.

but I’m talking to a lot of people who are, you know, they’re kind of getting started on this journey and, you know, they’re, they’re kind of thinking about themselves first and I’m not saying that in a bad way. I’m just, they’re just trying to get themselves settled and get them, you know, it’s kind of like just getting back to baseline.

in your circumstance and, you know, I think at, at, at a certain point when money is really not an issue and, and you’re kind of just, you just kind of thinking about what’s bigger, what kind of impact you’re going to make kind of legacy you’re going to make. but it’s a face thing you can’t, you can’t, I don’t think you can just skip right to going to legacy.

I think you have to get yourself up the baseline. And put your own oxygen mask on first, but I mean, what’s your, what’s your opinion on that? Helping folks get, I mean, you’re right. It, yeah, it takes, it takes years to understand what that really is. And, you know, oftentimes people have more than one legacy, right.

So if you’ve been a professional athlete, that’s one legacy, but what’s after that. and so because we are unlimited, that’s the other thing we’re unlimited. So in our human. In this world, we feel very, we feel the limitations of, of this world, but when you leave it, you know, Oh, I was unlimited the entire time and I had no idea.

but what I would say as far as, as far as, how. We tend to be raised from, from children to think, what do you want to do when you grow up? What do you want to be when you grow up? And so I feel like culturally, we planning for middle age planning too. Cause when they say, what do you want to be when you grow up?

They’re really thinking that at least in my opinion, what do you want to be when you’re 30 or 40? Right. And not, who are you when you leave on your last breath? And I have a lot of my clients do this exercise of on your last breath. Who are you? Who were you? Who were you here to serve? You do that, right?

Because when we think of that, we think of the entire life. Then when we go back and we, these are the people that I know that I’m here to help that I know this is what I’m here to do, and it’s easier to go back and do that. Yeah. So I, I have a, Little business and life coach now. And we’ve kind of come to a point or they’ve kind of made me see that my big motivation is I’m a big ego guy.

I want to create big legacy and big impact. And I think about this all the time when I’m, you know, w we’ll we’ll bring on a new client, into the mastermind, they’ve got to pay some money to get into that group. And then I take that money and I. Put it right back into something, you know, I pay a virtual assistant to do something, or I buy some ad Facebook ad, you know, few thousand dollars of Facebook ads.

I’m like, where did all this money go? You know, like I did this to kind of be financially free, but the here I am just burning it up again, putting it right back in the business and then for what? Right. And. It’s kind of like, I kind of created that short circuit where it, well, you know, it’s for legacy it’s for impact it’s for doing something bigger and you know, I’ve got the basis covered today.

And I think the other thing that you’re doing, is you are creating a network of people. So in my world, I call it my tribe. Right. So the cost. Of doing business, the cost of being in your mastermind, the way I see it is that’s the cost of being with, with these greater minds. It’s the cost is the price of admission to get into a mastermind and be with people that are like minded, because the conversation that are going on in, in your mastermind is not what’s going on in the rest of the world.

And so you need to bring those people together to say, how can we talk about money, about abundance, about wealth. About legacy in a way that’s more of an expansive conversation. And so the cost is saying, okay, and the people that, that aren’t willing to pay that cost that entering that entrance fee are going to there they’ll have a different conversation somewhere else.

Right. And so it’s, I think it’s beautiful because people need to be around people who are abundant in order to become abundant. Right. And you know, all I know is like a few years back, I couldn’t stand just talking to regular folks at work about normal financial building stuff. Right, right. You go pass them.

Yeah. nothing wrong with that. I used to do that for a long time. Not at all, but I think if growth is good and we do past relationships, and I think that that’s a really difficult thing for people because they want to hold onto all the relationships. Meanwhile, they also won’t want to grow past it and they want to go into a next level with abundance, with wealth and with their legacy.

And so it’s a matter of how do I navigate that and keep relationships that are really dear to me and also allow myself to grow. And that’s where, you know, masterminds are really. A wonderful place for that to happen. So you’re working with a lot of high end clients. you know, a lot of people work in day jobs.

What are some of the findings of the things you work through with those folks? the Tiffany’s they have guilt big one. So in leaving women, they know, or you need to do a lot of times what stops them up. Could you repeat that? You cut it up. Which part, the whole thing. Yeah.

Guilt. I would say the biggest factors because when somebody says, okay, when we see, okay, this is the bigness, this is what you’re meant to do before this world, but that might involve leaving their job and that right. Like their job, but they feel sometimes guilty. Well, but my company needs me. What would they do without me?

Right. And so actually guilt is a big one and I usually will tell them, well, you know, that company doesn’t care the next day. If you laugh, They wouldn’t care about you, but that’s just me, but how do you kind of work through that? I mean, you know, people, people think that they have, you know, if they left tomorrow, the whole world would crumble.

I think what you do is you have to, into your next four, you get there. Meaning, you have to step into the mindset. You have to step into feeling that next level of who you are before you become it. So, so part of what I do is I help people become the person that they need to be in order to thing they’re meant to do.

Right. So that’s a big mindset shift, and there’s a lot of action around that, but you literally have to feel it before you do it. So you have to like. We really have to believe in. You have to believe in your dream. if it’s not something you’re passionate about, then don’t do it because there has

to be a drive, right? In order, in order to be willing to quit your job, you have to really love what you’re doing. Obviously. So, is it kind of like you have to know what kind of legacy you’re going to create before you kind of get off of this current, your current job or your current path? Is that a key part of it?

So you don’t have to know the specifics, but you kind of have to be able to feel what it is, right. If you have no idea what it is, there’s, there’s no reason to quit your job, but if you are specific about, this is what I’m here to do. and you are in the financial position to quit your job or B both have your job.

And then on the side, You’re working your business, you’re growing your business. It doesn’t all have to happen. and so that really just comes down to time management. What are you doing right now? You know, what are you doing next? What’s up on the possibility list? What could you do? But you don’t need to carry that with you.

And that’s something that also stops people up. We look at all the possibility, okay, this is, this is what I want to do. And it’s, you know, it’s this big thing in the world. You can’t carry that around with you all day. That idea there’s too many working parts in that idea. So you have to really use time management skills and say, what am I doing right now?

What’s what’s on my schedule next week. And then you create like this possibility list of like, okay, and these are all the things that I could do, but I don’t, I’m not doing it right now today. And then you take some of the things that you could do and chunking them down to where you’re getting. You’re sort of chipping away at them.

one conversation that came up a lot during our last, Hawaii mastermind was, you know, a lot of people are already on the path of investing. You know, they pulled all their retirement funds. They’ve got things deployed and good cash flowing assets. but they’re realizing like, wow, I’m gonna need to invest a lot more.

And this is not a get rich quick thing. And I’m like, yeah, man. But then it’s it’s then I’m like, yeah, you better get comfortable, comfortable, buddy. Like, it’s going to take awhile. but they don’t have, maybe they just haven’t spent the time to kind of figure out what is that bigger thing that they’re going to need to create, or maybe they don’t want to create.

Maybe they’re totally happy. You know, they’re happy at their current job and you know what, what’s kind of the advice for those types of folks. Yeah. So. Why you’re doing what you’re doing. Right. So I know, I know why I show up. I do. I know I I’m, I I’m doing this. Cause I don’t want anyone to die with an assignment on their life.

I don’t want any leave this world unfinished. Right. We don’t get to go time, but I don’t want anyone if I can help it to leave this world and go, Oh my gosh, I didn’t finish. I could have done this big thing, but I wasn’t, I didn’t, I just got stuck. No. And cause that’s, that’s a, that happens. And so I think for people that really.

No, you know, they, they really feel like they want to do something bigger. They need to know why is it the right, not going to be instant. And so your why is going to get you to the heart. Your why is going to be, you know, thing you give up and putting forward. And if you don’t know, well, I’ll give up. So you really have to have a strong sense of why am I doing this?

I guess like, you know, one thing I’m, I’m kind of saying here is, you know, and let’s just say you make 80 grand a year and you save a whole bunch of it and you, you, you like you travel the world and you know, you’re good, right. If you’re good, you’re good. And also if you’re making $500,000 a year and that’s really all you really want to do and not really, you know, take up a, a side gig or a business or create a huge legacy.

You know, nothing’s wrong with that too either? Well, I think sometimes the legacy is your family, right? The legacy doesn’t have to be big. The legacy could be literally being the most amazing parent you’ve ever been or friend. So that’s the other thing, right? We, we, we tend to believe that a legacy has to be this big thing.

And sometimes it’s very quiet. Sometimes it’s something that nobody else notices. Right. We have those people in our family that live literally we’re the glue to the entire family. And that’s C I think that’s beautiful. I think that’s a well lit, so it’s not just about making money and being abundant.

It’s well, abundance elevate, right? Abundance is friendships, family relationships. All of it. Right, right. I think a lot of people listen to these podcasts and, you know, they hear about, you know, doing these big things, but that’s not for everybody. I mean, it’s, we don’t want to shame anybody. It just, you know, kind of playing the role kind of, you know, making your own world better place.

Right. That’s I mean that honestly, if you don’t have that nailed down, then the big system is not going to fix it. It’s not going to fix it, right. You really have to be, be, and continue to become a person that you really are happy with. And so that’s some personal development, right? You gotta kind of look at yourself and say, am I a good person?

Am I, am I a good friend? Am I a good father? Am I a good mother? That does have to come first. Okay. Yeah, I think, I think I see in like, you know, the real estate, for example, people with like these thousands of units, they’re kind of weird people, in my opinion, they’re kind of kooky. I always tell my, my clients, you know, let’s figure out what your end game is, you know, define your end game and work towards that.

And then when you get it stop, you know, I, and I use the analogy of like, people are on a train or the subway, you know, people always get off before the end of the line. The only people that I won’t get off or the weirdos, the homeless people. And the people that don’t really like, they’re just weird.

They just stay to the end. And that’s kind of like the, you know, the people that keep, keep trying to achieve and do more and more, more, but for what no reason, I mean, I mean, it’s cool. And sometimes people just like to ride the train, ride the subway, but that only happens and you know, some romantic comedies, I guess, but.

Yeah. I mean, I D I S I see the downside with some of the people that keep going and going and going. Yeah. I feel like that’s all they have because they didn’t build a life as well. And that can be weird. Any last thoughts, to kind of part on, the listeners here, if you think we missed. Go for it. I think that that’s really a big message here is just go for it.

You know, big don’t leave anything on decide what playing big means to you. Right? So like we said, playing big could mean, scaling down on work and becoming parents playing big in, you know, launching a business and, and drown the entire. But you decide what big means to you and don’t leave it undone.

Well said, Mariko’s website is so priority.com. You guys want to check her out and any other ways they get ahold of you, we’re gonna put up. Sure. I’m on, I’m on Instagram at spelled M a R I K O. and on Facebook, the Matico Frederick. All right. Well, thanks for listening everybody. We try to throw in one of these, You know, more life building type of less hardcore investing math science podcast once in a while, if you haven’t done.

So please check out the website. I’ve been doing a lot of upgrades there@sevillepassivecashflow.com. Lot of ultimate guides like for taxes, trade lines, legal, all sorts of fun stuff. So, we haven’t connected please. let’s get on the phone. She meant email lane and civil, passive cashflow.com. And we’ll see you guys next time.

How to Hedge Against a Recession w/ Russell Grey (Part 2 of 2)

0:10
Lane. Did you ever get a copy of the report we did called real asset investing? I think I did. I gave that presentation at the New Orleans investment conference in 2013. And I wrote the report shortly thereafter, and I chronicled first three or four years from China from 2009. To the time I wrote the report at the end of 2013, I chronicled all the moves that China had made to supplant the dollar to de dollarized the world to unseat the dollar as the world’s reserve currency. And they’ve solicited a lot of partners. Russia has sold all of its treasuries and bought all gold. There’s a reason we’re upset with China and Russia all the time. They’re anti dollar. So you and when you understand gold oil and the dollar, then you will understand geopolitics and all of this stuff about human rights and nuclear weapons and all that stuff, which doesn’t ever seem to make any sense gets thrown into the car. I’m not saying those things aren’t valid, but I believe that 90% of what we do geopolitically has to do with gold oil and the dollar. And when you look at it through that paradigm, you’ll you’ll see it and so then in 2018, at the future of money and wealth conference, I did a follow up presentation where I kind of updated that real asset investing report and talked about everything that China had done up to 2018 and how vulnerable the United States was becoming to having the dollar unseated. Well, now we’re teed up and so I think that the the challenge is if it was anybody except China, who’s completely vilified right now, and maybe justifiably so I’m not saying that the vilification of China is unjustified. I’m not here to defend China by any stretch of the imagination. But Kiyosaki taught me that there’s always more than one side to the story. And so all I know is that China is the best position to knock the dollar off, but I think right now they’re a bit of a pariah. And I I don’t know that people would be willing to trust China at this stage of the game, but they would be willing to trust gold if somebody, anybody if a coalition of countries came out and were to issue some form of a currency and backed it by gold, I think you would see the dollar collapse almost immediately. And I think any investor who understands what’s going on at the macroeconomic level and understands history, and that this aberration of history we’ve been in since 1971, where gold wasn’t behind paper currency realizes this is an experiment that probably isn’t going to end well. And the rest of the world is already used to navigating around the dollar. But Americans mostly only think of life net worth business, everything in terms of the dollar and they have no plan B and I think now is the time for Americans to start studying and to start really considering a plan B. And the good news is real estate investors are in an excellent position because they’ve got a big part of the equation figured out they know how to do the real estate component. They just need to learn how to add the gold component and now you can hedge against both inflation and deflation and and if nothing happens, you know worse off. And if something horrible happens you’re going to be in better shape than most

3:12
of your body it is is pretty much a fixed is a commodity, it’s packaged. Come on, it’s a lot of different commodities on one hand cash flows.

3:18
Yeah, Real Estate’s great. The challenge with real estate right now, where you have to be careful is that there’s a lot of error in the pricing. So I have a saying that says unrealized gains aren’t really real. They’re not right. I mean, the market gives you equity the market takes away we wrote equity happens, which is all about the price of properties go up denominated in dollars because the purchasing power of dollars fall over time. But if you purchase property with debt, then you actually make a profit over time because you’ve shorted the dollar with debt by bringing dollars from the future into the present and buying an asset and then you get to pay back later with lower dollars. You know, over time the rents go up over time the equity grows so how can I pay my house off fast buy the house now. Next Door using interest only loans on your house and the house next door, wait 10 years and at 7.2 annual appreciation, your house is going to double in price, sell the extra house and pay off your house and you never have to amortize one penny,

4:13
I’ll kind of summarize that in a different way for folks. I mean, people always ask like, well, should I do a 15 year mortgage or a 30? I’m like, well, you take as much debt as you can, because that’s the whole point of why you’re doing this

4:24
with the lowest required payment possible. Because you can always accelerate if you want to, but you just you lose control of the property. If you lose control of the cash flow. And the bigger the payment, the harder the cash flow is and if you know what’s the point in putting any more equity, I love interest only loans when you can get them and I love long term amortizations which mean your amortized loans have lower payments.

4:45
And this is why we’ve been brainwashed that you know that’s bad because the banks want us to pay off the debt. And actually if you want to hedge yourself or something that’s coming in the future, you want to take as much debt now so that when inflation’s happens it’s worth barely nothing.

4:58
Yeah, banks don’t want you to pay off the debt, they want you to roll it over. They want you to stay in debt because that’s how they acquire streams of income right? investing isn’t about buying low and selling high investing is about acquiring streams of income, what I call acquiring the efforts of others, you start a business not so that you have a lot of work to do every day you start a business so that you get a lot of people to go to work for you every day, and you make a profit on their efforts. The more people you have working, the more profits you make. If you have a sound business model, when you go to invest in real estate, I’m not interested in owning a property that goes from 100,000 to 200,000. I’m more interested in having two $100,000 houses that have two tenants instead of one because now I have twice as many people working for me right it’s you accumulating the efforts of others will debt is a way for bankers who don’t want to get their hands dirty to accumulate the efforts of others. So they want to lend but they use amortization schedules where all of the interest is front loaded if you pull up an Excel spreadsheet and do the loan amortization template that they have in Excel, and just Play with the numbers, look at how much what percentage of your monthly payment in the first five years is interest, most of it. So that’s all free money to the bank, it’s all profit. And if they can convince you five years later to refinance, they start that all over again. And so you know, it’s not that they want you to pay it off. They don’t want you to pay it off. They want you to roll it over, they start the loan over again. So interest rates go up and down to entice you to continually roll the debt over and start your amortization schedule over again.

6:30
They can pick up those origination fees for that.

6:33
Well, and then of course, yeah, the origination can mean I was in that business. You know, you make money on the church or the sound money world. You don’t want to be in debt. You want to be a lender, but in the world we operate in because our money itself is dead. If you pull out $1 bill or a $20 bill or $100 bill, it says right across the top Federal Reserve Note, well, we all know what a note is, are you when you buy a property and get a mortgage, you’re signing a promissory note, which is a promise pay a note in financial terms is a promise to pay. A Federal Reserve Note is a debt the Federal Reserve owes you money when you get that they owe you money. That’s why their balance sheet expands with the debt they’ve accumulated. That’s how much money they’ve printed. The problem is there’s no way to pay it off. It’s irredeemable. All you can do is trade it with other people that are locked in the debt aquarium, we all live in an environment of debt, there’s no way to get out of debt. So being debt free doesn’t work in a non sound money environment. I know a lot of people have a hard time getting their mind around it. But really, the key is to use debt strategically to outpace the devaluation or the inflation as the currency loses value because they’re printing it, you have got to be invested in something that is going to increase your purchasing power faster than you’re losing. And that’s why you have to use vehicles like leveraged real estate and for your liquid, you have to incorporate things like precious metals which hedge against that decrease precious metals are not an investment. It’s just an alternative to cash. That puts you outside the dollar and protects you from the dollar falling. But you have a highly liquid investment and you can go back into dollars whenever you want. You can borrow against your gold the same way you would against your property if you want except you don’t have to qualify, you can pivot into any currency you want. I mean if all of a sudden somebody came out as they suggested and say China announced a gold back, you won and all sudden you one way up in value and the Dollar fell. If you’re sitting in gold, you don’t care. You can trade your your gold for you want, but if you have dollars you just lost. It’s like the people in Venezuela that had dollars when the bulevar collapsed, they weren’t hurt. The people that had gold and dollars, which were considered safe forms of money in Venezuela weren’t hurt. But when the bulevar collapsed, those people were destroyed because it took a million bolivars to buy a roll of toilet paper.

8:49
So the way I personally play that is look at my checking account. It looks like them for I don’t have very much liquidity or cash ever. As soon as I get enough money, I put it into real estate right away.

8:58
No, I think I think this is a time To be liquid, I was playing that game running up into 2008. I was on the tail end of of what you’d call a real estate Bull Run. And then when the crap hit the fan, which it’s about to do, I was liquid, what I would be doing right now is looking at your portfolio and looking at everything, looking at your markets critically and asking myself, hey, if we have a severe economic depression, if this thing really is protracted, how is my market positioned? Is it a low cost of living? Is it a low tax? Is it going to be the kind of place that would be attractive for businesses and people who are trying to survive a recession? Are they going to move there and put upward demand pressure on prices? Or is it going to be a place that people are going to be fleeing? Once you’re inside the market? You have to ask yourself, what product niche Am I in? Am I catering to people who are getting weaker economically or my catering to people at the top of the market? And then if you’re at the top of the market or whatever price point you’re at compared to your competition, are you at the very, very top In the market, you always want to have enough people above you in a downturn so that as they become economically weak, they can move down and put upward demand on that spot where you’re at. And then the what happens is when that pressure from above comes down, it pushes the poor people at the bottom right off the bus and into the street. So you know, as those people start to fail, they get angry, they tear up your property. I’m not a big fan of D class for those reasons, especially an environment like this, because I’ve been with respect, but desperate people do crazy things. And when they don’t understand what’s happening, they lash out at people they perceive are victimizing them. And when you’re being evicted from your home, the landlord is the bad guy, and they’re going to destroy the property and pour cement down the toilet and tear out your air conditioning and sell your appliances. I mean, and we’ve had people do some of that stuff, right? So I’m not a fan of that. But if you can be in that spot where in good times people are moving up from below you and in bad times and also in good time. All the new build competition is happening at the top of the market. in bad times that people who are above you are coming down to the middle. So that middle market, middle product, niche, middle price point all the way across the board. And then where you have a great team. So if I’m if I’ve got the right market, the right product niche where I’m serving the right demographic at the right team, then I’m going to really fortify my focus on those properties, make sure that they’re operating really well that I’ve got good long term financing in place. If I have equity, I’m going to extract as much of it as I can get before the market takes it for me. And then I’m not going to roll that right into more real estate, I’m going to be liquid, I’m going to get some dry powder ready, because there’s going to be distress coming in this cycle. And I want to be prepared to take advantage of it. Anything that I have that’s marginal, I’m probably going to try to get rid of marginal markets, things run by marginal team things where I’m in a product niche that I think that group is going to be marginalized and then I’d start you know, looking for you Emerging markets like I talked about at the top of the show, where may or maybe we’re doing this pre mic. But you know, one of the areas that I think is really intriguing is how human behavior changes in the wake of a crisis. So you’ve got people that have just discovered that I don’t need to live in a 3000 or $4,000 a month house or apartment close to the work center, because I don’t need to go to the office anymore. I can actually move out of state from a high tax state to a low tax state, I can go from a high cost of living state to a low cost of living state, and I can go to my employer and they can pay me 10 or 20% less when I can have job security. And yet my my purchasing power, my true living standard goes up. I’ve been reading articles and I’m sure you’ve seen them as well, that demand for properties in rural areas is booming right now. And the cities are struggling. And I think that some of this behavior is temporary, but some of its permanent. People have discovered that they can shop online people that maybe were hesitant Didn’t to do that or didn’t like to do it or the habit of going shopping now haven’t been able to, I think retail is going to change, and it’s going to be a bit of a permanent change. I think a lot of businesses aren’t going to survive, they’re not going to come back. And risk capital is not going to be willing to try it again. So I think, you know, there’s going to be communities that are going to change. I think that manufacturing we just discovered, and I think we talked about this pre recording, you know, we just discovered the United States that we manufacture some critical meds, or we have critical meds and we have critical medical equipment that’s manufactured in a country that wasn’t on our side when we were in a crisis that were hoarding for themselves. And we realized that you know, our critical supply chain items, maybe need to come home. Well, when those factories come home. The question is, where are they going to go because they’re going to bring jobs, they’re going to bring demand for working class real estate. There could be some really affordable markets right now that are being overlooked. You know, when you have plenty of time, but when that starts to manifest the people who are brave and bold Aware and prepared and part of being prepared is being liquid and having boots on the ground teams ready to go, then you’re going to be able to move into those markets ahead of the curve and ride that wave up. So I think there’s going to be lots and lots of opportunity, but I would not be spreading my equity thin across a portfolio with high ltvs, even though I can get great interest rates, because all growth is at the margin, but all recession is at the margin. So if you’ve got an 80% loan to value on a property, you got 20% equity and the market receives it could receive 20%. And now you have no equity. So if you say I’ve got really tight control of the cash flow, and I don’t care that I have negative equity for five years, because I care what the property’s worth in 10 or 15, then then maybe, I mean, if you buy right, but I would think right now would be a time to be thinking about developing some liquidity and I would divide that liquidity up but and of course, I’m not giving anybody investment advice. I’m just a guy with opinions, but I’d be thinking about giving some of that liquidity up Between precious metals and dollars.

15:02
What about what about life insurance? A lot of guys like to do the infinite banking.

15:06
Yeah, so I actually just did a boots on the ground interview yesterday with Patrick Donahoe mutual friend. And we were talking a little bit about that. And what I like about that is that once again, it’s a place where you can have equity equity in these policies in these annuity writers, and you can borrow it back out without having to qualify or being obligated to make a payment. So if I could pull equity out of a property and sequester it from the property, especially properties with non recourse loans, you know, if the crap really hits the fan, then I’ve got the money out, and I may lose the property, but at least I have the equity. So insurance policies are private, I would definitely have assets outside the banking system. I think counterparty risk is another major thing. I asked Patrick to do some work for me and get back to me, I want to really understand counterparty risk, you know, what kind of shape are these insurance companies really in? I know the banking sector. system is in bad shape, but they’re backed by the FDIC insurance companies aren’t but they have stronger balance sheets. Okay, well, anything over $250,000, I would rather go with the insurance company’s balance sheet than the bank’s balance sheet. Because once you exceed the FDIC insurance, I don’t think banks are a very good place at all, to be lending money, because effectively when you deposit money in the bank, you’re lending them money and you’re an unsecured creditor. And I think a lot of people think money in the bank is safe and secure and it isn’t.

16:26
And so that strategy that we’re kind of talking about you guys want to read out more about it simple passive cash flow, calm slash banking, but just to kind of wrap things up here, Russell, just looking at your crystal ball, we’re gonna see some negative rates coming up.

16:39
Well, here, here’s the challenge. They don’t want to go negative. They’ve said they won’t go negative, but what they say in what they two are two different things. I think interest rates are in a black hole and they’ve crossed the event horizon. So if you’re familiar with that black hole is intense gravity. It pulls in everything so much at the event horizon, even light cannot escape. In other words, there’s no No escape. Once you cross the event horizon, you cannot get out

17:03
or in this case, the magnitude is so big your debt payments are just going to engulf itself at some point.

17:08
Yeah, exactly. So if interest rates were to go up, then the system would collapse because of the inability to debt service and the debt would go bad. Now, we’re papering over a lot of that right now with printed money. And so the big challenges we discussed earlier, and something that your listeners, I encourage them to spend some time studying and thinking about and learning to understand is that to save the banks and the credit markets, the Fed appears to be willing to sacrifice the dollar. And if you don’t have a hedge against a failing dollar, you’re vulnerable to one of the more probable outcomes. At some point, it might be a year it might be three years, it might be five years, but this is the path we’re on unless something substantial changes. We’ve reached the end of a 40 year cycle of falling interest rates. Paul Volcker raised rates up you know into 21% Prime in the early 80s, that was the big reset. So we went off the gold standard in 71. The dollar collapsed. Gold went from $35 to 850, hyperinflation and stagflation and sued, people dumped dollars. And in order to save the dollar, we took some extraordinary measures we’re paying the price for right now, one of which was we exported a lot of our jobs to china to take our labor costs out of our products and hide the inflation. But it came at a very, very big cost American prosperity. We replaced productive prosperity with that. That’s the consequence of what we did in the 70s and 80s. We jacked the interest rate up to 80 to reset the system, and then we’ve been systematically lowering interest rates ever since as we’ve been expanding debt. We are at the end of that we were bouncing off the zero bound for seven or eight years before they finally tried to raise them and they were only able to raise them a half a point before they had to abandon and go back to zero rates. We are absolutely 100% on life support and that life support is coming at the expense of the dollar. So I don’t think interest rates can rise, will they go negative, I think we’re probably going to get a system reset. before that happens. I think we’re in the process of setting the table for that right now. And I think that it’s probably going to come a lot sooner than all of us recognize. So if this is your first time hearing all of this and really getting your mind around it, welcome to the club. You have a lot of homework, but you definitely not business as usual. You definitely do not want to listen to the talking heads on mainstream financial news. They don’t understand real estate investors. They don’t understand real estate investing. They never talk about counterparty risk. They seldom talk about the danger of a complete collapse of the dollar. And all of those things are the things that are more likely my opinion and worth exactly what you paid for it, but it’s my opinion than some of the other risks and I definitely would not be feeling safe with any amount of cash in a bank beyond the FDIC limit.

19:59
Do you own Any paper assets stocks, mutual fund, I don’t

20:03
talk a lot about what I own only you can make that a policy. But if I were to own paper stocks probably would be mining shares. In other words, what I’m interested in, when you’re buying stock, you’re buying ownership shares in a company and their asset is usually their brand and their customer list and their goodwill and their productivity. But businesses are being disruptive right now. So I’m interested in businesses whose core business is very insulated from being disrupted. If I go buy shares in a mining company, I’m buying a part of their assets is the metal that they have in the ground. And of course if I buy it when gold is 1700 dollars an ounce and gold goes to $3,000 an ounce like Bank of America thinks it will then all sudden the value of that company goes way up because their inventory just went way up. And I know there will always be a bit on gold agriculture’s and other thing that I like if I found a publicly traded company or even a private company where I believed in the management and I was buying land productive farmland with a good team in place, I think I’d be interested in that I’m not a guy that is like a tech stock guy. I’m not a momentum guy. I don’t believe in buy low sell. Hi, I’d be looking for companies that have proven track records of making profits and paying dividends, kind of the Peter Schiff mo but definitely not a fan of buy low sell high. I think that that is a false strategy that was created to serve not the investor because when you buy low you generate a commission. When you sell high you generate a commission and a capital gain, which means you pay tax and then you create cash temporarily but it creates float in the banking system. So who benefits Well, the brokerage gets the entrance and exit mission. The government gets the capital gain tax and the bank to use and lever the money in the float. What do you get from cash to asset to cash at the end of the day, you didn’t have up with any more cash, which they’re printing so to me by Lowe’s hi is with him and you’re being suckered into feeding the varying that’s that’s robbing you blind accumulate the efforts of other accumulators of income at lawns, buy rental property and keep your liquidity and for convenience sake, most of it outside the banking system for safety sake, and some of it is the dollar to hedge against what could be a collapse. The dollar is the strongest currency in the world right now. But it also has the farthest to fall. If it gets knocked off. It is a long fall and I don’t think I don’t think enough people understand the potential for that risk or how to navigate it.

22:40
All right, well said Russell, appreciate you coming on, check out the real estate guys Radio Podcast. If people want to get a hold of you guys, what’s the best way to find you? Oh,

22:49
well, I mean, you mentioned the newsletter at the top. So if they’re interested in getting on that, it’s easy. Just send an email to newsletter at Real Estate guys. radio.com. I also mentioned the real life asset report if you’re interested in seeing that if you send an email to real asset at Real Estate guys radio.com you’ll get a copy of that otherwise you know where easy to find real estate guys radio.com we put out a weekly podcast we are starting to move into the 21st century get our website updated and or relaunch our YouTube channel with a lot more content but right now primarily the podcast and our website got a big special reports library so love to

23:23
have people check us out All right, guys. Well, it’s not all doom and gloom, just simple passive cash flow pick up deals at cash flow and it’ll be all right yep, make it easy.

23:30
Yep, keep it simple.

Repo Market Using COVID as a Cover-up? w/ Russell Grey (Part 1 of 2)

 

0:00
Introducing the new remote investor, incubator and ecourse we had the mastermind and we are going to break off from that being mostly an accredited investor group. And I wanted to create something that was helping out the little guy get started guys getting their first properties. And we’re calling this the incubator group. Get More details at simple passive cash flow, comm slash incubator, but basically what we’re doing here is we’re getting a group of professionals looking to build your network with others starting this journey to financial freedom, the ecourse that’s going to accompany this group is going to have eight modules in a closed membership site plus two bonus modules and download kit all geared toward educating the remote investor in this group, we’re going to have biweekly zoom video calls. And if you join up, you’re gonna get all past turnkey rental recordings. Now these calls are designed to ask whatever questions you have and hear the other questions from other investors in your shoes and we’re going to run this like a boot camp style. This is going to be a five month program. We’re gonna walk you through the best practices for tax and legal as you acquire your first remote rental. We’re going to walk you through the due diligence and offer process we’re going to have staff membership coordinators for extra support to get you over the sticking points to connect you with

1:16
one of the biggest

1:23
you guys were basically spoon feeding this to you if you’ve been on the fence and it’s time to get your first rental property go to simple passive cash flow calm slash incubator and by the way for those accredited investors, we are looking for new members go to simple passive cash flow calm slash journey and join the flagship simple passive cash flow mastermind there after the pandemic to new world out there having a network around you is so much more important.

1:58
This is the story of About a dude named Lane he moved to the mainland and bought one place to stay. And then one day he went try to rent them out. And then he became one real investor.

2:12
Hey simple passive cash flow listeners today I have Russell gray one of my mentors that kind of got to me where I’m at today. How long has it been almost like four or five years now since we first met I listened to the real estate guys, podcasts. You guys check it out in iTunes, Google Play. It’s one of the few podcasts out there that wasn’t designed to put you into some syndicated deal. It’s more of an educational podcasts that I clicked on to a long, long time ago. And I eventually met up with these guys join their mastermind a few years back and things like there’s so many influences you guys had on kind of what I do today like interacting with my investors one on one phone calls, which I still do, but you guys can still go on the website and book that if we haven’t had a chance to talk but should you say Russell gray, how’s it going?

2:57
Good. Happy to be here. Excited to end Congratulations on your success. It’s always fun when people come into our world and then take the things they learn and act on them. You know, our motto is education for effective action.

3:08
Yeah. And the kids always come back right one of these years I got to come back to the goals seminar, which you guys do I think, what every January, February Yeah, I mean, I originally went to your guys secrets of successful syndication, which is a great precursor on how do you do bigger deals, but I think most people will say your guy’s goals seminar, people who come routinely say, that’s your guy’s best at that you guys put on, you know,

3:29
we don’t do a lot of events where we looked at the marketplace and looked at what people needed and what we felt like we were qualified to do, and we tried to stay in our lane. But you know, after the 2008 crisis, we just thought there was going to be a huge opportunity in private capital and syndication was going to be the way to go. And we didn’t see many people out there really teaching it or doing it and those that were were more interested in raising money than they were interested in and really seeing people become successful real estate entrepreneurs. So we did that course back from the time we were working with anybody Real estate investors and you know, we still do that or you know, encouraging people to be syndicators ultimately real estate, whether you’re doing it in your own account or you’re doing it on behalf of other investors as a business or whether you’re investing passively through a syndicator however, you’re approaching it. It’s just a vehicle to accomplish your goals which presupposes you know what those goals are. And so before you start investing, you need to have a team before you have a team, you need to have a market that you think has the right conditions to deliver the kind of financial program you’re looking for. And before you can pick that market, you have to have an idea what you need your money to do for you. So you need a personal investment philosophy and that personal investment philosophy grows out of your personal goals. So we do that. And then we do the annual summit, usually for 17 years in a row on a cruise ship this last year. We had to do it. We call it summit on screen or somebody in place because we did it virtually but it was great. We had Kiyosaki and Chris martenson and Adam Taggart, G, Edward Griffin and Peter Schiff. And Tom Hopkins, you know, a whole cast of the regular real estate thought leaders that we’ve had. So it was another great event. But those are primarily it. I teach a sales training class once a year that we cancelled this year because of COVID. And the rest of the stuff that we promote are really things that we see other people doing that we think they’re doing well.

5:17
So check out the real estate guys and subscribe to the newsletter, Russell writes it himself. And I thought I’d bring you on and kind of talk about some of these concepts that you’re talking about in your newsletter. And this is what frustrates me about mainstream media is nobody reads more than 500 words, right? Nobody has that capability to do stills it’s always on based on headline. And I guess the first topic I’d like to unpack for people is this repo market. And you know, if you haven’t heard about this before, I mean, I haven’t started to read your content, probably like what the heck is this? Right? Yeah. For people who have no idea what this is, maybe take us back to when this story first broke?

5:52
Yeah. So there’s a lot of components to the financial system. Think of it like an automobile or a big building. You know, there’s different systems. There’s different pieces of substructure that kind of put the whole thing together. And some of it is, you know, you see it, you understand it, there’s like if you get in a car, you see the steering wheel, you can see the controls, you operate the seats, there’s things you see. And there’s a whole lot of stuff going on under the hood and in the chassis that you don’t see. And so the financial system is like that after 2008 when things that were way off the radar of most people, even myself and I was in the mortgage business at the time, you know, these derivatives and mortgage backed securities and collateralized debt obligations, and all these structured investment vehicles and all this stuff that was happening in the bowels of the financial system under the Wall Street gamblers, operating all that machinery, I took a real interest in it and I started realizing like I if I start watching this stuff, I might not understand it. But at least if I see smoke coming out from under the hood, then I’ll know that I should call somebody smarter than me like you know, a financial system mechanic and go Hey, what the heck is this? Well, that’s what happened in September. I saw a headline that interest rates in the repo market had spiked to over 10%. Well, you know, anytime interest rates spike, it’s because people are charging a risk premium. It tells you there’s more risk in the system, you just look at what interest rates are, the lowest interest rates typically are treasuries because you’re borrowing and getting paid back in dollars, and you’re borrowing from the people who issued the dollars. And so they’re considered to be the safest investment you can make. And we could debate whether that’s true or not, but from an interest rate perspective, that’s the way it is. So anything that moves out the rings of risk from that center point of the riskless investment you add interest to as risk premium Think of it like an insurance premiums, that’s kind of way interest rates work. So spiking interest rate tells you that there’s more risk in the system. So it’s like okay, I looked at it so there’s there’s something going on, right because these interest rates are 10 times what they should be and they boomed and the feds response was to pump in 100 $200 billion a day. And of course, you know, we hear these big numbers all the time. And we think they just kind of go in one ear out the other. We don’t have any context to understand. But back at the height of the 2008 financial crisis when they were doing quantitative easing, which was basically papering over bad debt by printing money, they were printing at 5 billion a month, and in September way before COVID-19, way before economic shut down. The Fed was pumping in as much as a trillion dollars a week. clearly something was wrong. So I dug into what the repo market is and just to keep it super, super simple, it’s basically a pawn shop for banks. So imagine a pawn shop, you’re short on cash, and you’re like, Okay, what do I have, I got a, I got a watch or I got a gun or I got, you know, some old jewelry, and you go down to the pawn shop, and you basically sell it to the pawn shop operator, but you have the ability to redeem it in a certain period of time and they charge you interest for the use of the money but presumably, whatever you are Hawking your asset for is important enough that the premium you have to pay to get access to that is there. And of course, the interest or the rate that you pay is, you know, kind of based on the risk. So anyway, so banks are showing up in the repo market and they’re bringing in their treasuries and they’re Hawking them. They don’t want to sell their treasuries or they don’t want to be divested of them who have the right to get them back it basically seeing the banking system is low on cash. That’s what activity in the repo market is and just like maybe you’re not proud to tell all your friends Hey, I had to Hawk my watch, right? the banking system, they’re not like proud that they had to go Hawk their treasuries to raise cash, it’s an indication of dollar shortage in the system. And the Fed accommodated that by printing a lot of dollars, and

9:42
what did they need that liquidity for to pay off their notes? So why did things come to that? Do that

9:47
something’s going wrong. I mean, you don’t know it’s the smoke coming from under the hood? It’s like, Well, okay, nope, we don’t know. I called Chris martenson because he’s a smart guy. And he watches this stuff, too. And I said, Hey, Chris. In fact, I think we did a show on it with him. I know I wrote a couple of newsletters about it. We did a cruise in the news episode, but I’m pretty sure we did a radio show where we actually interviewed Chris martenson. From peak prosperity. We talked about it. And he was in the same place because yeah, clearly something’s wrong. We don’t know what it is. But there’s a lot of smoke coming from under the hood. So we all agreed, hey, this is something we should be watching the indication that there was a real problems when interest rates spiked to 10%. Because when interest rates went that high, that tells you that whoever is bringing the dollars in lending money that they’re fearing counterparty risk, they wanted 10 times the risk premium. That’s the concern is this person may not pay me back. Okay. So that’s where the concern was. And so why would these banks not trust each other? That’s a concern. So you know, nobody knows what the answer is, but they were pumping money into it right up until COVID-19. And then when COVID-19 hit, they pumped money into everything, and this whole repo thing just kind of faded away, but it was really like the canary in the coal mine and the post mortem on what is been going on in the banking system is probably not going to happen until we get to the other end of this just like a lot of what happened in 2008 didn’t come out into, you know, really a public understanding until people kind of sorted through all the rubble and reverse engineered what happened and explained it. And there were a lot of great books written about 2008. I think there’s gonna be a lot of great books written about 2020. But we’re not there yet. This COVID-19 could be and again, I don’t mean to be a purveyor of conspiracy theories, but there are smart people that I hang out with, as you know, and a couple of them are convinced that this is an overreaction to a real disease for the purpose of being able to take extreme economic measures, printing money, spending money in order to cover up a problem that pre existed and the symptom of that problem was what happened in the repo market. And that’s about the extent of it from my perspective.

11:50
If you’ve been following my journey, I’ve been selling my initial real property and transitioning into syndication deals lately. For more purely passive investment strategy. One critic Part of my portfolio is the American Home preservation fund, or what folks in the we call HP for short. George Newbery once apartment owner, operator and mentor to me, is now sponsoring the podcast is private fun, which by the way, also accepts non accredited investors cuts the middlemen out and allows you to invest directly with him to fight the mortgage crisis in America. join him by purchasing distressed mortgages while getting a double digit annual return paid monthly. Find something else better out there. Well, let me know. Feel good knowing that you are helping families stay in their home after buying their underwater note at a huge discount, invest as low as $100 by going to HP servicing comm slash investors. And if you want the free burns on book, please send me an email Lane at simple passive cash flow calm

12:54
Well, that’s your light bill.

13:01
Yeah, so when people say, you know, the Fed is printing money, right, where does the money flow into like bank stocks or

13:07
Yeah, so technically they don’t print money. There’s a fairly infamous or notorious interview Ben Bernanke on 60 minutes, probably back in 2009, or 2010. Trying to explain quantitative easing, and in the one breathy saying we don’t print money. And on the other breath, he’s saying it’s effectively like printing money. But what it is, is they just add digits to a computer screen. So it’s all digital. They just they conjure these numbers out of thin air. And the way they put the money into play is they purchase treasuries. So the US government needs to spend more than it brings in which it’s very good at so that it can issue new treasuries. And when those treasuries are issued, they’re sold on the open market through market makers and those market makers individual investors around the world sovereign wealth funds, governments, other central banks. All by treasuries for their reserves, the Federal Reserve manipulates interest rates by bidding on those bonds also through their FOMC, which is the feds Open Market Committee. And what they do is they set an interest rate target. So when the Fed comes out and saying, Hey, we’re we’re lowering the interest rate, what they’re doing is they’re lowering their interest rate or changing their interest rate target. And the target is what they’re aiming at doesn’t necessarily mean what they hit. And they certainly don’t dictate to private lenders what rates should be. But again, if you go back to my early explanation, that treasuries are at the center of the rings of risk for interest rates. If I raise that interest rate at the core, then everything else outside pushes out, and rates go up. So if that ring that the Treasury is in and the interest rates shrinks, then everything that has a risk premium built on it shrinks to and so mortgages are a ring of risk out from treasuries they’re considered To be very, very safe, but not as risk free as Treasury. So mortgage rates are higher than Treasury rates. And if Treasury rates go up, mortgage rates go up, if Treasury rates come down, mortgage rates come down, alright, so the Fed goes out and they they print money out of thin air actually conjure money onto their computer system, and they bid on the bonds in the open market. And in order to drive the rate down, they have to bid the price up. So it’s just like cap rates on apartment buildings. If your audience is primarily real estate investors as ours is, then they understand that right if I go buy a property, and it’s got a five cap, it’s listed as five cap and it sells for a four cap. It isn’t that the rent changed, it’s that the somebody bid the price up, they bid the price up higher, which means that the return on invested capital the purchase price went down. There’s an inverse relationship between yield net operating income and a cap rate. There’s an inverse relationship between the cap rate and the price of the apartment building, the higher the apartment building price, the lower the cap rate and vice versa. Same is true with treasuries. So the Fed creates interest rates by bidding on those bonds bid it up drives interest rates down. So that explains negative interest rates. Because you say, Well, why would anybody buy a bond at negative interest rate? Because they’re convinced that the Fed is going to come in and bid even more for it. They’re speculating on the price of the bond. They’re not buying the bond for the yield, there is no yield. They’re buying it knowing that the Fed is going to buy even more, and I could tell stories about that out of the news, but I’ll let that lay. Did that answer your question? Lee?

16:35
Yes. So manipulating, so when they create like a $2 trillion stimulus package? Is that their mechanism for putting cash into the system?

16:42
Yeah, well, they buy the treasuries and then the government spends the money. So there’s there’s what’s called a fiscal stimulus, which is when the government and the Federal Reserve and the government are not one in the same if you’re not sure about that read the creature from Jekyll Island G. Edward Griffin does a great job explaining it but the Federal Reserve A private banking cartel and they have a contract or a deal that’s baked into the 16th amendment that allows them to issue the currency instead of the Treasury. That’s why you have Federal Reserve Notes and not Treasury notes, or treasury bills. And they then manage the money supply theoretically, outside of political influence. They’re supposed to be independent. So this was what the system was set up in 1913. Of course, it’s like most systems changed quite a bit over time. And some could argue it’s become a bit corrupt and politicized, but be that as it may, the Federal Reserve prints the money and then they give it to the government by buying the bonds. And then the government puts it into circulation by spending the money. So monetary stimulus is the Federal Reserve, lowering interest rates, which is effectively meaning they’re going to print money to buy more bonds, but it has to be married to fiscal stimulus, which is where the government spends the money and puts it into circulation. And of course right now both of those things are happening. We have a thing Three and a half trillion dollar deficit. So we’re spending gobs and gobs and gobs of money. We’re injecting it directly into people’s bank accounts. And the Fed is printing trillions and trillions of dollars. In fact, I read an article the other day that the Fed has purchased 100% of all Treasury issuance, in other words, every IOU every bond, every borrowing that the federal government has done in 2020. The Fed has purchased China hasn’t purchased it. Japan hasn’t purchased it. private investors haven’t purchased it. Nobody’s purchased it. But the Fed net. I mean, there’s been trading for sure, but net net, the Fed has printed more money or as much money as bills have been issued or notes have been issued by the Treasury. So that’s it. That’s how the money gets in play. Now they’re buying ETFs you know, Bond ETFs are buying commercial mortgages. They’re putting money in through Fannie Freddie. So they do it by funding credit markets. The short answer, maybe I gave too big of an answer, but the short answer is they print money out of thin air, and they purchase debt instruments in the credit markets, primarily treasuries, but now money Other things, and then that money finds its way into circulation, we’re probably a hop skip and a jump before they start buying equities, stock ETFs and so on to prop up the stock market. It’s a full court press to prevent asset values from collapsing because that’s a natural reaction to a cessation of economic activity is asset prices collapse problems when asset prices collapse? It takes credit markets with it, because debt goes bad and that’s the big risk right now.

19:27
So when COVID hit and people lost a third of their portfolio in their stocks, and then it kind of bounce right back up. Is that a byproduct of just more money flooded into the system and not really what the headlines on Yahoo Finance says that, oh, people are sentiments getting better. What’s

19:45
the I mean, that’s ridiculous. I mean, get the Atlanta fed coming out going GDP is going to be negative 40 or 50%. They’re coming out with these unprecedented unbelievably horrible things. We got 40 million or whatever people unemployed, right? Unemployment rate. And then the Great Depression, there is no logical reason based on earnings for companies to stock to be going up. There’s nothing that looks good economically. The stock market though, has become a proxy or a barometer in many people’s minds for economic health. And it’s not true. And of course, it creates a huge amount of income or wealth inequality because the people who own stocks are the beneficiaries of the free money and the people who don’t are on the outside looking in just watching the cost of food and other things that they need go up. So there’s a reason why a lot of people are angry right now whether they understand the economics underneath the disparity or not, but this isn’t a left or right issue. This is a big government, big banking system, big corporation. It’s the big guys versus the little guys and the little guys get crushed when these types of games get played.

20:51
So right now we kind of establish that something’s happening. Something’s under the hood that’s smokin and I just want to kind of speak to little guy, the person listening on the podcast right? Now they’re going to hear that and they’re going to say, Oh my goodness, maybe I should put everything in gold or put cash under my mattress or dig a hole. Well, what’s the real play here, especially for guys who have less than a million dollars net worth, you can’t just buy gold, you got to grow your money to

21:15
well, gold is not an investment. And gold only preserves you against the failure of a currency. So I think the first thing is to understand the context and kind of the sequence of events as this thing rolls out. So we had a health crisis, whether it was real or perceived, whether it was overreacted to you can’t worry about that. The fact is, they shut the economy down worldwide and they’re opening it up very slowly, and maybe it’s going to be open it up a little bit and pull it back. The short of it is the health crisis led directly to an economic crisis and the economic crisis means businesses stop generating revenue, employees stop getting paychecks, which means that businesses and employees that have debts can’t To service those debts. So there’s been some temporary injections and some getting out in front with forbearance agreements and workouts and all this different stuff that’s been going on unlike how they handled 2008. But at the end of the day, those are temporary stopgap measures intended to keep the wheels on the bus until economic activity can restart. It’s kind of like being put on a heart lung machine until you can start breathing and your heart starts beating on its own. That’s where we’re at. We’re on life support, and that life support is coming directly from the Fed. So the economic crisis is the cessation of cash flow, think about having an economic heart attack currencies not flowing because people aren’t able to buy they’re not able to go out they’re hesitant to spend, they can’t make payments, right that that’s an economic heart attack. That’s where we’re at the next level is a financial system meltdown. And that happens when the banking system and the bond markets and credit markets begin to fail. There was some indication there were problems in those markets. For as we talked about in the repo market, they needed huge injections of cash. So there was already problems all COVID-19 was did was accelerate what was already happening and maybe provide cover for an extreme reaction that maybe they wouldn’t have been able to pull off outside of a very visceral, very visual, understandable crisis. People don’t understand financial crises. It’s all geek speak. But you can understand if you go out to the grocery store, and everybody has masks on and you can’t stand the six feet apart and all the restaurants are closed, all sudden, it’s like very conscious, hey, there’s a big problem here. And if you tend to believe the narrative, then you accept it and you accept whatever needs to be done to fix it. Again, I’m not saying that there’s a nefarious motive behind it, but I’m just saying people are a lot more forgiving. Of these extreme debts. Extreme spending measures extreme expansion of the Fed’s balance sheet because they are believed Meaning that we’re in the midst of an unprecedented crisis. And the idea is that extreme times, you know, require extreme measures. So health crisis to economic crisis to financial system crisis where the credit markets collapse, like we had a mini financial crisis in 2008. Here’s the next crisis in order to save the financial system. And to put the economy on life support, the Fed is printing and the government is spending trillions and trillions and trillions of dollars. So to give you kind of a historical perspective, in the entire history of the United States up until 2008, or the entire history of the Federal Reserve from 1913, up to 2008, almost 100 years, they grew their balance sheet to 800 billion after the financial crisis of 2008. By 2012 or so their balance sheet had grown from 800 billion to 4.5 trillion. They tried to taper and they tapered it down to 3.7. They raised it or tried to raise interest rates by 50 basis points half a percentage. And the result was the stock market started to retreat and the economy started to slow down. And so they realized that was going to be a problem. And so they lowered interest rates and they stopped tapering. Soon as COVID-19 hit their balance sheet has exploded to over 7 trillion. So it’s more than doubled since COVID-19. The last four months, the Federal Reserve has gone from 3.7 to over 7 trillion that’s all freshly printed money that is, is working its way into the system. It’s propping up the stock market. It’s keeping interest rates down when there’s tons of risk and people should be charging a risk premium, but you can’t because there’s too much debt in order to stop all that they’re printing dollars. Here’s the thing if you print too many dollars, and people lose faith in the dollar, now you’re Zimbabwe you’re Venezuela. Going back in history, you’re why Mar Germany, the only reason we’re able to pull this off is because we issue the world’s reserve currency and the whole world has to suck up. These dollars problem is if someone were to come along like a china and say, hey, we’ve got 20,000 tons of gold, not eight, or four, and we have a big manufacturing economy and we’re willing to back up our currency with gold, then everybody would move out of the dollar and into gold, and the dollar would collapse, all those excess dollars would come home and we would end up in America with hyperinflation.

26:25
And that’s the kicker, right? You hear all the stories about Zimbabwe and all these other countries have had hyperinflation. They don’t have that kicker that the United States has.

26:33
Yeah, I mean, our exorbitant privilege, if you will, is that we have the ability to print as many dollars as we want, spend as much money as we want. And the rest of the world has to provide it for us because there’s always a bid on the dollar just like there’s always a bid on gold. So people who are buying gold right now we’re buying it as an alternative to having something liquid that hedges against $1 collapse or Just a continuation of 113 year, a downward spiral of the dollar, right. That’s why people own gold, but you can’t gain purchasing power with gold, you only retain it which is worth doing. But when you pair gold with debt, now that’s different. Let’s say for example, I go pull a couple hundred thousand dollars out of a piece of real estate, and I take half of it and I put it into gold, and then the gold doubles in dollar price because of inflation. Now my gold will pay off all my debt and so the debt and the dollar go together. And the problem with going into debt to buy gold is you have to make the payments unless the thing that you go into debt with provides the payments. Now can you think of a vehicle that you can purchase with debt that actually provides the payments to make the payments can you think of one

27:45
of these couple of guys, they built their whole platform on real estate?

27:50
Real Estate and so what I found is that I’ve kind of crossed over and become this bridge between the gold community and the real estate community from a financial strategy. perspective and when you pair gold with debt and real estate, now you have a chance to outperform in an environment where the dollar is falling. And so that to me is the way to play this game right now because all of the pressure to support the entire global economy is landing squarely on the dollar

28:23
this website offers very general information concerning real estate for investment purposes every investor situation is unique. Always seek the services of licensed third party appraisers and inspectors to verify the value and condition of any property you intend to purchase. Use the services of professional title and escrow companies and licensed tax investment and or legal advisor before relying on any information contained here. Information is not guaranteed as an every investment there is risk. The content found here is just my opinion and things change and I reserve the right to change my mind. Above all else, do your own analysis and think for yourself because in the end, you’re the only person who is going to look out for have your best interests.

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https://youtu.be/2Fs7CYzzGrMhttps://youtu.be/4eVAskRng9Q

Source: Richard Duncan

Our government is giving huge tax incentives for those who invest into our country.

https://youtu.be/aqPWoki-MP8https://youtu.be/FTj-nJEGi-4

What is making the stocks go back up?

The country effectively shutdown for half of 2020, unemployment is high (expectedly so with a slow ramp up), yet the stock market is on track to be at all time highs by the end of the year?!? WTF?!?
Call me crazy but this sounds fishy! 🐟

In case you missed it at least 3 Trillion dollars of economic stimulus has been flushed into the system.

Could this be what is pumping the stock market with fake money? 

When is the air going to be let out of the stock market again?

Do you remember how you felt back in March 2020 when stocks lost a third of it’s value? Don’t forget that.

The Cares Act now allows for a 100k withdrawal from your 401k or TSP penalty free till the end of 2020 and possibly till you file your taxes in 2021. This is the time to get out of frothy paper assets and into real hard assets.

Never forget! Do yourself a favor and get out of fake assets and into real assets that produce cashflow.

https://youtu.be/2t6t4Lw5Mu0https://youtu.be/UrSzupI0H28

Why real estate? Is this another 2008?

The great Recession of 2008 was a systemic failure in the real estate market caused by bad mortgages, rampant home flipping and speculation, and overbuilding all contributed to the last financial meltdown.

NINJAs (No income no job no asset) were being approved for multiple home loans on the belief that housing prices would just keep going up and these loans were packaged off and sold as Wall Street derivatives.

https://youtu.be/iDcbUAh731s

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This time around, there is a growing demand for affordable rentals housing due to increasing population, less homeowners, and the constant separation of the haves and have-nots 🙁 the much-stronger housing market isn’t the driver of the crisis—it’s the effects from COVID-19 a medical crisis. It is a true Black Swan event.

What Could Cause the Stock Market to Fall?

  • A severe second wave of the Coronavirus
  • Insufficient additional Fiscal Stimulus (which would make the bad economic fundamentals even worse)
  • The possibility that the markets have already priced in all the impact that the Fed’s new money creation will have on stock prices
  • If the Fed signals it will create less than $120 billion a month, a new “taper tantrum” would be likely to cause stocks to plunge
  • A political crisis in the run up to or the aftermath of the November Presidential elections
  • Any number of other unforeseen developments

Is this a time to sight tight and not invest?

You could do this and make 0% on your money or load it into deals that make sense, tie up good long-term under 4% debt, and hedge against inflation as the country looks for revenue sources such as taxes or debt minimizers with inflation.

I have taken a “load and stabilize” approach to my investing where I…

  • Load into some good deals (one at a time or every few months)
  • See them stabilize (harden into recession-proof after a few months)
  • Repeat the Process

Some may even see this as the “dollar-cost-average” approach which is similar to what were taught in stock investing 101.

I have seen pricing on assets increase every year since 2009.

I felt what you are feeling back in 2012… if I would have stopped I would have missed out on another great run!

I felt what you are feeling back in 2015… if I would have stopped I would have missed out on another great run!

I felt what you are feeling back in 2018… if I would have stopped I would have missed out on another great run!

After seeing this phenomenon happen for a few times and seeing a lot of people who never got started, I realized and had proof of concept that as long as I go into conservatively underwritten deals that cashflow I am pretty much untouchable or going to do a lot better than waiting on the sidelines.



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Collections Post-Covid in comparable Assets we operate:

COVID19 came and I was a little worried to see how April and May collections were. But collections remained strong and came down only 2-8% across the 3,500 unit portfolio. In some assets, collections improved! Commercial real estate pricing was pretty much unchanged and experts say that at most Cap rates went up only 0.25%. (Excluding commercial retail storefront and short term AirBNB type rental who got killed)

Now, you can see where I am coming from in my neutral-aggressive stance.

Combine that with the fact that I am around higher level Accredited investors these days who have seen the ups and downs and they say NOW we see the separation between the faint of heart and those who take their family’s  legacy to the next level.

Of course… don’t be silly and choose investments in good sub-markets and have sound underwriting to ensure cashflow.

Warren Buffet said “be fearful when others are greedy, and greedy when others are fearful.”

John D Rockefeller said “The way to make money is to buy when blood is running in the streets.”

The Fed has pretty much doubled down and planning for additional stimulus plans which is ensuring the nation moves past the current COVID crisis with Infinite Quantitative Easing commitments through the year 2022 and beyond. Get on this wave now!

Source: Richard Duncan

https://www.youtube.com/watch?v=M8jJ2iiDMes&feature=youtu.be

We were able to get a lot of interior footage on Harbor Village units on this last trip out to Huntsville!

Also included are drone shots of all recently acquired properties.

2nd half of video is Garden Place and upgraded and non upgraded units in Treehaven which are our other class C properties.

Now what?

Let’s reconnect, huddle up, and get a game plan for you as this is we start to build a legacy!

If we have not connected use this link to setup a time to chat that works best for you.


The population is still going up…

Between 2010 and 2017, population growth averaged 5.5% for the US as a whole. Delaware boasted the highest growth rate, 15.3%, over these years. A state with a relatively small population, however, needs fewer new residents to achieve such a high growth rate. The double-digit rates recorded by Texas (up 12.6%) and Florida (up 11.6%), both high-population states, are therefore that much more impressive. There were three states that posted population decline between 2010 and 2017: West Virginia (down 2.0%), Vermont (down 0.3%), and Illinois (down 0.2%). – ITR – 19.02.28 

Since I feel we are in the 9th inning of an 11 inning ball game, I decided to pass on a recent Class-A apartment deal in a secondary market.

Here is my thought process…

First off, Robert Kiyosaki has a saying: “There are three sides to a coin.”

People like to argue that it is either a good time to buy or a bad time to buy. For example, they say that “MFH” is overheated or commercial is getting killed by Amazon and e-commerce. I think these are mental justifications by tire-kickers who are scared to act. I mean really how many of these people are under the accredited status (not sophisticated) or have not obtained their “Simple Passive Cashflow number.”

Lane Kawaoka
Simplepassivecashflow.com
Sophisticated investors still trying to grow on the edge of the “coin.” They buy deals out of the reach of amateurs due to the amateurs’ lack of network/knowledge. These opportunities are undervalued, with undermarket rents, with value-add opportunity. Sophisticated investors are patient; they don’t stray from standards that force them to get crushed in a market correction. (Cashflow from other investments makes this possible.) They invest following the macro- and micro- trends and don’t gamble on gimmicks such as guessing where Amazon’s next HQ is going or where the hurricanes just drowned a market. The trouble is that an unsophisticated investor or an outsider (in terms of having a poor network) is figuring out which of these deals transcends the two sides of coin and is on the edge. Stating the obvious (though often ignored by many)… starting out as an investor is going to be slim-pickin’s due to the lack of network. But you have to push through this rough part. You are not able to decode the noise until after a few deals or having someone mentor you.

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With that out of the way let’s continue…

Real estate is one of the best risk-adjusted investments out there. In private placements or syndications, we are able to crowd-invest in larger & more stable assets while maintaining control with operators who are aligned in our best interests. By going into a project properly capitalized with adequate capital expenditure, budget, and cash reserves, you are able to remain steadfast through softness in the market where rents stagnate and vacancy decreases.

(If you are starting out you should start with turnkey rentals even though they are much more 🎥 volatile)

 

Pause there. In troubled times what happens?

People lose their jobs and there is a bit of shuffling, let’s take a look at different the different property classes:

Property Class 1
Property Class 2
Property Class 3

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Yea, people need housing, but there will be some vacancy as some people will lose their jobs and be displaced elsewhere.

Following this train of thought…

In a recession, the high end or class A will be hurt the most. It is Class A workers who fulfill much of he discretionary services.  We are already seeing softness in rent by rent decreases in class A of the high-end markets such as Seattle and San Francisco.

For example a once $1,700 one bedroom is now $1,625.

Most deals model for 1-5% in annual rent increases or escalators. Other than the Cap Rate to Reversion Cap Rate truck, this is the second most manipulated assumption in investment modeling.

In this unfortunate but natural event, the A-Class renters will fall to class B housing. Some homeowners will even lose their jobs creating foreclosed investments for smaller investors in the single-family home scale.

What’s happens to the B and C class renters?

It is likely that they will also lose their jobs at higher or lower rates, but that is up to debate. In the same fashion as the A-Class renters, the Class B/C renters will downgrade to make ends meet.

I imagine this similar to a game of musical chairs (where the chairs are getting crappier and crappier). Or it looks a lot like the natural housing shuffle in the summer near colleges with people moving in and out. The landlord/investor is likely to see increased vacancy.

Multifamily occupancy varies from 85-95% in stabilized buildings. Some markets are hotter and some are colder. It is important to use the correct assumptions depending on the markets. For example, Dallas typically sees 92% occupancy while Oklahoma City sees 89%.

One of the reasons we love multifamily is because of the decline of the middle class and the need for more scalable workforce housing. [And those millennials can’t save] The population is increasing too.

[I like to use this image cause I make fun of millennials… this is the millennial version… cause they can’t seem to afford (or want) to own anything]

When I travel to Asia (which I see as a more mature society, for better or worse) there is a much larger wealth gap than in the USA.  People are living in cramped apartments or very rare single-family homes. And they are driving a Mercedes on barely enough money to share a family moped. This is the trend that the USA is following.

As with many things, you need to look past the headlines and the general data. Instead of analyzing a whole asset class, as the media likes to do, let’s break down vacancy in terms of classes.

Here are some typical vacancy rates (notice the spread).

Class C 4.5%

Class B 5.0%

Class A 5.5%

Why? Because there is just more demand for the lower class properties because there is more demand than supply.

Many times the business plan is the be the “best in class.” For example, businesses want to be the best mobile home park or best high end remodel because you attract the richest customers in that niche.

I like to monitor the number of new units coming online because that is your downward pressure. It is rare that new builds are for Class C or Class B.

The micro-unit trend is an attempt to build for Class C and B tenants due to the need. But often the numbers don’t make sense when you have purchased the same building materials and mobilized the same crews to build a Class B asset as opposed to a class A asset.

Let’s go through that Armageddon example again.

Class A will have to drop rents severely and see great vacancy.

Class B and C will see vacancy come up too as people are losing their jobs but should see some absorption from ex-A Class tenants.

Mom and dad will also see some absorption as deadbeat son or daughter move back home.


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Note: one can argue that class A+ will not be affected at all which I believe is true. That’s why we are trying to invest right to enter that untouchable status.

I remember when I sat through the same economic presentation at work from 2010-2014. The sentiment at the time was that it was going to be an extremely slow recovery. It makes sense that the length between the 2008 recession and now is very long which is why I mentioned an 11-inning ball game.

RTV ratio 1
RTV ratio 2

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This is why I took a step back from some pretty Class A deals because I asked myself the following questions:

1) What will happen to the rents if IT should happen?

2) Is the modeled 90% vacancy rate going to get blown up?

Class B and C apartments in strong submarkets will perform best over the long term. If you ensure the loan term is long enough so you don’t get hurt then you should Outlast the bumpy ride ahead.

Beware of the self-destructive behavior of not investing. You know what I mean… are you someone who self-sabotages?

Understand the micro and proceed if the numbers make sense.

I have to admit Class C and B assets are boring but work especially in a seller’s market because 1) they cashflow and 2) have a forced appreciation value-add component to give you levers to pull in tough times.

Again going back to Mr. Kiyosaki’s three-sided coin quote, investors go through three stages:

Stage #1

Go into MFH… Duh (I did well at single-family rentals let me try apartments)

Stage #2

Be a contrarian investor so go into other asset classes most decent investors are afraid or don’t even know about

Stage #3

Do special projects such as Affordable house taking advantage of tax credits or specialized operators (ie take abandoned big-box space like movie theaters and convert to the latest consumer needs)

Experienced investors who were in the downturn in 2008 say its interesting that the sentiment in 2006 was exuberance that it was going to keep going up. Now in 2018 the sentiment is fear… This is a good thing. Remember that in this market we still have:

  1. Historically low-interest rates
  2. Historically high rent increases (not 8% anymore but still 2-4%)
  3. Historically low vacancies

Things to monitor if you really need to geek out on numbers:

  • 2 and 10 yield t curve. When that crosses you have just-a matter do time. Because its a measure of fear.
  • Automation and AI – huge shifts in jobs. People need to work but technology has been increasing since the beginning of time.
  • Wage growth
  • Bankers prospective: how deals are getting funded and by who (institutional or dumb capital)

There is a saying out there that real estate is location specific. However, when I invest in more stable asset classes it’s a National market based on the economy both USA and international. When you invest in a micro-economic fix and flips then it’s location specific. When you invest in commercial assets it’s with more stable tenants and based on the aforementioned larger economy. How affordable is rent really? – “During the same span, median effective rent nationally has risen by about 26%. That rent appreciation pushed the median monthly rent nationally to around $1,220 per unit to end 2018. With the US median household income being just over $62,000, this rent accounts for 24% of monthly income. Using the typical benchmark of monthly rent being 30% of monthly household income for affordability, a margin remains for renters.” – [If you stick to using 2% and under rent growths and stay away from Tier I or Primary markets you should be fine] – ALN 19.02.24 A lot of people point to the Yield-Curve as a big indicator. In the end, I do believe that real estate will go down because of consumer instability. But if you have stocks you should sell those before even thinking of lumping it into cash flow type rental real estate. 
“The guy not investing right now and hoarding cash (with net worth of under $1M… because if you can live off your cash flow then cool you can do what you want) is just afraid and lacks deal flow. Its like the person who complains that there is nothing to do during the weekend in LA (insert city with a vibrant scene) when in actuality they don’t have any friends (lack dealflow)… and by the no one likes (has a bad attitude and that person who makes excuses”

Lane Kawaoka
Simplepassivecashflow.com
 Doomsday theory: Everyone talks about national debt but we are far far behind debt to GDP ratio that of Japan. When Japan hits the wall lookout. Here is my theory… watch out post-Japan Olympics when they have to let loose the belt (after a holiday period of excess calories). Leading up to a period where Japan has to save face while they are in the Olympic spotlight (and I’m not being racist cause I am Japanese and it is a thing). I don’t have the latest data but Japan is at around 250% where the USA is at 100%. Household debt KPIs: student debt, car loans, housing debt. Which is why I like these assets that are used by the poor and middle class! #RenterForever Lane’s theory: I’d rather be in deals that cashflow today that do better in a recession like Class C and B assets. Say it cashflows a 8%.The guy who is stilling on the sidelines with the “hoarding cash” mindset will lose because they will make 0%. 


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I, on the other hand, might dip from 8% cashflow to 4% cashflow. On paper, I might be in a market with compressed cap rates but hopefully, I have forced appreciation potential if I really needed to sell – the counter move is to get 8-12 year debt to effectively bridge you to the next side of the market cycle. In the meantime you cashflow 4% which is 4% more than the “hoarding cash guy”. In addition, remember back in the 2008 crash. 2009-2012 people did not know if that was the bottom and it was so hard to close deals in that Phase IV (see below). “Hoarding cash guy” in 2009-2012 and the few years after the next recession will likely be in the same clueless situations. Wouldn’t you like to be in solid Class C and B assets that continued to cashflow?!? 4% x 4 years is still 16% ahead! Now if you are “hoarding cash guy” with no deal flow then I get it. Saving cash is the best thing to do for the guy with no deal flow or does not know how to run the numbers. I guess everything does suck. 

SPC returns
SPC returns 2

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[Investors are chasing for decreasing yield these days] – REI.com – 19.03.4

Cap Rates
Cap Rates 2

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[Sophisticated Investors know interest rates and caps go up and down together and their money is made in the delta between the two] – REI.com – 19.03.4

Of course, all the Pro-Apartment publications will say this: Get Ready: Recession-Proofing An Apartment Portfolio – National Apartment Association 19.03.7

But enough of this doom and gloom because most gurus out there call recession everyday just so they can have Tweetable content. And they make a living selling subcriptions to their $79/month newsletter. But we are better than the average investor! And understand that future softness could very well be slowdown before the next great bull market.

Take care of yourself!