Tag: podcast

Timeshares w/ Alexandra Olson

https://youtu.be/IvBJDK9LB68

Hey , simple passive cashflow listeners. Today, we are going to talk about giving up your time, share, why they’re not the best of investments and what the process is to unload them. And I personally am always looking to take advantage of a distress. Seller, whether it’s an apartment building or I’ve interested in these timeshares to buy, but not from the the first buyer, but the second owner.

I’ll get into this and this kind of goes into the whole hobby lately. I’ve been having buying cars lately I’ve been realizing it’s not the greatest to buy a car new, all this, because of that, you take that big gut punch as you drive it off the lot. But as you, if you pick up a one to two year old car, you ride that decay curve down and then you sell it at some point before the warranties expire or shortly thereafter of you can capture a low cost of ownership.

And it’s very counterintuitive to the course. But as we’ve seen through the first two or 300 podcasts, passive cashflow land things normally are, but yeah. Why don’t you introduce Aleksandra Olson, who is from. The you guys want to check this out on your computer to give up my time, share.com, but welcome Alexandria.

Thank you so much for having me. Yeah. So I’m from give up my timeshare. We help people to get out of their timeshares. And we also, of course always sourcing a buyer for that, seller that is distressed, that wants to get out whose kids don’t want their ownership. yes, we are uniting sellers and buyers.

Some of them are taking over ourself and that’s our business. Friends don’t let friends buy timeshare. That’s a pretty kind of a crummy investment. It’s scabbing how they do things, right? You see them here in Hawaii and every time I go on vacation, you got like people handing out flyers and like trying to trick people into talking to them, especially at Las Vegas, by these timeshares. Let’s go through the process. So young couple, they get that booze loaded, the buying this thing up. How does somebody really end their time share? What’s the process like? First of all, if there is no mortgage on the property so it’s free and clear the maintenance fees are current.

Then it comes down to a matter of finding a new owner. There’ve been a lot of scams that have emerged about trying to help people say, Oh, we were frauded in the purchase or, all these different things. But what it really comes down to is this is deeded ownership. This is real estate. So you do need to find a new buyer just as you can’t walk in the street and declare, I don’t want this home anymore.

The property tax, bill and HOA fees and things are still gonna find you whether or not you’ve declared that to the world. It’s the same with a timeshare. It is a deed and you need to find a new buyer and that’s really the trouble is that the resell market has diminished incredibly in the last five to 10 years, just because of the different travel options that have emerged.

And just so that we can pinpoint it because every time people ask me why do you. I’m a real estate investor. I have a time share. I’m like, dude, that’s not, you’re not an investor. You just got suckered into a deal, but I can never explain. I can’t explain to myself. I just walk up upset and frustrated.

My understanding it’s because when people buy a timeshare, they not only is it an expensive and when you figure out the cost of ownership that you do, like a life cycle cost analysis, it doesn’t start a good deal. But also you get into these nasty arrangements where you have

annual maintenance fee. And then like you have a termination fee since they like negative equity. If you can explain that a little bit. Sure. It’s ultimately a timeshare was once sold as an investment and there was a resell market now because of Airbnb. VRVO the internet. Consumer confidence and being able to plan a trip short notice and having a condo, with accommodation, similar to the timeshares where you have a kitchen and space, there’s just no resale market for it.

That’s gone away. So what you have is it’s basically a prepayment of vacations and it can be really quality vacations. I, I actually believe there can be some value in the ownerships if you use them. Now getting back your original upfront investment that’s, as you’re speaking to them, With auto purchases certainly buying resale would be, much more advantageous.

You don’t have that 30 grand or whatever to recoup from the upfront. It can be a good value. I always tell people at our seminars or whatever, don’t feel bad. 10 million homes in America owned timeshares. And, you bought this because you wanted to spend time with the people that you love and a beautiful place.

And if it gave you those good memories, you probably wouldn’t trade those for the money. That being said, It’s really, not a good investment because at this point, and you can jump online, make reservations for anywhere in the world for this weekend and pay less than what the maintenance fee is.

In most cases. And that’s a bash on timeshares that much, but I got a buddy. See he bought him because it forces him to go on a vacation. If not, they never go on it. And, for. For kind of higher net worth families that are very tightly personality workaholics. It needs stuff like that.

Absolutely. If it ends up being the catalyst to create memories with the people you love. That’s awesome. And that is a great reason to look at owning one. Really, for probably most of your viewers, the maintenance fee annually is nominal, but if it does, force that commitment to doing the trip and knowing, okay, we have a week we’re going to do every year as a family.

Then it comes down to just picking something that’s going to offer the most flexibility and sometimes value. Isn’t the most important thing. But the economics have shifted, like you said, right? Because people can just go on Airbnb VRVO et cetera. Just book it. And it’s not like hotels, they don’t have availability.

Let me show you. You have to pay 600 bucks a night care on Hawaii, but there’s no lack of, I. Right. And, at the same time, like doing so many vacation rentals with timeshares, I definitely see that, if you are willing to understand the system, there’s no learning curve on the internet, that kind of thing.

Actually, most times your owners are older. Rather than young couples, it’s typically retired couples that now want to go and travel. They want to provide trips to their families. It’s not to say that young families don’t buy it, but more commonly the consumer’s kind of a baby boomer type. Just less educated on, what’s a good purchase and they just don’t have lack of information.

They just don’t care. I don’t work the system, so many ownerships that we take over, we’re able to get good value out of, book weeks in Hawaii for the equivalent of about a thousand dollars of costs. You’ve got to know where to click online and have the patience to do that.

What’s the process, somebody wants to sell their timeshare and then we’ll skip over to, I think most of us. Don’t really want, we want to buy timeshares from these distress buyers or sellers get into that at the end, but what’s the process if somebody wants to unload it, so if they want out of it what they would do is I recommend that everyone first contact your resource, see if they’ll let you out for free. That does happen on occasion, usually with, higher end brand so explore that option first, plus, you want to know that, you didn’t go and pay someone to get out of it when you could’ve gotten out of it for free through the developer.

That would be step one. If that’s not the case, then you know, you need to go through a company that can secure a buyer for you. And I would encourage everyone to be very careful and not pay anyone up front. And I’m sure that your viewers are certainly a little more savvy than many of the people that have fallen victim to the scams.

But in general, don’t pay anyone upfront. If a client comes to us, all we’re going to need is the deed. A copy of the deed. If they have it copy of their IDs, copy of a recent maintenance fee bill, we can then price it out. We use a calculator, so we already have pricing preset for every resort in the world.

And get them a quote within minutes, and if they want to move forward, we send them an e-sign contract open escrow and it follows a normal real estate process. So we’re never paid until the close of escrow and we don’t even collect payment. It all goes through the title company. So it’s a very secure transaction and.

A guaranteed one. If we are not able to secure a buyer on our own, then we’re going to transfer it into our own name and turn it into vacation rental. It’s a guaranteed quick process. And what our clients are looking at is, Hey, we don’t use this thing. We’re paying for it every year anyway. And then, it’s going up at six to 10% a year.

We’re just throwing money away. Let’s, basically stop the bleeding . So what’s the normal commission structure like, with real estate. No deals. It’s 6% is usually the commission. And then how does it, what’s the normal range, to keep in mind.

 

 

Are you asking, what do we charge? Two, three to five years of maintenance fees is a good rule of thumb. The exception, there are some outliers to that which would be resorts that have very high transfer fees or require prepayment of two or three years of maintenance fees. Something like that.

I do have a webinar on our website that explains why we have to charge in the first place, all the scams to watch out for, if you’re just starting to explore how to get out of a timeshare and really covers the entire process. Yeah. What’s one of the better ones. The less nasty wants to get up and what are like the worst.

Okay. Probably the simplest would be a straightforward deeded week what’s happened over the last 10 years in the industry is a lot of resorts have moved to a, trust-based like it’s a real estate trust where they now, upgrade all the inventory into that trust. And it’s.

It’s points that the client is using collateralized by, this real estate trust. Those are a little more difficult because it’s basically a membership and you have to have the resort approval before you can transfer your title. So I am always like that, I think. Yeah. Disney your diamonds, your Wyndham’s, the big players.

And I prefer to deal with. Straight deeded, old legacy properties where someone owns week 42 and unit 10 that’s, always the quickest and easiest transaction that being said we’re familiar with and pride ourselves on being the best in the world at, getting through the process with whatever property it is.

That’s, how we’ve built. Our whole business model is around not getting paid until we’ve completed the transaction. And it has, of course encouraged us to be the best at getting it done. I’m not too familiar with timeshares. Normally they cost, what about 50 grand in cash in the beginning?

You can’t finance it, right? Average is about 20,000, you can finance usually at about 18%., and then they’re putting in 20 grand, the maintenance fees are about how much for a year is very typical. Okay. So for me to dump my 20 grand timeshare that I might have access to what, five, 10 days out of the year or something, correct?

Yeah. Typically seven days a year is what that will get you. I would have to pay maybe five grand to dump it and then get the 20 grand back or be a little bit more. There will be no getting the 20 grand back. And that’s the hard pill to swallow is that this is not an investment that, has any return other than in memories.

So if you used it had some good times great. But whether or not you use it, you’re paying for it forever. And there is no one on the other side, that’s going to pay for this repeat at this point. Okay. So what if I want to buy one of these things? How much could I buy one of those four? There are thousands of timeshares online for free?

Is that available on your guys’ website? Or how would I get for this? Yeah. This is actually never really come up in this kind of a setting. We don’t advertise it in that way. We do actually use like a shared Google sheet that will list all of the available bums on. So I guess the thing would be if someone had interests that was, listening to this, or, I can certainly send you.

Thanks for that. And we have seen, over the last few years, some nice portfolios be sold or, taken over by larger vacation rental companies. And if you want to work at, you can do well. You can make 10, 20% above the maintenance fees on these ownerships and sometimes much more.

It’s just a matter of, a lot of times, our owners don’t want to become an expert on vacation rental to deal with their one week a year. Now, if you’re doing like we do where you have a whole bunch of them and you’re making a business out of it. Yeah. Of course you can do well. And we are happy to give them away if there’s interest.

Our business model is, to get paid for getting someone out of it. We don’t worry about trying to money, reselling them. If I wanted to stock something here in Hawaii, just use an example like that, that somebody had previously paid 20 grand for maybe paying five grand a year. How much would I have to pay to acquire something like that for myself?

Oh, for free actually paying rather than the buyer in these transactions. And that’s what can be, a little confused. It’s so unusual, right? There’s not many things where you pay to sell it. And it could be like, not want to have it makes me not want to have it now. It’s like a, it’s like a monkey on your shoulder that you get for free.

And now you have that monkey. There are certain ones that, can be a good value. And if you’re going to use them great, we get a lot of Hawaii inventory. It’s a specific week, in a specific unit, if you’re going to go and use it, to pay 800, a thousand dollars for a week in a condo on the beach in Hawaii is amazing.

I don’t know. It’s just that these folks might live in Nebraska and aren’t wanting to fly far because of COVID now. And they’re looking at, Hey, we didn’t go the last couple of years anyway. And we paid, let’s just dump the thing. Yeah, I’ll definitely get on that list and I’ll be stocking it a little bit.

Cause I’m like one of those people that I need that motivation to actually spend money. If not, I just keep it in my bank or so it might be good for folks like myself with our listeners. Sure. To make a commitment, to doing something, With your loved ones at a specific time of year that you can plan around.

If that’s something that is of interest, we’re happy to, give you any of the ownerships that our clients are trying to unload. Anything else that you think listeners would be interested or you get very commonly asked on this topic that you think need mess. Probably, the biggest thing that I always want to communicate is to be very careful.

Unfortunately, the timeshare industry is not very regulated. Especially on the exit side of the industry, getting people out there are almost no regulations. And so there are a lot of scams, any kind of situation where you’re, bringing money to a transaction. Having to pay up front. If it’s not a legitimate title company, just stay away from it.

There are unfortunately a lot of bad players in this space. And I would just caution anyone to, do a little background research, look someone up on BBB, make sure they don’t have attorney general complaints because there’s very few out there that don’t. Yeah anybody can get on BBB.

I’m on there. I have an a plus rating, but just joking. But yeah, if you guys want our reach out to Alexandria, you can go to give up my timeshare.com. Yes. Any other, that’s probably the best way to get ahold of you guys the best way or a quick Google search, Alexandra timeshare, I’ll pop up, watch our webinars that will give you a lot of background information.

Feel free to reach out. If you are wanting to, have access to what properties are we in loading right now, we can definitely hook you up if you want to step in as a buyer. Or if you have one that you want to get out of then definitely start with watching the webinar and reaching out.

And I’d love to chat with you about it. Hey guys. So if Hey, no shame. If you bought a time share, we all make mistakes in the past. Luckily you can unload this monkey off your shoulder to somebody else be a, this means, if you guys have any friends or family members that need this information, feel free to pass this along a little hint, hint in there for you.

But Hey, if you get rid of that $5,000 a year payment, right? That’s a rental property of four years, or if it’s another syndication deal I think once you realize that there’s this alternative investing world out there, you start to look around the house in the points and the couches money all around.

You start to look to really deploy that money and you got a lot of dead Basie equity or Astro going out the door, one of these timeshares and you do the math, right? If you’re investing, making 10, 20% returns on your buddy with a tax advantage basis, Who cares about a $500 hotel timeshare that you get access to five times a year.

You could probably go like baller status and the Maltese for a thousand dollars a night, right? With the cash that you have in cash is King cash gives you freedom. Timeshares. You’re just stuck in that arrangement, but thanks for listening guys. Make sure you join the investor clubs and we’ll pass the cashflow.com/club.

All right. We’re back guys. Now it’s time for a little real talk with Alexandria as my personal questions here, which I use my podcast to ask my selfishly questions. All so if I’m thinking about buying like a Lonnie, just use that as the example, which is the Disney berserk here at Walker.

I got to pay the annual maintenance fees, which is like five grand a year for something like that once. Oh no, probably about 1200, a hundred while. So 12 pay 1200. And that gives me access to the property for how many nights a year you think, it will depend on this time of year, what week it is, what size unit, but around, a thousand to $1,200 for a week, pretty much anywhere in the world.

Okay. And of course I live here in Hawaii, so it’s the same season every freaking day out of the year. And I live here. So that would be ideal. So maybe I’m just trying to get a price for a day in my head, so is that five days? I find with doing the vacation rentals, we end up averaging around 80 to a hundred a night for what our cost is to make a reservation.

Okay. But this Alani thing is really exp, to stay there is like $600 I could think is a complete rip off. I’d never do that, but that’s what they charge. So that’s $1,200. Basis, they can charge $50,000 up front for a week at a place like Aillani because, then it’s all about the, Oh over the next seven to 10 years, you’re going to break even, on, because you’re only paying a thousand a year and, so you’re saying if I pay like my maintenance fee of a couple of grand, for that one, maybe. I would be able to stay there for five nights or something like that. So an average night of 200 bucks. Yes. It would be unusual in timeshare to ever even average paying $200 a night for somewhere.

Okay. That I can do. Cause I have to take these quarterly break out to do like personal goals and stuff like that and family stuff. This would actually work to that, yeah. And if know when you’re going to be doing those breaks, for the planner, for someone who’s organized plans ahead and schedules and is fine planning a year out, two years out, time’s just going to work very well for, that’s just not how people plan travel typically anymore.

And that’s where, there’s been this imbalance where about 80% of timeshare owners want out of their ownership. Yeah. And for you guys, listen, this is where it’s important to like the imbalance, right? So many people in California, Hawaii, Seattle, New York, they all think the buy their house.

This is why I see do the complete opposite. The imbalance. There’s so many desperate landlords out there that would love to rent their house for two to three grand to somebody like you guys. That’s where you guys make money on the Delta, just like in this circumstance. Cool. I’ll I’m going to try this out and, maybe update you guys on a future show.

Jan Miller – Paying off Student Loans

Today’s podcasts are going to be talking about paying off student debt and give you a little bit insight if for a lot of you guys are, have that stupid debt or more importantly, I guess if you got kids that you want to send to college, one of these days now colleges and everything, but I think a lot of us are parents.

I’m a parent myself, want to give our kids a leg up in that category. Been a dad here for about a couple of weeks. You don’t quite see the bags under my eyes . We’re past the first three-day period where we uh, yeah. Punched in the face and you realize you’re not going to sleep for awhile.

But now two weeks in, I know what to expect and it’s kinda like losing the first game of the playoffs and a know how things are gonna work. That’s where we are at today, but things are good. Things are good here.

For those you guys have young kids or expectant, new mothers or fathers, check out the infoPage@simplepassivecashflow.com slash baby got a lot of parenting advice. Shouldn’t you focus? And got a little shopping list there. You probably don’t need all that stuff in that shopping less. We were fortunate enough to get a lot of hand-me-downs for a lot of things from other people barely bought any clothes since everybody dumped their old baby clothes on us.

The only things we had to buy were, I could probably count on one hand, Chris. All these baby carriers, know what this stuff is for quite honesty, we don’t have to buy a lot of this stuff and our strategy is the buy it use.

Most parents are freaked out and they don’t want to buy you stuff, but, I do it where it makes sense. And I like to go to a north shore. See what the cool baby things are, then check it out at Facebook marketplace or Craig’s as well. I stay away from Craigslist these days.

Cause they’re a bunch of weirdos on there. I like to be able to vet the people that I’m buying from. But yeah, we bought one of those snooze cribs from Facebook marketplace magically rocks your kid to sleep with an app. It also, you strap up and there’s a steep on their face.

And then I got one of those that pneumonia and not one of those fancy baby strollers that makes you look really cool on Facebook marketplace for like half price. Other than that, yeah. We got very fortunate that a lot of cook gave us a lot of this stuff as my kid squirms in my arms here.

But, think two weeks into it to this and fun or see. It gives you another why you’re filling up all this passive cashflow, and really start to build that legacy right after all. It’s not that hard to get financially independent, look that passive cashflow, most of our clients do it in a decade or less, the bigger ideas of what do you do after that.

And how you build that, see, and I think that’s where the next chapter is full passive tasks. It’s going to be a headache. It stays as we’ve been having a lot of conversations about this and our after hours of our family office, a Honda mastermind breakout groups where, this is where a lot of the conversations go a lot more of these soft topics that how to simply just pay off your student loans or where to get the best rates on the Heliox.

For example.

But yeah, just wanted to let you guys know I’m alive and well. Babies. Well, Mom as well, and check out those baby tips@simplepasacastle.com slash baby. And enjoy the podcasts.

Hello, simple passive cashflow listeners. Today, we are going to talk about student loan, forgiveness programs, how do you pay off your student loans? The best way a lot of us unfortunately, or fortunately went to college for way too long and saddled with all this student loan debt. Now I am I was born in the 1980s and I was lucky enough to have a good job and I paid mines all off personally.

But some of the kids out there, man, I feel sorry for you guys. Cause it’s a Hutch several hundred thousand dollars, at least, especially a lot of dentists guys and doctor guys out there. So this podcast is going to be for you. We have a young Miller who is a student loan consultant and we’re going to be talking all about student loan.

Tips and tricks. How do you pay it off? What’s the best way, Yon once you give us some background on how you got started doing all this. Yeah, sure. I actually started working directly for several different loan servicers back in 1997. I worked for Nelnet and fed loan servicing, and also worked on the private side for discover financial and Citibank

and saw the student loan world from every point of view on, I worked in 11 different departments during that time. My career eventually went into the brokerage industry as an investment advisor at Morgan Stanley and financial planner and advisor there. But all the while helping people on the side with student loans, everybody, I knew Mike dentist might.

Brother-in-law whoever they all had student loan debt. And so I would help and eventually started helping people on a more professional level. While I was working at Morgan Stanley, not for Morgan Stanley, but on the side. And eventually the demand got so big that I retired from work and Stanley in 2010.

And made it my sole focus. I’ve been an advocate for borrowers for student loans since for the last 20, some 22, 23 years. And I’ve been at a professional capacity doing as my sole focus since 2010. And yeah, I’ve just been helping borrowers manage it, using my financial background, understanding and conjunction with the student loan expertise and knowledge of how the system works.

Both from an administrative level all the way up through the regulatory level, as well as just the practical level of how to apply that to your student loan repayment. That’s what I’ve been doing for the last decade. A little bit of backstory here. Why are we talking about this subject?

I was asking you guys in the community. If you guys want to join our Facebook group, let me know. And we’ll add you to that private group, what are the problems you guys are facing out there as high paid professionals, looking to invest your money?

And this definitely came up as one of them. I always asked you guys, who are you working with right out there. That’s the power of our community. And if you want to join the group, go to simple passive cashflow.com/club. Or if you want to join the inner circle, that’s what the incubator and the mastermind are for.

Your name came up beyond I got to admit a couple other guys names came up too, but I didn’t want to work with them because they wouldn’t return my phone call. I want to talk to the principal, right? Like I don’t, there’s a lot of people who do this, if you Google it, there’s a lot of people that spend a lot of paid advertising on this stuff and have very pretty websites.

Not saying that yours isn’t good, look, this is just my brand. So this is simple passive cashflow brand. I always go off of value, right? Like I’m not going to go to a CPA that charges me 10 30 grand that do my taxes. That’s ridiculous. Nor am I going to go to like H and R block or do it on triple taxes for goodness sake.

I’m looking for value and think Yon fits this this category here of somebody who. Offers a very good service and charges a fair price for it. Why don’t you let’s go over like a typical client? Cause I think. And the one we were talking about earlier and what is it exactly that you do with them?

Again, if you’re going to hire me in to justify my fees, I’m going to need to provide a pretty significant return on investment. Of course. So as result and because of my background, majority of my clients are professionals who have six figure debt. What’s your debt rises about one and 200,000 so forth. Every decision you make impact your total cost of that repayment by huge factors, tens and tens, if not hundreds of thousands of dollars between the two. When that happens to make sure that you get the best, repayment experience you often will reach out to a borrower, reach out to an expert

and again, one of the ways that I run my businesses, I’m looking out for the borrower. So I’m going to design a plan or repayment strategy. That’s best for them. Not best for. The actual loan, servicer or lender. When you see advertisements for sofa they’re gonna obviously want you to refinance that loan, but a majority of the time, that’s not the best option for the borrower, just because you can get a lower interest rate.

Doesn’t mean it’s the best solution for you. And we need to evaluate all of those solutions. And make sure they make sense with your financial objectives. My job is to look at all of the variables , what are those techniques, if we can, I know you mentioned there were like three of them.

You can go through them one by one. There are basically four major repayment solutions there’s private student loan refinance with a private lender. We’re basically forfeit all your federal program benefits and you refinance at hopefully a better interest rate. Otherwise it doesn’t make sense doing it, but of course you may have a higher payment because it’s a shorter term.

Typically lenders will offer you a lower interest rate, but they’ll on the condition that you can afford the payment. That will create a seven or 10 or 12 or 15 year term instead of the 20 year terms sometimes associated with student loans. And there’s also if you work for non-profit of course public service loan forgiveness is its own juggernaut is very nuanced and complicated and understanding how that program works and whether it’s worth pursuing and its reliability.

Those are all issues that come up. That would be the second one. The third thing would be to, if you don’t qualify for the nonprofit forgiveness, you public service loan, forgiveness, or government agency work then you can also in some circumstances that make sense to do the income driven plans, which are either 20 or 25 years long, all the way through to the end until you received the forgiveness there.

Or another solution would be the fourth option would be. Payment targeting or unorthodox method putting some of the loans at a zero payment and accelerating your payments on higher rate loans that type of thing, or making your student loan or payment work around your other debt or other financial obligations.

There can sometimes be a mixture of several different of those strategies at once, but refinance public service, loan, forgiveness, income driven plans, and. Payment targeting are the four major solutions. And then how to incorporate that into your own financial objectives. That’s of course the more complicated.

And then of course, for a lot of us that work time is more valuable than money. You guys do all the paperwork and just tell me where to send, help with execution. It’s not just, Hey, and this is what I found early on doing this for 23 years. Now I can tell you how to do it. And about half the people I talked to.

especially physicians, where they all they educate themselves on how it works. So they have an understanding they talked to all the other residents and they have an idea of how to enroll in the program and so forth. They don’t need help with that. And then you just need the finer details worked out, and then they can do it on their own, the other half of the time.

It’s just too much of a mess for them to deal with and they want to hire somebody to help them. Not only. No what to do, but the execution, how to do it and help doing it so I can prepare and submit all the paperwork for them. So that the only thing they need to do are make payments and I’ll take care of everything else.

And they’ll always be able to contact me and talk with me if they need to. It depends on where you are, what your needs are, a lot of people would prefer to have hand-holding through the whole process. Before we dig into this more, my full philosophy on, people come to me, should I pay off my student debt?

Yeah, you shouldn’t right. You should invest. That’s why, if we’re living the simple, passive cashflow thing, so we can make returns at 10, 20, possibly 30% in a turnkey rental. Go look at the rate of return. You can make it simple, passive cashflow.com/returns. Or I break down a simple, just turnkey rental, how you’re making money, four ways, mortgage paid down, tax benefits, appreciation of property, which, I guess you could say that’s getting lucky and then of course cashflow,

okay, we’re going to pay off the debt as slow as we can. So to optimize our liquidity going through our investments, but how do we do this smart with these other strategies? , cashflow is the hidden gem in the income driven and forgiveness programs, that a lot of people don’t significantly pay attention to. If you refinance your loan, let’s say you have $500,000 in debt at 7%. And if you refinance that loan, you’re looking at a five or $6,000 a month payment. Even if your interest rate is cut in half that’s gonna eat up a lot of your cash flow each month.

You may not even be able to afford that or want to afford it. Do you have family? What other obligations do you have? What’s your cost of living? You live in San Francisco or in rural Alabama, these. All factor in the decision making, but the cash flow is huge. You can use that for other financial objectives, especially like with my dentist who usually don’t work for nonprofits, massive debt all the way up to a million dollars in debt.

And they’ll tell me, Jan, if I can Lord this payment, I can use the extra cash flow to build my business mill practices and expand my business so that my return of investment might double every month, in that circumstance, which. For extreme certain situations.

It doesn’t make sense to accelerate a payment on an 8% loan or refinance it and save a little bit of interest when you can benefit so much from investing that extra cash flow. Those are all considerations for sure.

That’s why started this podcast.

There’s so much bad financial advice out there. Pay down your debts. It depends, right? If you’re bad at your handling your money, just spend it like a bozo then yeah. You should go pay off your debts. But if you’re a responsible person, I think most people that are listening to podcasts educating themselves.

So you fall on the other side of the coin on this and, check out my article about that. It’s simple, passive cashflow.com/debt. But yeah, I, to me, the best strategy is pay down the student loans or your mortgages as slow as possible because it’s a pretty low interest rate and invest the money otherwise basically interest rate arbitration, right?

Just what the banks do. They lend out at this rate and they go invest it in this much and they make money on the spread. It’s not, you’re responsible, your grandma, your grandpa, your mom, your dad probably thought otherwise, but amen. If you want to get what other people don’t, you got to do different things, right?

Yeah. And even the psychology of the borrower comes into play. Some people can’t psychologically watch their balance grow. When they’re paying less than the amount of interest screw in each month and they’ll send me Jan, I know what you’re saying. I’ll save hundreds of thousands.

I’m doing the income driven plans or what have you. I just can’t watch grow. Okay. That’s fine. As long as you’re making an informed decision, but that’s a part of it. And again, every situation is a snowflake. I always tell people, if you hear a one size fits all solution, it’s wrong.

Everybody’s needs a very, a detailed assessment especially when you have six figure plus debt to determine what’s the best solution for you. Do you qualify for the program? That doesn’t necessarily mean you should do it. That has to be looked into. And add onto that, like even like investing in rental properties or syndications, for some of these younger dentists, like I tell them you’re an entrepreneur, your liquidity and money.

Certainly shouldn’t be going into paying off your student loans and maybe it shouldn’t even be going to investments, but putting that money into marketing or into improving your operation as a dentist practice is probably your highest and best use. And it always comes back to it. What’s your highest and best use for your time and also your money or liquidity in this case.

Let’s dig into this, like this common one. Someone comes to me and they’re like, this is stomach who doesn’t listen to podcasts, not simple, passive cashflow. They’re not investing. They’re just investing in their normal retail investments, mutual funds. And they’re like, oh I like look at, I did.

I reconsolidate all my loans through a sofa company or whatnot. And it’s a lower interest rates. It’s a lower payment. How was that? Not a losing situation. What are the negatives of just of going down, just blindly going to these websites, you see them all the time and just lowering your interest rate and lowering your monthly payments.

What is the side that we’re not seeing here? One of the first things I look at is if refinance makes sense for you and if it does, it’s a simple solution. You don’t have to deal with all the federal records and programs and paperwork or hire somebody like me to help with that.

You just pay it later a traditional loan because I refinance so fire and Laurel road or common bond or whatever those companies They’ll call a student loan. The product is a student loan, but really it’s just a loan. You’ll a bank. It’s just a personal loan. That’s all it is. And at whatever terms they give you.

So you’re going to forfeit all of your federal regulations and protections. You’re going to, and the safety net that they provide you’re going to forfeit the flexibility that federal repayment has once you agree to those terms and unless you are able to refinance it and in a better terms later, You’re stuck with them as long as it is at that company.

I would say a majority of the time, the payment does not lower when you refinance. So even if you lower the interest rate that does not ensure that your payment’s going to be lower. In fact, the payment usually goes up because typically lenders will tell you we’ll give you a 3.0% fixed rate on a seven year term.

If you are on a 25 year term before that, or an income driven plan more typical to student loans, especially after federal consolidation then your payment’s going to go way up, despite the fact that you get a lower interest rate. Jan my understanding of student loans is, it’s a government loan and you’re switching over to more of a privacy of private loan where you don’t have those government protections. But I thought that. It’s, everybody talks about how the forgiveness of student loans is not permissible, right?

Like a mortgage is, but what are some of those protections, if it not for that, what protections somebody giving up by, making a deal with one of the private lenders, like in this case? With federal student loans, they cancel upon death. Immediately after loans. So if it’s a federal loan that’s a given a hundred percent of the time.

If you’re looking at a private loan that might not necessarily be the case. So the devil’s in the details, right? These guys might be signing on a lower interest rate and a lower payment. Which is the same tricks that the car lenders use, but they may be signing up their kids and grandchildren or whatever to pay this debt off eventually.

Yeah. There’s a little bit of a risk there. And then of course the, flexibility. What if there’s no guarantees? What if, for example, a crazy pandemic comes along. And causes you to lose your job and your income goes way down. If you have a private loan, you’re going to be very limited on what you can do to lower that payment with a federal loan it’s going to be easy you’re going to get built up first, just like those you guys would Fannie Mae Freddie Mac loans, and you think you’re all clever by getting these portfolio loans.

That is a huge safety net. I have, for example, I have a physician client who have for over a decade and she was in a car accident and she could no longer operate. So now she’s a teacher at a university and her income has went down. From, three or $400,000 a year to $80,000 a year.

That changes her financial outlook and her strategy for repayment on her large student loan debt completely because her loans are still in the federal system. She had several options and manageable ones. But the private loans are not necessarily, you may have to pay or default in the story and you may have to do harsh things like negotiate settlements after you’ve defaulted and no one wants to do that.

Those are protections, a lot of my clients, they have like several hundred thousand dollars in their infinite banking or they might have, nice parents with deep pockets, like they’re good. So they might as well do it and get the lower rate and. They’re good, right?

It’s in a way self-insuring themselves. . Yeah, exactly. If you’ve got the deep pockets and like I’ll tell my ER docs and I’m just using to say I have so many doctors as clients, ER, docs usually work for contracting groups or physicians or hospitalist groups, and they don’t directly work for the hospital as a result.

They don’t qualify for public service loan forgiveness. Typically they’ll have. Three years of residency, and then I’ll jump right in as an attending. And they’ll have usually their income is maybe 300, two 5,300 and their debt is 250 to 300. In which case refinance makes more sense for them because the income driven plans wouldn’t really lower the payment that much anyways.

And they might as well just accelerate the payment and paid off. They can afford it. So when your debt to income is strong, Then refinance is more often a solution, but if you’re upside down, which is Mary common, 80% of the people call me or don’t call us, they have problems, that’s right. Exactly.

I’m like the mechanic for expensive cars, and they come in with a problem and usually they owe more than they make. And because of that the refinances, not as It’s greatest solution for them in most cases. In my search for this doing a little studying on this topic, I don’t have any student loans personally.

But just doing some research. I found what this, I don’t know if this is a scam or whatnot, but like some guys are like, they found the company to create an LLC for them. That is set up as a nonprofit. So they can pay themselves via this nonprofit so they can qualify for the tenure student forgiveness thing.

Have you heard of this thing? What’s your thoughts? Yeah. And I’ve been asked over the years, Jan, I don’t work for a nonprofit. What if I own my own nonprofit or I create a nonprofit. And technically as long as it’s structured so that you are an employee of that nonprofit. Then you do that will technically qualify.

It’s interesting because not enough people have been eligible for forgiveness yet for to see how the auditing process works with those specific borrowers. But technically it is possible. It’s a risk though, right? I think so. I always tell people, if you’re gonna do it anyways.

Sure. You might as well shoot for the forgiveness, but if you’re going to open a nonprofit. Just so you can get the forgiveness, then that’s risky because you’re opening yourself up there’s some gray areas in the regulations there in regards to owning your own. Non-profit.

It could cause problems when you actually applied for the forgiveness when they audited. And I seen like the set, one of these things up, it’s not cheap. Definitely not something I personally recommend, if you’re going to if you’re going to do it anyways.

Sure. But if you’re doing it just for the student loan forgiveness, then it’s probably not as good. It’s just an example. There’s so much random stuff out there in terms of the financial world. And yet it makes sense. We’re always looking for the loopholes, to me, the intention is not there.

That’s why I’m like, yeah, that’s a black hat tactic. I agree. Are there any other techniques that you would think that people should know about that maybe they wouldn’t have known otherwise that you’ve been using for some of your clients? I think that one of the biggest things is understanding.

A very complicated subject whether or not to file separately or jointly to exclude the spouse’s income, whether you need to do that how your spouse, if you get married, it’s going to impact the program is a very complicated program because if your spouse has a significant income and doesn’t have any student loan debt than , their income is going to increase your payment dramatically.

It might even just qualify you for the program, but if your spouse has student loan debt and you can prorate the payment the other thing is if you need to exclude your spouse’s income, but your spouse has an escort or something like that, where they have huge expense write-offs that could be very costly to file separately.

Which is sometimes necessary to exclude this as income. And then add into the fact, what do you live in a common property state? , all these things make a massive difference in Filing your taxes and how much the forgiveness program is going to benefit you and whether or not you should pursue it.

If you are married or you planning on getting married in the middle of one of the income driven or forgiveness programs, definitely find out all the nuances of how that works and how it’s going to apply to you. And probably again, you want to talk to somebody like me to help you sort that out because it’s complicated, but that’s the first thing.

That I would say you want it to take into consideration, you’re opening up a can of worms. Cause then I would say probably like at least a lot of people in my mastermind group, the dentists, the doctors that were just one single income, we’re using that spouse to qualify for a real estate professional status.

We can use passive losses to offset active income. Yeah, worms there, it is a can of worms. I always tell people that. I should charge married couples five times as much as I can charge individuals because I don’t, but I should, because their situation’s always more complicated, especially when situations like that arise.

And you got one situation where one spouse is qualifies for public service, loan, forgiveness, and the other doesn’t. So how do you file then whichever creates the largest payment or the most forgiveness, or, you’re always want to look at total costs over time. It’s, everything’s gotta be evaluated, gotta crunch the numbers to really determine what the best solution is.

And that’s I’m growing up. I used to be super cheap and try and do everything myself and trying to learn everything myself. And now all I do is I build up a network and I ask other people who’ve done this before. Who the heck did they work with? And then that’s how I find guys like yourself.

Here’s a perfect example. As we were talking earlier, my wife’s a teacher and she’s been working like 10 years. So I was like, Googling the Publix or forgiveness thing. I don’t think she has that much loans. It’d be like 10 or 20 grand. Something, definitely could pay it off, but I want to do it smart, but it’s man, what a pain?

I got all these forms. I got to learn about it. It’s like government stuff. Can you figure out how, like far to stay apart from each other when you wear a mask when you don’t? I dunno. It’s just so good to using and I’m getting to a point where I’m like, all right, timer’s more valuable than money pay the man, get it done.

Don’t screw around. My days of just trying to do this all by myself are over. And I think if you’re listening out there and you’re making under a hundred grand a year, Your net worth is under a quarter million. Cool. That’s what these podcasts are for. Everything’s on my website for free.

Go ahead and learn it all by herself. But that’s why people sign up for the group coaching, or services like this, because time is more valuable than money. What is your highest and best use for a lot of my guys, it’s like it’s doing an extra surgery on the weekend, picking up extra shifts.

That’s screwing around with some Burr by rent, rehab, nonsense that thought of the kids talk about all the time. I’m glad I found you because I don’t want to do that paperwork. And if I can spend 500 bucks to just get it done that’s what I’m going to do. Yeah. No, I don’t. I don’t blame you.

, you mentioned before, there’s a lot of resources out there, but. There’s a lot of debt relief agencies, which were more like call centers. Yeah. And they’re really good at that called content marketing internet nonsense. Really just write bogus articles just to get the SEO, the search engine optimization, right?

. They’re not student loan experts. I have to tell you. They have a business model and a lot of them want a slang unit income-driven plans or, they’re not really looking out for what’s best for you individually. They’re looking to sell a model on how they can lower your payment or what have you.

And I always tell people, if you’re betting student loan experts to get help, number one, have they worked in the industry? Number two, do they have a actual, real financial credentials? And number three, when you talk with them, you can always tell when somebody knows. What the heck they’re talking about, are they trying to sell you on something, or is it more like a meeting you’re having with the financial planner accountant what it should more resemble somebody who’s has your best interest in mind and is not trying to sell you products, , I don’t sell people insurance or try and get people into an annuity. That’s your long lost college friend as far. Exactly. These are, another piece of advice I can give people who are looking for help is you can tell when you talk to the person, if they know what the heck they’re talking about, and they have your best interest in mind, not their own.

Like a lot of internet influencers, bloggers, podcasts, they all have the affiliate links to these loan consolidator things. You don’t know who to trust. And that’s why I always tell people, build your own network. Of other people you trust organically, not influencers, not people with podcast, land or blogs.

And then find the right consultants to work with and pay the consultant. On an hourly basis or where they don’t really have a skin in the game again, that’s the whole problem with the financial planners, right? They’re just here to sell you stuff.

They don’t know what they’re doing. That’s why I have a job. That’s exactly what I’d say about student loans. Same thing you just said. The reason I have a job is because of the loan servicers. Are poorly trained and the reps would frankly rather be on Instagram than talking to you about your student loans and you can’t talk to a bank, they don’t know anything about it.

Your school knows how to get you into debt. They don’t know how to get you out. They don’t really, they understand less than they realize, especially financial aid. They’re just clerks. Financial planners don’t know anything about student loans or they’ve had a diet Coke version of training of it, but they are not real experts on it.

It leaves us niche open for me that just developed itself where. I already had the background and I just put it into use to help people. What about you help people on the back end once they get into student debt. What about like people with young kids or they’re going to go away to college soon, getting the most student loans, any advice there?

It happens too, because even though my speciality is in student loan repayment, a lot of my clients are families and they’ll have kids 15 to 25 years old, and some of them are in debt. Some of them are going to college and some of them haven’t gone yet and they’ll have options to take out parent loans or the child needs to take out private loans.

That needs to be evaluated, when you’re taking out student loans, for example should I take out federal private? What are you going to school for? How much money do you expect to make when you’re finished with school? These things need to be taken in consideration. If you’re going to be a social worker take out federal loans.

You’re probably going to qualify for the forgiveness, and you’re also not gonna make that much money. So I promise you that private loan payment’s going to hurt when you enter into repayment after school on the flip side, if you only need a little bit of debt temporarily, you can get a better interest rate and plan on paying it off.

Anyways then, private loans can make sense, but if you need parent loans, there are circumstances for that, but that actually makes more sense than other things, those things it’s hard to give a general answer to that, those things do need to be evaluated. Yeah. So if any of the listeners out there, you have any best practices, let me know.

Or, if they work with anybody. This is how we build the community with the right people, not with big conglomerates who are really good at internet marketing, but guys like Jan , he geeks out on this stuff and he’s made a nice business out of it. I’m sure you enjoy doing this.

Just like how these travel hackers love which credit cards to get it’s collecting points, how you redeem the points, it’s cool. . How I built simple passive cashflow initially. Yeah. You’re passionate about it. Mainly because people have so much anxiety about it.

I often refer to myself as a student, one therapist because people call freaking out about their student loans and at the end of the call, they always feel so much better about their options and it’s a nice feeling and it’s great. And I feel like I wanted to be very few people on the planet who truly understands.

The micro and the macro picture surrounding student loans and how to apply it individually. I think it’s a rare niche that I fell into like I said I love it. Reach out to Jan and tell them you guys came from simple, passive cashflow. You want to get your contact information or website information out there for people to reach out.

Yeah. Sure. The best way to to find me is just to go to student-lone-consultant.com, which is my website. If you Google student loan consultant, I’ll be one of the top organic search results, Miller student loan consulting. Once you’re on my website, you can click to schedule an appointment.

And then I will contact you at the appointment time and I have tons of availability and the best way to get started as always with the initial consultation. From there, we can evaluate to see in what ways I can help you, in what ways you can help yourself with the loans. And I’ll be booking mind’s here to hopefully pay off that loan that my wife has.

Yeah. I already have some thoughts about that. I’ll save it for our call, just from what I’ve heard you say about it, all right. Everybody will thanks for listening. Please share this with your friends really helps us grow the show more. And if you guys are interested in the mastermind or.

Go to simple passive cashflow.com/journey. And if you’re looking to pick up the first few rental properties, remote investing, if you’re non-accredited investors, that’s what the incubators for simple, passive cashflow.com/incubator. And if you haven’t chatted before, feel free to book a call. It was looking to get to know each other a little bit better.

I ocular guys. Bye.

AHP Servicing Financial Review w/ Jorge Newbery

https://youtu.be/NpDAlroiKHk

Hey everybody, we are going to be doing a deep dive into the 2020 financial audit of servicing. If you guys haven’t heard about this, go to my website @simplepassivecashflow.com/AHP. I’ve known George since 2016 more poorly. I’ve floated a 60 to a hundred grand in his fund.

Got a nice cool. Return every single month, like clockwork. If you guys go back@simplepassivecashflow.com slash HP, you’ll see all the past webinars we’ve done on this fund. One of the things I personally invest in, but the question that comes up a lot of times is, as a fund, it’s hard to determine other than, talking to other investors had they had a good experience, but supposedly the financials are audited.

But look around. Nobody knows what the heck that means. So we’re going to dive into it today and George has got the report up and I guess let’s get into it. Welcome George. Hey, Eileen. Thanks for having me on. these reports can be pretty dry and overwhelming.

Maybe walk us through what are things, this is the HP. Audit obviously, this is something you can do with any private fund that you’re investing in or possibly wanting to invest in. But maybe George take us through how these reports put together and who does it?

How do they go about it? Sure. So we have all. Regulation eight plus companies generally are required to file audited financials with the sec through their Edgar system. And in fact, I believe that’s a requirement of most, if not all publicly traded companies.

And The reason for it is you want to know if you’re investing in a company and like you said, you don’t know the minutia, what did they invest in today? What did they sell today? So the independent auditor’s report will be an independent company.

That’s engaged to review all the financial records of the company and then issue a report. And so we do this every year. We’ve been doing it since we started our first regulation, a plus fund in 2016 and we get these done and then they’re filed with the sec and they can be reviewed there. This was a challenging year, 2020, but this will show how we fared and then I can go through each page and interpreted, everyone can interpret for themselves, but I can certainly share some context about how we did last year and what the state of HP is right now.

And of course, this is obviously George is the principal HP, and you guys can look at the numbers on your own, but, as I always do it, like with our apartments we have the PNLs and all the line items, I usually look at a certain things I personally do it and we’ll see how it kind of George does it.

And, but you guys can all have a C dig through this stuff, find your own. Yep. I’ll try to add some color. So it may all make sense. And certainly if you’re an investor HV, or even if you’re not, if you’re considering an investment in HP, we definitely encourage you. If you have questions on it or anything else about HP to reach out to us and we can assist we’re at HP servicing.com and this little plug in there, Jane.

I’ll dive in and go through this. This is Richie may that’s our auditor. You can choose through any. There’s a number of auditors in the country. Richard Mays has a lot of expertise in the mortgage industry, which is why we chose them. They do a lot of mortgage servicers, originators companies and invest in mortgages.

They have a lot of experience.

There’s a whole bunch. You can access this. This is on the SCCs website. We can also provide your copy. If you go sec filings or Edgar HP service, and you’ll see all our filings since the beginning of when we first filed with the sec in order to do the HP servicing offering.

that’s on their 20, 15, eight pluses on there. And. This first page is simply, some background on the audit and the auditor disclosures and whatnot. So not really too much meat there, but certainly something that anyone is welcome to to read same with the second page, but then you get to the meat, we started out with a balance sheet and then we’ll get to the profit and loss, but basically it’s showing and this report what we held.

On our balance sheet at the December 31st of 2020. And it also compares it what we held on our balance sheet on December 30, first, 2019. At the end that year we had 665,000 in cash. Some of these are fairly easy I’m going to mention them anyway. So cash.

End of the year, 665,000. We had an escrow cash of over $3 million. as our servicing portfolio has grown. we’re servicing both loans that we own, and that is own. We do continue to hold more and more cash and in escrow Accounts receivable. This is money that we’ve advanced sometimes on behalf of third parties.

So if somebody has a loan that we’re servicing, we may advance money on their behalf to let’s say, pay a legal bill or pay taxes. It’s typically repaid the next month when their remittance comes through and we can apply the payments that they received against the amount that we’ve advanced.

In this case, it’s almost a million bucks, $922,000. Here’s the biggest item though is mortgages that we held for sale. And they categorize basically all the mortgages that we purchased as held for sale. These totals, you can see just over $37 million. I’m looking right here. can see my cursor.

So just over $37 million in mortgages. Now a key item to understand is this is basically what we paid for the mortgage. So if we buy a mortgage. Where a family owes a hundred thousand dollars and the home is worth $150,000. And we buy that mortgage for $50,000 using very round numbers.

Then it’s booked at 50,000, even though they’ll oh, 150, we book it at what we paid. We don’t realize a gain or a loss until the asset is actually disposed of. This 37 million is what we actually paid for those loans. A note receivable third-party this is if we make any advances on loans that we actually own, or two entities that were related to, I’d say specific like 20, 15, eight, plus if we made advances on or legal or anything for them, that would be included in their prepaid expenses.

If we paid Prepaid and expenses on behalf of the company that we expect for services that not yet been rendered, that would be in the $300,000 other assets, property, and equipment any kind of computer equipment servers Would be included in there deposits, probably our security deposit on our bill, on our leases and other things like that.

$40,000 in the end, $45 million in assets. Now what do we owe? We have out 1.3 million in payables. These can be any kind of bills that we owe 1.1 million in escrow liability. So this is in all likelihood. This escrow that we’re holding $3 million. It’s probably offset by. We probably owe some of that.

So 1.1 is likely money that we owe that produces that cash probably down to 1.9 short-term debt. We borrowed money on a credit line or something like that. Short-term $662, I’m sorry. $662,000. Long-term debt. If we are long-term note we had last year, we bought a lot of loans. We spent almost 50 million at the end of the year.

I think we bought a significant number and We borrowed $14 million against the notes that we purchased. In fact, that was all incurred in the last six months of last year. But it’s what, like the number of the average one, the value on that stuff, and then the rate

it’s very light leverage still. It’s very light level. Yeah. We bought about in the last six months of last year the ideal strategy for the performing stuff, to use on that. We just use it to, if we had enough money to close, so basically we bought about $50 million.

I think it was 48 million in change that we spent for loans where the amount due on the loans was about a hundred million. The property values back in those loans was about 120. That’s what we purchased between July 20 20 and February, 2021. That’s pretty aggressive for us. And we bought these a great prices.

I think on average, we’re talking about 50 cents on those. And again, you look back to last June through November, which is when we made the deal. Some of them didn’t actually close to February for different reasons, but that’s when we made the deal and set the pricing, it was still pretty uncertain, the real estate market was surprisingly doing well, but I don’t think people would consider it

we’re acknowledging that it was doing great. And so as we kept buying the pricing was very attractive and we’re seeing that some of those loans were exiting right now and 2021 at significant markups, because back then you buy a loan it’s based on what’s the value of the underlying property.

And if that value goes up, people are willing to pay more. And also if we ever sell the property, let’s say we get an REO or a deed in lieu and we’re selling it. We thought it was worth a hundred last year and now it’s worth 120 and we’re selling it. That’s great. So we’re seeing a ton of that happening now.

And I think we’ll continue to see that through. I would expect certainly this year and probably sometime into next year, I imagine there’ll be a A point where this goes the other direction and in my mind strategically. We want to sell as much as possible today. If we get an REO, it will sell at a big premium, typically over what we paid for it, whether it was last year, early this year, or even or before COVID but also all the loans that we modified, we didn’t sell loans.

Since I came back as CEO in, in mid 2019, I said, Hey, no more loan sales. Let’s just hold everything we had. And we did that. But now these loans where we modified the loan and people are paying we’re now selling these loans at the average is mostly they’re selling for over 90 cents, which we typically bought them at 50 to 60 cents or less.

So that’s. Resulting in some significant gains this month we’re selling about 5 million next month, we’re selling about 9 million and we’re working on another pool that we’re probably closing in July or August. Those should provide some significant liquidity and we’re hardly buying anything right now because we see so few opportunities out there that have attractive pricing.

So back to the audit So member’s equity. That’s how much equity is in the company, $27 million. They add up the liabilities and the equity to come up with a total of $45 million now profit and loss. How did we do last year? We lost money. We earned asset management fees of two oh nine loan servicing fees of six oh nine interest income of nine 21.

Gain on on sale of mortgages, seven 24 other income, one 63. So we made $2.6 million last year. Significantly offset by expenses. We had over $4.4 million in expenses. In salaries and wages occupancy, basically rents and equipment 346,000. Admin nine oh six oh four professional services like attorneys just over a million dollars advertising.

115,000 depreciation, one 33 interest expense four oh two. So total loss of 4.4. Now, why is that? Why would we lose? We’d be losing money while ASP servicing is two things are the money that we raised goes for two purposes. One is to buy mortgage loans. Two is to build out a national mortgage servicer.

So that’s why, we’re all the salaries that’s because we have a national mortgage servicer that we built, which is licensed everywhere, except for the state of New York. We’re still working on getting her license in the state of New York has taken a long time,

 

where’s the interest paid to the investors.

We’re fortunate that is. Distribution. So next page. Right here. So we can jump there right now. Member equity, this is we’ll go for each year. We started out in the first year. We were active for two months. We raised 3.9 million. And then the next year we had $15.7 million come in as investments in 20 19, we distributed a 4.3 million so at the end of 2019, we had $12.9 million outstanding to investors that rose a lot through 2020, we raised over $20 million and we distributed Around a million dollars.

We didn’t do too many ramps with, so we distributed just over a million dollars and we lost $4.4 million. So basically think about this when we raise we’re always bringing in money every day from interest payments. We’re bringing in money from. Loans that are sold Oreos that are sold.

I shouldn’t say loans that are sold like short sales, REO sales. And so that’s the money that we pay out to investors in our monthly distributions. Overall, still we lost $4.4 million last year. So our total on sanction investors right now, 27, or right now as of December 30, first, $27 million,

the 10%. Back to investors 1% every month. Which line is that again? It’d be member distributions right here. 1.1 million. Okay. So that didn’t skip a beat. It came a little tough in March and April and bear in mind. Roughly half of our investors, because we’re still in the capital raising phase reinvest their money.

So they simply, instead of getting money out the door, that money is added to their investments. So with the reg a plus offering, you go out to a whole bunch of the masses. How many investors isn’t this whole there’s over 1300 investors. Wow. So you’re saying George and email.

It don’t expect an answer. Yeah, I know we have our investor relations. Michael Distasio is our primary contact in investor relations. He’s the one who’s normally responding to emails phones and other outreach. If you email me, I’ll definitely try to assist.

I usually forward it to Michael, unless it’s something that’s particularly out of the ordinary. I think you’ve told me this before, but now that we have the financials up, What is your logic on, like how much cash to keep on hand to be able to go after a good opportunity?

Or do you just raise it? We just raise it or we borrow it if we get caught short and we have a closing, like that’s next week or at the end of the month or something like that. So we don’t have Hey, we always want to keep a certain amount of cash on reserve. Literally money does come in every single day.

We usually know if there’s a big purchase coming up. That if we get over short money, we can usually borrow it on a short-term basis. So I’m not, keeping cash on hand, we’re paying investors or return on that. So I don’t try to keep anything significant dilute your investor pool.

What is there a certain percent number that you’d like to keep as cash? No, it’s a couple hundred thousand, $200,000. I think people will get nervous if they say, oh, we’re, we only have a hundred thousand dollars in the bank just because there’s always pay, just as money comes in every day, there’s bills that come And once in a while, it’s like an emergent, Hey, we got to cover this taxes today or something like that. So there’s always typically a hundred or 200, lots of times more and we try to manage that. Sometimes we’ll get Significant payoffs or Oreos or significant money comes in or investments come in and it’s not readily deployed.

We sweep that money to a money market account. So we’re earning some anemic rate of interest, but at least there’s a little bit of money versus sitting in the kind of operating account order earned zero. So that’s done regularly. It doesn’t add up to much, but it’s something.

Just a, I guess a personal question. What do you think about sweeping that money into a block five or like how Elon is putting money in Bitcoin? What is your thoughts on. I’m sure it goes against the PPM. Yeah, you’re right. In our STC offerings statement, we’d have to disclose that.

I don’t know. I guess the only reason to keep cash on hand is because we may have needs payables and stuff like that, acquisitions, but it is not I’d be a little nervous if we did that and then it wasn’t readily available when we needed it. So I think, These sit in the bank either in an operating account or in a money market account.

And definitely not Bitcoin. I don’t know how it’s doing today. I was reading on the news the other day. It seems to take a big hit. Went through the numbers and let’s get into how did the business go last year? I know you’ve mentioned March and April and I feel your pain.

I was a little. Afraid myself of what would happen with collections and March came. And then I was really afraid of April, right? Because that was when the lake happened. You would think people exhausted their cash reserves in their bank accounts that maybe can’t pay rent. But yeah, take us through 20, 20.

March and April were really tough. And even in may we were anxious that this was it, we had seen a big run-up for years ever since the 2008, nine, 10, 11 things started creeping up in 12 and 13 and primarily real estate values increasing.

And that had gone on for a long time, 18, 19. I kept thinking it was going to turn and and then COVID hit, I thought, okay, this is it. There’s usually a trigger that emotionally people say. That’s it, things are collapsing. And I was braced for that. And I was really concerned because we have tens of millions of dollars in assets and the potential, they’ve they could have gone down 10, 20, 30% and that would have been have a significant negative impact.

But the opposite has happened. They’ve gone up 10, 20, 30%. And I don’t think anybody expected that in March and April when our phone suddenly start lighting up from customers who were historically paying. And now they’re saying I just can’t pay, I’ve been laid off.

I don’t know if you remember the number and unemployment of our car correctly. It was spiking into the, 10 million, 20 million some. Huge numbers. And if I’m recalling correctly and all of a sudden, a lot of people were laid off. A lot of people couldn’t pay. We were giving forbearances because these are people that historically were paying income interrupted.

They needed a cup, a little break, but now our income started. Drawing up and then most challenging is we had a decent number of Oreos when an REO cells, that’s a big infusion of cash, anywhere from, tens of thousands, sometimes hundreds of thousands, and that stopped in most parts of the country.

Many parts of the country. We couldn’t complete a sale. We couldn’t get the deed. Some of the county recorders closed. The sheriffs maybe had the deed from a foreclosure and they wouldn’t issue the deed and that went on for months. So it really challenged our cashflow.

But we started seeing funds also getting nervous and they started selling a loan. So in June we said, Hey, we’re going to start buying opportunistically and that’s Turned out to be a good bet. And things have gone up significantly since then. And now it’s the opposite side.

For seven, eight months, we were aggressively buying, every dollar. We were paying distributions but just about every other dollar we had, we were buying loans. And now it’s the opposite. The last pool of loans we bought. Of significance was in February right now, we’re selling aggressively everything that we can sell.

Everything. that’s REO, we’ll sell everything. That’s a performing loan. That’s been, we modified and is now performing. We sell, there’s no extra value we can add to either of those situations and to exit into this market is great. The loans that we hold that are unresolved, that we’re still working on the homeowner with a modification or to complete a foreclosure, any of those things we’re holding onto, we’re going to take them to a resolution.

And then sell them and again, we’re not buying. So what we have is what we’re focusing on are I really want to get these things max resolved as many as possible and sold, by the end of this year. And I think for the next, six, seven months to get to the end of the year, it’d be a great opportunity to sell.

You mentioned you sold some of your apartment buildings. I imagine you did well, probably a lot better than you thought when COVID first hit that things you could sell stuff so strongly. We’re doing that and I think the buying opportunities will be limited and what you can buy.

There’s certainly stuff to buy, but you have to pay a lot. And so we will be on the sidelines as the buyer, but be out there aggressively selling. And I think that would be is the thing to do there’s time to buy at a time to sell, I think right now it’s time to sell. Yeah. I think it’s I think there might be a divergence within like residential stuff, which you guys work with.

And then the commercial assets, like I haven’t seen the run-up in prices in commercial assets, maybe like a quarter point across the board of cap rates, lowering, which by the way, it’s you guys means that the prices are going up when the cap rates are what they sell for lower. But nothing nearly is like the residential world.

That’s what I’m like. I’ve lower my like waterline for like people to buy turnkeys to me buying is make absolutely no sense. Right now. But so if I were to understand how you’re thinking in summarize it, you’re thinking this is an opportunity to sell residential properties

What do you think a lot of people in the middle of the pandemic and the summertime will creating a lot of videos that YouTube offers. God love them, right? They’re always doing those tweetable or those SEL terms where the world’s going to end. There’s the weight loss of foreclosures.

Is that really gonna happen? Where are you putting your money? I put my money on that. I think there will be a bigger disruption. I think I was in Dallas, Texas last week for a couple of conferences, had a meeting with some manager of the billion dollar fund that we were talking about.

What would they thinking? And it lines up with I’m thinking this cycle will end and we’re not sure if it’s going to end in six months. 12 months, 18 months, but this high that the cycle will end and then it will go the other way.

In the managers Words it will lead to an extended period of depreciation. And we’ll see these prices steadily declined and his thought was late this decade. Our economy is really weak right now. And the fundamentals are not good. I think there’ll be Some significant challenges ahead.

They’re not reflected in the current real estate market, but at some point they will be. And most of the rosiness today is the result of, a good chunk of it is government intervention, which is the record low interest rates are near record low, and then all

the the stimulus money that has been pumped into the economy over the last year that’s been, I think that’s there’ll be another side of this, that we’ll pay for it. I think about 2005, six, seven, it was such a. Dramatic run-up, there had to be a turn and eventually it turned in late oh seven and through oh eight.

And if it came a people were at that point, you got to, oh, nine, 10 people are looking back at oh seven and oh eight and oh six and thinking, what were they thinking? Why do they think this will keep going up? Why were they paying so much for houses? And and I think right now, fast forward, A year, two years, three years.

At some point, there’s going to be people looking back and saying, what were they thinking in 2021 people are paying For assets, be it a mortgage or a real estate. I’m happy to sell into that market. In fact, I’m thrilled to sell in that market, but I’d be really scared as a buyer I’m having to buy.

And I know, talking to some of the funds, they have to buy they have money. They can’t not use it. And so they have to buy they’re buying, with expectations of Very modest yields like low single digits that they have here. They’re getting four or 5%.

And that is not even three and a half percent people. It’s better either. They have a super cheap cost of capital, which some of them do, or it’s better than not investing the money at all, but I’d be nervous if they, if you buy something and you’re getting three, four, 5% return, and then the market turns and suddenly you lose your road, your principal That would be challenging.

So my thought, if you own real estate or you own a mortgage or any kind of type of asset with the exception of probably hospitality or our office buildings, which are probably you sell in today’s market, you probably won’t do well, but everything else by and large, not residential real estate, I think to do with that, I think it’s definitely time to be a bestseller.

You think It all indication because of the stimulus money and things move slowly. What we have, pretty high, maybe single digit GDP growth, these next couple of quarters, at least. Yeah. That could be the case. But I think it’s slightly artificial just because of the stimulus, I think that’s driving it.

It’s not the That the economy is doing as great as the numbers may reflect. So at some point maybe once that burns off, people are going to have struggling to pay their mortgages. And that’s going to start the foreclosure that perhaps they come in and move into our apartments. Yeah.

Reversal. The reality is, think about this the rallies, there’s millions of families who are having trouble making their payments right now. You just wouldn’t know it necessarily because there’s millions. There’s a significant number of millet. There’s millions that are in some kind of forbearance or other types of a payment plan.

And that is, I, in my mind is masking the underlying challenges, which will, you know, once the foreclosure moratorium, Zen. Once you know, the forbearances and it’s pulling up the covers. What’s really going on down here. And I think that’s when we’ll start seeing some disruption that’d be a trigger.

Now what concerns me and what we’re trying to get ahead of is once these foreclosure more attorneys lift, there will be In my expectation is that there will be millions of loans that are suddenly moving through the foreclosure process that will clog the courts that will just clog the whole system.

Now, what if we have a loan today and we’ve exhausted the options of modification or any type of consensual solution, we are trying to move that. Forward as fast, as possible. And also as far as possible, recognizing that in some cases we can’t complete the foreclosure because of some kind of restriction like a moratorium.

And so we move it to that point and then the foreclosure moratorium is lift and we can, we’re far along in the process. And part of it, there is a little bit of it that some consumers, some borrowers maybe You are saying, Hey, I’ll just deal with this. Once they can actually foreclose on the home.

And then I will be more than maybe I’ll do a modern or something like that. And that’s fine. We’ll work on some mods then, but some people are just not responding to any kind of outreach today because they know that we can’t foreclose on their home and that’s a little bit frustrating, it’s the way it is and we will recommend it.

But I think there’s a lot of struggles right now. Families that are hidden by all the government intervention that foreclosure moratoriums is extra stimulus money, the extra unemployment money, there’s a lot of stuff that is propping.

This country’s economy up. And I think that kick out a couple of stilts and we’ll start seeing some adjustments and things won’t be so rosy and people won’t be making multiple offers, sight unseen, no contingencies, all this stuff that we’re seeing today, which is great if you’re a seller, but not so good if you’re the buyer who is looking in two years and saying, oh my gosh, oh, 20% more than my house is worth.

Which is what happened last time. And then people stopped paying and then people who aren’t even in trouble say I’m not going to pay because I own, 20% more than my house is worth. It does make sense, which is what happened last time. And then it just starts this thing where people go, everything collapses the other way.

Sounds good to me. Cause I got a couple more properties. So single-family homes that I’ve reluctantly done the purchase strategy with we’ll probably sell here in the next year, hopefully. And I think that’d be great timing for me. Yeah. Exit. My message is to sell while you can.

For HP servicing, we have two things. One is we built a service or partially in anticipation that we want to be ready for the next turn and for the next downturn. And We will be here once there’s all that disruption occurs, we expect that our servicing portfolio will significantly grow.

And now we can grow as a company. So that’s a period. Those periods of disruption is where you can take market share away from the market leaders and hopefully become a market leader ourselves. And that’s when you guys start thinking your chops with all that stress out there.

Exactly. It’s a stretch. it’s an opportunity to make money, but it’s also opportunity to help people. They can’t be one in the same thing in our attention, this and do that. One of the big questions that my folks have asked me, or they asked, I got a question like that somewhere every month is HPS retentions.

And some people I’m just like, seriously, it’s not like a fricking bank. You can’t just put money in a fund and expect it to come back out, maybe comment on there was a big, a lot of people that panicked right in the beginning of COVID that wanted their money back and it’s just that’s not how it worked, guys.

I know that we had one internet trouble that was like, HB is horrible. I like it. When you look at them profile and it says, who’s this ? There was one guy who had a hundred dollar investment who was waiting on his redemption and he was like, every place he could go, he was like, this is terrible.

It was a hundred dollar investment. Here’s where we are with redemptions. That’s why not a credit investors , you don’t want them. Yeah, we do, but we didn’t expect this to happen, but here’s what happened. We offered redemptions best efforts redemptions.

So if somebody requests their money back, we would undertake our best efforts to redeem that money within 30 days. And we started offering them in 2016 with the first regulation A-plus offering 20 1500 plus. And we were able to consistently do them within 30 days. And COVID hits.

We had, and that’s what I did. I took her ademption at one time, I needed to take some money and go into a syndication deal. That was more long-term. That was more of an equity deal. And then I put the money back. I think I took a month or two to process it. That was the reason why I went into the fund because there was like, there’s nothing out there that has something that even resembles redemption, but I knew very well.

I’m a responsible investor informed investor, knowing that, Hey, it’s up to you guys to see if it works. The most important thing is the fund and the whole investor base. Exactly. I’m glad you brought that up because last year we could have just simply said, Hey, we’re just going to not buy anything.

And every dollar we get our hands on returned it to, that comes in and revenue return it to investors. But for the investors that are staying in this that are in it for the long haul, that would have been the best strategy. We were seeing great opportunities. We spent a lot of money last year, almost $50 million or over the period from July, 2020 to February, 2021 in buying loans.

And those investments appear to be paying off very well this year as we resolved them. But now our focus is returning money. We don’t see opportunities. You’re absolutely right. We have to look out what’s best for the company.

And we want to honor redemptions. I think we’ll be back to honoring redemptions within 30 days this summer and right now without buying anything new and of significance and selling as much as we can, we’re starting to see big cash come in. In a nutshell on the redemptions.

So we’re having big cash come in and we are starting to redeem significantly. And this month, I think we’re in a process around 200 redemptions, a couple million dollars. There’s probably another 2 million that we probably right at the end of this month. And then through Late June, July, I expect we’ll probably have about close to $8 million.

That’ll come in. And a good chunk of that can go to redemptions as well. I was curious because you had a big backlog, right? And they were sitting in there when you’re like, Hey, we lean, it’s your turn. What percentage of people are actually following through now that we’re on the other side of COVID it’s like you’re just getting scared.

You’re absolutely right. I think yesterday we sent out about 100 emails to investors saying, Hey, we have money available to redeem. We’re seeing about 25% maybe even a little bit more that are saying, Hey, don’t worry about it. And and they don’t need it anymore. So that’s fine.

That means we just , move down the road to the two additional investors we have. Currently, and ever since COVID started, we’ve been. Processing redemptions in the order received. Whoever requested earliest, those are the ones getting redeemed. And we got wildly behind , in March and April last year, we had a huge number of redemption requests.

But now we chipped away at it through the year. Now we’re making big strides and I think we’ll start seeing over the next couple of months They’re getting actually caught up in being back to the point of where we are reviewing within 30 days.

Yeah. It’s harder than I thought. I’ve not thought it’d be more like half, but that’s a surprise. I’ll make people actually follow through. Yeah. I know actually a fair amount. Yesterday we sent out a hundred. I’m not sure what, number previously it’s been more modest numbers.

I’d say about 25%. Maybe a little bit more, based on what we had through the beginning of the end of last month, we forecast a 25%. We’ll cancel it. It may even go up and you’re right. I wasn’t really focused on it, but now that COVID has easing people, seeing the market NHP getting stronger, I think they start thinking, Just leave it in there, if that’s all your true friends are I understand some people were calling in, Hey, I need money for payroll.

I got a margin call because you remember a year ago or when COVID first hit, the stock market was wildly fluctuating, and a lot of people lost a lot of money. And they needed to cover stuff. So I get it. And people also. You mentioned big landlords their forecasts were like a huge number of people were not going to be paying rent that never really materialized as much.

Certainly it was an impact, but it wasn’t as severe, I think as people were nervous about, but all those things were factors. And I certainly understand people’s concerns. If people needed to bail, we’ve done our best. I appreciate patients from those investors. And I think the extent you still need the money we are working on getting those back in and we’ll probably be completely caught up in the next couple of months.

Maybe part of that’s my fault too, because I wrote that article spool pass a castle.com/oh, fund. I use you guys as like an opportunity fund that kind of siloed money as I’m waiting for another deal to come by. And this is a lesson learned on my part. I should not have the expectation to get at that money.

Within a couple of months. I need to have some other dry powder elsewhere. A lot of people, I do know a lot of rehabbers and investors who they’d get, close the sale. They would put the money with us and it worked pretty well. Through we were able to get the money back promptly before COVID hit.

And I think it works so people needed the money, Hey, entered under contract. I need the money in a month or two. They got it, but COVID hit. And that was no longer The issue, so what’s coming up next. I’m in that other fund. That gives 12%.

Cause I was one of the early adopters you’re kicking me out now, our first fund you’re right. First regulation A-plus fund was 12%. That’s 2015, eight plus it’s been close to investments since 2018. It’s now been five years, or I should say not now,

next month in June, it will be five years since we launched that fund. And that is the end of that investment term. So we will start redeeming those investors who’ve been in there for five years starting next month. It coincides to me, the timing is actually good. We’re catching up with the old redemptions.

We now start redeeming people who haven’t even asked their money back, but it is five years. We want to honor What we agreed to at the beginning, which is, we’re going to return. Our goal is to return our money within five years now, the good news to that you may see it as bad news, but the we have another fund that will be opening up which is HP title.

And people are welcomed there was sending out emails, just like we’re sending out right now for redemptions. Hey, your money is due to be redeemed. We now have money available to redeem it. You can either have the money back, or if you elect, we can invest it in the new fund, which is HP title, which should go live.

Probably in July, maybe end of June. And that one pays 7%. So it is a return. , I think that’s better align with what the market is today. So that goes live, as soon as that goes live, we closed investment into HP servicing and we opened it up into HP title.

So that’s the reality of 7% in today’s market is a strong return. But I guess that’s for every investor to decide after themselves what makes the most sense to them? The OGs and that first fund myself included. I don’t know if I was one of the early people in that fund.

I get a run rate of five years, they’re going to contact me and then a year or so. Yeah, the five-years comes from when you first invested . I don’t remember the exact time that you invested, but whenever that was, it’d be five years from them. Now that said our goal is to start.

We’ve been behind our redemptions. We’re catching up. We’re going to get to the point where we’re caught up with the 30 days. And now we’re redeeming those investors that are maturing on five years, but our goal, I see it now us getting ahead and actually returning money even before the five years that’d be our goal.

The rally is the there’s very little opportunities to redeploy that money. There’s very few buying opportunities. As a result, the best thing we can do for the company is to return the money, even if that’s earlier than the five years, rather than continue to pay at 12%.

And the opportunities to deploy that money right now are typically under 12%. I’m enjoying my time in that first fun house. So you just take your time, redeeming me out. I’m fine. Hanging out, but. If I’m reading between the lines here and for the people, who’ve actually stayed to the end of this thing video.

So what I, if I’m, you’re smart, you’re in the first one and you have some liquidity, you throw it in the current fund servicing before it closes. That’s the ninja.

actually we do, there’s actually some investors that figure that out too. And this is not figured out in a good way or bad way, but today you could redeem your 12% investment and put it

in the current fund, which is phase 10%. So absolutely you could do that. Now your question is, will they align if you’re wanting to do that, you probably should get your request in because the question is and there’s a reasonable likelihood of who knows the time is going to be pretty close, but if you’re afraid of redemption in today, there’s a decent chance that you could transfer it into 2015 flood.

From 2015, eight plus into HP servicing and during the 10%, instead of the 7%. Okay. I have, and have everyone requesting more to this tomorrow questions now, so nobody catches on and what’s going on. The whole, new fund is going to be 7%, which I think is pretty decent out there because yields are going down.

Bore chasing yields, they’re looking for safe places to put their capital. It is what it is. If you guys can find something better with some potential possibility, let me know. Lane@simplepassivecashflow.com. I’d like to invest my money in that, you can’t really find anything out there that does the same thing, at least in an audited legitimate company, you can invest in how slipper Harry, that also is working his engineering job on the side, flip a house. Giving them a private money lending know, but I think our friends with suits would probably call that junk box or bad paper. But but yeah, any other questions I think you get asked a lot, lately, those are the main ones.

And so we still have a lot of investors coming into HP servicing right now we finance we’re not really buying aggressively on the market, but we do have a platform on called pre reo.com. Right now, HP servicing is financing the loans where people are putting down 25% and we’re financing the 75%.

So we’re doing that and that earns us, modest markup And so that’s basically it I think closing note, everything we’re doing right now as a servicer is HP servicing. And soon to be HP title is to gear up for what I talked about a bit earlier is that downturn in that downturn we expect there to be significant direct disruption, and significant opportunity there will be our hit, we’ve built this national servicer.

We have a reputation for resolving distress deals right now there’s limited distress. So I’m not as much as demand for our services fast forward a year, or thereabouts. We expect that there’ll be a significant demand for extraordinary demand for our services. And we want to be prepared for that.

So that’s what we are. Our big focus is here. Have you ever thought about doing like a growth fund, a little bit more higher risk, but they get equity upside and then complementing that with like the current fund, if you guys do now, when the impending actions happen or like that market conditions happen.

No, I think we’re going to move. Right now, everything we’re trying to do is to. Be prepared for that next downturn. And I think, we’ve been buying and I know I’ve shared this with you and your audience before we’ve historically bought the most challenged loans where we get the greatest discounts and then we try to create value and add value to them and that’s worked, but it’s also means everything’s a customized solution.

It’s less scalable, repeatable as we would like. We’re trying to grow and scale this and how do we best scale? So our HB titles focus will be to buy defaulted mortgages, just like we’ve always done except only government backed default mortgage.

Let’s think FHA VA, USDA and these are where there’s government guarantees. We’ll probably pay more, but there’s a government backing. We’re going to be able to to the extent money’s lost, we can we can make a claim that backing and these ones. We see a big opportunity there.

It becomes much more repeatable, much more scalable. We can’t customize as much. We’re going to need to follow the FHA guidelines or the USDA guidelines or the VA guidelines in order to. How we interact with the customers, but we think we can use our high touch expertise and still work within the government guidelines and then turn in claims for when we don’t recover all the money and and we buy these discounts.

There’s a, built-in we buy them at 80 cents and we exit we’re eventually going to get, X amount of dollars depending on the backing that becomes more repeatable and scalable. I see that’s where our big growth is, that all said we probably won’t have, we’re actually going lower risk than higher risk, mostly because we want to scale the whole operation.

It’s like me buying class B assets. As opposed to slumming it in the class C with the headaches exactly right. Your potential return is lower, but it’s something you can do a lot more of. That is exactly the same thing. I can see we’re both evolving in different ways, daddy syndrome.

Exactly. It’s so less, more conservative, less headaches. Hopefully neither of us will be working around the clock. Yeah, exactly. George, you want to put your information out there. People would get ahold of you guys. If you guys want to learn more about HP, you can check out our old videos@simplepassivecashflow.com slash HP.

But. George wants, you guys dropped the, you guys always changed the URLs for the new funds, but what is it? It’s AHP servicing.com is where the current fund is open. And reach out to us there, HB servicing dot com. All our contact information is there and you can invest online or reach out to us with questions.

Guys thanks for listening. And I hope this was useful. I know a lot of us in our group invest in HB. They got a little nice liquidity sorta semi liquidity there and for a nice monthly yield. Thanks for joining us, George. We’ll see you next time. All right, thanks.

I’ll talk to you later.

Syndication Tips for LPs

https://youtu.be/h-hnc9lsvcI

Probably investing has been extremely competitive over the last few years. And despite the continual cap rate compression, bringing down investment returns, we strongly feel that cashflow investing in recession resistant assets is still a prudent strategy over holding more than 20% of your equity on the sidelines.

You guys are watching on the YouTube channel and the behind me, that’s a who’ll to one of our stabilized assets in Houston, Texas, but I wanted to take today to just talk about what’s been happening in an apartment investing lately now. Probably investing has been extremely competitive over the last few years.

And despite the continued cap rate compression, bringing down best returns, we strongly feel that cashflow investing in recession resistant assets is still a prudent strategy over holding more than 20% of your  equity on the sidelines where it’s not making anything there. The last decade, some say has been the golden age of apartment thing, especially in the state of Texas.

However one has to suspect that we cannot sustain this type of thing. Current growth, which is always what your purveyors are going to be saying. But as the person I’m thinking about as addicted, what the last five out of the last two recessions in the last 20 something years for our clock is always right.

Twice a day is the same. They’re just here to sell books. They’re not investors, they’re just economists. They’re just like the weather now in market reversion or living off is bound to happen. We want detect our capital while it’s growing. As best as we can. How do we do it? Our goal is to stay in the game, get cashflow and mitigate our risks by conservative underwriting, using data or network of our operators, which is in the ground due diligence data that is not available to the public such as CoStar, which owns apartments.com and is big glomerate data.

There. We get the market rent, roll vacancies, or should cavalry. Et cetera. In 2019, I had seen a couple of tricky methods that do operators, will I in their underwriting, I go into this great detail in the syndication LP course, which is for purchase. You go to simple passive slash versus, and you can check out all the other eCourses we have.

Now this course I developed exactly for the passive LP investor. So if you’re busy, This is the best way you’re going to get up to speed with evaluating which investments to people like into. But anyway, let’s get into these tricky methods. First, as I discussed many times before you have to look at this cap rate to reversion cap rate, and I named this, the cap rate gate, where lore than reversion cap rate exit is used.

Normally, I like to see a 0.5 to 1% increase on your projected reversion cap rate to your prevailing cap rate. And the reason why I want to assume that the prevailing cap rate is lower than what we assume is in the future. Assuming that you’re going to be selling in a junker market, if it goes better.

Awesome. More money to us as investors, but let’s assume that we’re selling in a worst soft markets. That’s the reason why we’re assuming that we’re taking the prevailing cap rate. See it’s a five cap and we’re adding a half a point to a full point, right on top of that for the version cap rate in your underwriting to make it five and a half, or maybe you get 6%.

This is where I like to afford a lot of the contingency things. Aren’t going to go perfectly. There’s a lot of infant life and things typically go wrong. So by doing this, you can put a lot of contingency in here, which is ultimately helps you when things go well, now, many institutional operators would ask them this, what are they using?

They’ll admit to be using a negative quarter 0.2, maybe at most, a quarter point increase. Factor in reversion cap rates. So the way we’re doing is actually they’re going a quarter point expansion. We’re going what two to four times that, but Hey, they can do what they want to do. Now. Second being more aggressive on operational components like rent growth and expenses compared against the projection of market analysis.

Oftentimes taking the acception to bump the rents any more than 12 to 15%, I think is crazy. Unless you’re doing a super heavy amount of value, add where you’re doing maybe eight to $15,000 and you have per unit. Now, maybe you might see that 12 to 20% bump. I think I’ve seen a deal the other day, where they were expecting to bump the rents up 40%.

That’s not going to happen in my opinion, if it is, maybe I didn’t look at the DME, but I didn’t run the comps. But when I just saw that, I was like, whoa, that’s a big job. There’s certainly going to be a lot of vacancy as. Your tenants gave you the middle finger as they balk and don’t renew. Now, every deal is different.

Then of course you could be legitimately lower rents, but I think whenever you’re going over that 12 to 50% range, you’ve got to be really scratch your head and really verify those comps. I know we’ve had it. We’ve had deals where the rent sores legitimate under the market, but that’s very rare, especially in these days where it’s very competitive.

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

This has been a way to sneak deals past even the most astute, passive investors. Well, understanding of underwriting, just put stuff into other income category. Because most people don’t look there now, the way we do it is like we come up with our operating budget and rehab budgets with of course deferred maintenance, because that has a bit of a bit us in the butt in the past.

So made that lesson learned, but we independently use the knowledge of our past projects. And it’s great when we have so many properties in that same area that we can benchmark against. We also use the big data from sources like CoStar or the Reece report to give us insight on the operating budget of other comparable buildings in our.

Cincinnati now the second piece of that, and like I said, we, this is independent. Our property manager, even before acquisition is walking all of the units and coming up with their own operational budget, we have budget. So two things there, right? What can we run the property at? And what big deferred maintenance item or what things that they think they can.

Revamping that, and they were coming up with that budget from there, we’ve come up with our numbers, independent, put our heads together. We don’t really peak at what our property management is doing. The team comes together. We create a budget and of course, add someone for contingency and especially in the rehab budgets.

Now the sequence creates a level of expectation that the property manager is held accountable for with the bottom line or the profit and loss statement, being the assumed performance rubric, which means if the property manager comes up with a budget, we’re holding them accountable to that. They don’t hit it.

They’re a gun for hire. We can always fire them and get another one. That said overall yields might be dropping. However, we don’t undertake a project unless we underwrite it the right way and feel more than comfortable in taking on investors. But at the time, I think, you know what, you’re probably seeing a lot of strength in multi-family apartments and you’re starting to see some institutions, especially from the retail sector or some office coming into this multi-family apartments is seen as a safe Haven.

Maybe it may not make sense to be in apartments. Of course that’s on the high level. And I think a lot of investors, they listen to a lot of podcasts and they start to get these ideas in their head and they’re not digging into the exact deal. We’re not going into a deal unless it’s one in a thousand and that one in a thousand kind of defies the generalities.

It’s the same. Like all boys are bad when they’re teenagers, they might be on average. But I think if it was yours, you’d probably say mine’s a special right. Kind of the same thing here. Sorry. If I offended everybody. But we’d like to think that the deal that we’re picking, the reason why we’re picking that one is because it’s a one in a thousand deal that sort of the FI’s generalities.

So, yeah. Even if though apartments are getting more and more expensive, trying to pick that diamond in the rough, and this is where I say, like, I think the same example can be where investors are looking at a certain market and say, I don’t like that market. Have you even looked at it? Have you been taking a look at not the MSA, but the market, but only that some market, but what is it on that block?

What’s the vibe of the area. But just some things to be on the lookout for. If you want to learn more about this, go to simple passive cashflow.com/syndication. And thanks for listening guys. Please share this with your friends.

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 inspectors, to veffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffrify 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 in information is not guarantee as in every investment there is risks.

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 your best interests.f

June 2021 Monthly Market Update

https://youtu.be/Ej3gVGwhRj4

What’s up everybody. This is the June, 2021 monthly market update, where we go over all the important things that have been happening in the news that will impact your investing. But so let’s get into it. Easter egg for this month. Little bit of a joke here. It’s a little Mimi here. Taxation is theft.

Where person didn’t leave a tip, but they left it in a cash tip so that the federal government and state does it take their cut. And they’re exactly right. The middle class is the people that get 30 to 60% take in front of in taxes. If you guys want to learn more, go to simple passive cashflow.com/tax and join our private investor group@simplepassivecashflow.com slash club.

Like joining there. You’ll get the free light remote investor. E-course six or seven hours of videos to edge. Get educated. It gets started in investing again, go to simple passive cashflow.com/club. You guys haven’t heard me before. My name is lane Coca cellmate, professional engineering license. If you guys like this said more, check out simple passive cashflow podcast.

And for those you guys are already listing on the podcast form. Can also check us out on the YouTube channel, where we have all these great slides and graphics. Me, I like graphs stuff, check out all that on the YouTube channel.

So some teaching points as we start out, stuff, eating the chicken here, showing the KFC. Chicken poop and start eating the eggs first for cashflow, right? Create streams of income. Don’t eat the chicken, eat, the eggs that they hatch the golden eggs. Don’t kill the go to groups.

It’s the same. And again, act like an accredited investor. I had an investor today saying I don’t have enough money to invest. I’m like, but that’s not the point. The point is stopped doing all these things that are hurting you like buying a house to live in. Investing in the wrong stuff, like your 401k and doing things the wrong way in terms of tax, I’m gonna drop the link here.

Simple pass a castle.com/tax. Little gear here is looking at the back of another year. It’s like the IRS taking money from you.

And then, get that. Remote investor eCourse light for free, by going to simple passive cashflow.com/club or a shipping email land, simple passive And we’ll get you access to that. And then you’ll learn the secrets of investing. And a lot of it is just not in textbooks, such as this one.

No, I a meme here where the person said on social media, the bar, random people, jogging for no reason, the higher the rent is going up. Yup. That’s about it is we don’t invest in those areas where people will go jogging in the middle of the night. It’s no secret that we don’t invest in the nicest yuppy areas at the same time.

We’re not in dangerous areas. The class C or T Airbus worse. We stay in that sweet spot. And that is the kind of the secret sauce investigate, good areas to the lower middle-class wrong. Give them good housing and treat them with respect. In turn, they pay us a good return on our money.

A lot of other podcasts, if you guys missed out this month, we had a couple podcasts on cryptocurrency and you guys want to go back and check those out. My new rich uncle channel, which is geared more towards the younger folk. It was supposed to be a little bit quicker, for a lot of people, they don’t have too much money to start investing or start investing seriously as an accredited investor.

So where do you start? So check out my rich uncle channel or give it to the kids. Some Warren buffet highlights from his latest Berkshire Hathaway report where he’s talking about. Inflation coming. And the shorter, the story is by assets that produce cash flow. That will go up with the pace of inflation.

Those people not able to invest are going to be the losers here. Unfortunately. We also talked about preferred equity versus traditional equity to treat it different ways to invest and yeah. More stuff to come next month on the simple passive cashflow podcast.

We had talked about if you guys are missing out a lot of this discussion in our simple passive cashflow, we Facebook group, you guys need to find us on Facebook and join us as we’re always talking about new things, not always real estate. Talk about crypto, such as the latest happenings with tether here.

But yeah, let’s get into the report here. So the first thing wanted to talk about is inflation as Warren buffet outlined for everybody inflation is here and it’s probably here to stay price a lumber skyrocketed more than a few times what it used to be, but not to freak out, right? If you’re a home builder, you’re going to see the price come back at you when you actually sell the houses.

This past month, we had a big dip of Bitcoin or all cryptos for the most part. It is not a mature market. And the reason why I say that is, and if you look here, Elon Musk was the guy who supposedly. Tripped up the latest bull market as he tweeted that Tesla would stop accepting Bitcoin payments.

Sighting. I feel as a bogus thing saying that, he doesn’t like how it’s hurting the environment. It’s not like the people mining the stuff like they’re getting the energy. From pretty hydroelectric, solar. They’re not getting it off the grid for the most part.

And I think he’s not dumb enough to not know that. So it’s just another example. I think Elon is just trolling everybody and it just shows that cryptos are still a very immature market or what. No guy can move the market as he did. It gets people into storage clean so he can place swing trades.

Unfortunately, a lot of people like really buy into this stuff quite a bit. And it’s not the people that are very wealthy that cannot get hurt situations like this. A lot of people in my world, they like crypto, but I’ll keep it within reason, maybe with one, the 10% of your net worth, if that.

The less network you have, in my opinion, more conservative, you have to invest in investment cashflow as opposed to these ACE semester risk type of pull dates. I’m definitely not a big fan of alt coins, which I feel like are startup investments, very asymmetric risk type of investments.

Bitcoin and Ethereum are the blue chip type of cryptos, but these stills swing up and down quite a bit. And of course the more conservative way of playing this stuff is not the odd points, but the staple points, just getting a nice little yield farming from there.

So this survey put on by UCO on behalf of bank rate and April, 2021 showed that homeowners most common regrets about purchasing their current home. And it showed the difference between a home owners of all ages and then the millennials. So the top ones where they had no regrets, then maintenance and other costs of two.

I bought a too small of a house, bad location. Didn’t get the best mortgage rate. And then these are some of the lower row. Common regrets, butter, too big of a house mortgage payment, too high overpaid, too much, not a good investment. And lately I’ve been thinking, there’s no rules of thumb out there for this type of stuff, but I felt like, if your net worth is not one or two times the price of your primary residence, Ellie, you should buy it.

And it probably disqualifies most people out there. So if your net worth is, quarter million dollars, don’t think you should buy a house. That’s more than $150,000 in that case. You don’t buy a half a million dollar house until your net worth is a million dollars in my humble opinion.

And that probably upsets a lot of people. Cause they’re like, oh man, we’re going to buy a house. Like we’ll go invest and do something financially responsible and grows your money the right way. And then go buy a house. A house is a financial tray, but then again, my big cabinet is for most people out there are financially irresponsible.

They can’t seem to save, or then they make, and they can’t control their spending. Therefore, a house. Might be a good option for them because it is a force piggy bank for those people. But for most of you guys listening, you guys are pretty good with your money. You’re financially responsible. I know a lot of you guys backs out the 401ks, do things like that until you learn about real estate on alternative investing and for you folks, I wouldn’t buy the house quite yet.

So yeah, your net worth is at least two times your what’s the posture you’re looking to buy.

For sure.

All right. So I got a display of the back here of 2020 population, net migration by county. Now this is a big one. I think you’ve seen so many of these maps with states net migration, which is good, but. I think a lot of stuff gets mixed up in the shuffle, right? Because most people are clustered in a few cities in every state.

And it is a little misleading when, Texas is a big state for example, most of the growth has clustered in those top five cities in Texas. But here we have it broken down by county where the red places are, the growth in counties ended up blue is where the people have been moving out.

And I think this is a lot better way of figuring out are you in the best thing in the right place with the Tradewinds behind your back in emerging markets? I just got done watching a YouTube of Boise, Idaho. They said that the prices have gone up 30 something percent in the past year.

I’m not a fan of Boise by any means. I know it’s like people are moving out there, but. I think the reason why I’m not a big buyer of it is because when I, when I looked up the population, it’s barely anything, it’s a very small tertiary market at the end of the day.

I want to usually invest in a place that at least half a million population or greater. And a lot of people that move there or California, and so they can remote work. But what happens when. No, the bosses want everybody to come back to work, which I feel like will happen at some point. I think some people, they like to invest off headlines, but if you asked me I am not hugely bullish on a place like Boise long-term.

So next came from an article done by Harvard and they analyze are millennials so different than the generations before them. So there’s four major differences or things that have talked about. So first is marital status. They said millennials are less likely to get married than earlier generations.

I was reading, I forget where I heard it, but like they said, divorce rate through the pandemic is down, but then they said, it’s because people are getting married in the first place. So this article confirms that too, as far as home ownerships. Millennials have been less likely to be owners than previous generations of the same age.

The gaps between them of narrowing home-ownership at the age of 30, among the early nails was about 41% when it was 50.5% of budget X-ers at this point. So less people buying houses, and this is what we like. Hey, Rutgers for life guys. Keep doing it. Average personal income, despite the popular media patrol of struggling millennials, their average personal income has surpassed that of earlier generations as their age into the 30th.

Now, I don’t know if they took into account inflation cause you know how these articles are never really done by data, people that is more English majors that kind of just look at stuff and don’t really adjust for inflation and things like that. Maybe that had to do with also the poor early millennials were the ones that came into a 2008, 2010 type of job market post recession.

I don’t know. Multi-family residence shares. Millennial generation is about living in multifamily housing far more frequently than the boomers did. They’re falling their parents’ migration into single family homes and millennials are not forever young and it’s time for many to events that they might have to live and get a bigger space.

And that costs a lot with these types of single family homes. Tax changes now, Biden is asking Congress to enact legislation that would disallow 10 31 exchanges for gains greater than 500,000. Now this will change probably several times before it really gets solidified, but I think if they let people on their $500,000, 10 31 exchange go, I think

that’s a fair deal, not to get political or anything. Those people who have like left properties appreciate greater than half a million million dollars. They’re Asante. And, I’m all for wealthy people who are not smart and especially not motivated. That was just very indicative of second generation wealth.

So lose it and give it to those who Work harder and actually put focus into growing their wealth and wealth management. What’s the same 90 something percent of wealth leaves. So family Intuit to be generations. I dunno, I guess some people would argue with me that they deserved it.

I don’t know, but I just see a lot of. Trust fund kids and they just don’t deserve the wealth. They squandered it and sadly for them. They’re not motivated to do anything about it. One big thing that I saw in a year, this is probably not going to affect too many people, but it’s something to be aware of as the caring interest plays a role in every private equity investment, where the mutual fund leaders.

They get paid on carry interest. If you’ve ever heard of the term 220, that’s how the industry standard compensation where fund managers or mutual funds, they get like 2% asset management fee to keep the lights on, but they also get 20% of the upside for managing your money.

So that’s called carried interests. So right now, the carried interest is taxed differently. Where in the future, Biden’s looking to tax that at a higher rate, who knows how this will come out, I think it’s gonna spook out some of the rats in a way. The, each of fund folks, the big players are going to find another way for them to take compensation.

Cause for awhile, They were hiding a lot of their compensation, like at a lower tax rate under this carried interest benefit. So next time you want to sound cool in front of your friends. When you actually have a real lifeline party, you can discuss the benefits of the carry interests of wealthy fund managers.

Porter one completions. This is the construction from CPR E so RAC 2020. I think it’s obvious, like construction fell way off. Some people could say because of the commodities, lumber prices went way up, but it’s just a sign of the times. Uncertainty makes people stop building. It makes people stop taking risks.

And I think it’s a great time to build right now because prices are going up and again, the fundamental, so it’s the same, people need a place to live, but it’s just interesting to see the trends and like how there’s healthy building. Maybe some people would say over supply or over-building we definitely didn’t ever hit over supply.

We’re still at a housing deficit. But how things just slowed way down quarter one 20, 22 quarter one of 2021.

We said before a Warren buffet is very hyper aware of inflation. And so is his other older elderly friend, Sam Zell, who I like to watch. And Pete what he does from time to time, he says he’s buying gold with. Inflation reminiscent of the seventies says obviously one of the natural reactions is to buy gold.

He said, and it Bloomberg television interview. It was very funny because I spent my career talking about why would you want to own gold? It has no income. It has costs to store. And yet when you see the basement of the currency, you say, what am I going to hold on to? So this is where I’m going to I agree with inflation, but I disagree on though. What the beans, I think the way to do duet is with real estate. And I think at some point cryptocurrency will probably lead to wrong gold as the means, or mitigating against inflation. Right now I think cryptocurrency is a trillion dollars where gold is around 10 times that, so it’s nowhere near more than gold, but it’s the fastest passive asset to get up to that one.

Trillion mark, thus far as history. If I were to put a bet, I put it on crypto over overcoat, but I like real estate because it pays the income in the process. Commercial property, executive reports, the top five Sunbelt markets for industrial construction. Number one, Dallas, number two, Houston, number three, Phoenix.

Number four in an empire, which is out there in San Bernardino, California, Colton, California, and number five Fs Dallas Houston, Phoenix empire office.

Another article from Harvard university. If you guys looking for a good read, these guys don’t get too much notoriety, but these guys pump us good articles. Not really thought provoking once too. So they said here are millennials leaving cities. They say yes, but young adults are not. So I have a graph year of how the different age ranges are changing from the top 50 MSA, which are the bigger cities to smaller MSCs and how it’s transitioning over time.

I don’t know. Some of this stuff is I think people are moving out of the cities into the suburbs. Because when people would rather be in less crowded areas, there’s no point to commuting all this time. People don’t need to be in the same office as they once did back in the stone age before zoom and all these interim, even in February email, or when everybody had to get on a conference call, that was a big technological boost. But I feel like, young people. They still want to be where it’s boffin, right? Where the big cities are now, some of the smaller MSEs are having more uptown type of fun, leisure life areas. But I think regardless either in one camp or the city or the suburbs, I’m neither, I’m like populations going up, both are increasing both ways.

So new mark had a report here. This is from their multifamily capital for where they cited the lack of housing supply. The can line is the case. Should the us national home price index, which has been steadily increasing for a decade. No surprise. There. And the blue lines are the buck, the supply of hall, which went down in the past year.

And that is the reason why residential prices are higher. I wouldn’t say that there’s more demand. I don’t know if it’s more, I dunno if it’s less, but what I am searching and it can be measured is monthly supply of houses again, supply and demand. That’s what dictates the price. The supply is down.

Therefore, even if it’s more or a little less demand, the price goes up and that’s what you’re seeing. House prices go across the country. It makes absolutely no sense to me. That’s why I don’t do residential real estate because it’s based on emotion. You’re not really seeing this type of run up in the commercial world.

All right. So this next article from John Burns real estate consulting. So they forecasted how the affordability, which is defined as the. Medium parcel of income and the annual household costs, which includes mortgage plus taxes, insurance, and mortgage insurance for it equal to 80% of the median home price.

So in a nutshell, all affordable are houses based on what people can afford today. In 2005, 2006, you had a scale of 10. In 2009 to 2012, you had a scale of zero and it’s stead means the past decade it’s been going up and down, but steadily moving up to over the media where we are now we’re at baseline five and John Burns is forecasting that in the next few years, it will be keep going up and up to almost to where we were pre recession.

So I think people are scared to death that the recession is here moving. I don’t think based on this chart right here, we’re still another handful of years away. If you’re sitting on the sidelines, you’re probably going to miss out on one of the best bull markets in your lifetime postman, but Hey, we just want to see and watch the wave pass you by that’s your own life to deal with.

But I think the one risk that is looming is there’s a lot of people in forbearance. And for a lot of these people, they went in forbearance. The thing that sucks about forbearance is not like your payments stop big pile up. So people could be looking at, and you’re from like 10 to $20,000 of built up payments that they have to pay when the forbearance burns off, which you would think would be happening soon with.

The country, 50% vaccinated, everything opening up again. You got a hundred something. People at the Indy 500, you got real people at festival game. It’s things are opening up again. Therefore you would think the government would be like, all right, guys, y’all got to pay your rents again.

You got to pay your mortgages again. The freebie dance is over. And the theory is that it’s going to trigger a lot of foreclosures and on my last podcast with George Newbury, which you’ll see here in the next month of the latest update with HP, we’re going to be walking through the financials.

I asked George, Hey, what do you think about all the residential stuff? And he feels like there was definitely going to be a lot of foreclosures happening in disk and possibly a cool off the obscenely hot residential. Properties. And honestly, I don’t really care because I don’t own a primary residence.

And I invest in commercial real estate, which is a little bit insulated from all that madness and emotion in the residential world. But I’m not really interested in it, but if I was betting, I feel like in the next year or two, you’re going to see the prices start to cool off. And people get foreclosed.

And I think that’s why it’s smart to own commercial assets because they all get the rent.

If you guys haven’t checked out our mastermind group, the family office on a mastermind, check it out and apply it. Simple passive cashflow.com/journey. Prices are going to be going up here in the next month. So join now for it goes up just like a house. Price keeps going up. You’re going to what she did it six months ago.

And if you guys are still trying to buy your first rental property, check out the incubator and the rental e-course by going to simple passive cashflow.com/turnkey and simple passive cashflow.com/incubator. But again, if you guys are accredited investors already got in your portfolio, boy. Look to joining our group of accredited investors in the family office upon a mastermind, we are the only pure passive accredited investor.

Nope. And one of the question always happens is people are like, I don’t have the time for that. I’m like, dude, you don’t have the time not to do this. Like the time commitment is just like a few hours every single month. But the big thing is we put you in the ethos of 50, 60 other pure passive accredit investors, and you build a relationships with the right people, none of this, going out to the local trolling on some fee internet form with a bunch of broke guys wasting your time on the one time that your spouse lets you to go outside the house or the one weekend that you can go to some kind of conference the year.

Like trust me, I’ve been there. I’ve wasted so many weekends of my life. So many thousands of dollars going to fake real estate conferences, just to find other people that are rogue, trying to get unbroken, to have that get rich mentality. You’re not going to find another group like this who are already high net worth accredited.

You’re passive investors that have good paying jobs and understand that the highest and best use is at their job, but they want to understand the systems of analyzing syndication deals, the tax, the legal and the network. Of other pure passives like yourself. So check that out. That’s all I’m going to say about that.

A little bit, update on my life as we transition to what I’d been up to. Something I’ve been doing for growth this past month these are short the monthly definitely fly by. We’re already halfway through 2020. Yesterday or a couple of days ago, Memorial day, I did the birth challenge once again.

And this year I didn’t deal with the weight fast. My fitness has been sucking as a plate as I have not been going to the gym. I just do the zoo workouts, which had been very convenient and it really good for productivity on my business side, because I don’t go to the gym for an hour a day.

But I don’t have that peer group around me to peer pressure, me to putting more weight on the bar or shaming me that at the last person. So I probably got to get back into gym, but for the Murph challenge, which is a mile run, a hundred pull-ups, 200 push-ups and 300 air squats. And there’s me, the arrows pointing to me.

That’s me in the middle of one of my 300 air squats there, as you can see, I am pretty much at parallel, so nobody can give me any crap for that. So that was my thing for growth this week. How did I contribute back? I’m seeing my mission these days that help people get more educated about this stuff and.

There’s so many people out there that are accredited that kind of wastes their time buying rental properties. Again, if you guys are younger and like when I was in my twenties and your network is under half a million dollars, it’s like adolescents. You have to go through the stage of wanting rental properties, but there’s a message on our Facebook group that somebody left on one of their tenants, as they’re doing the move out, their last tenant accidentally left their handgun on the kitchen.

Countertop and the property manager freaked out and this is not something like an accredited investors should deal with, this type of stuff. Move off to bigger and better things that are more passive or liability, debt and guarantee.

Another thing I like helping people out is, I think it upsets me when I see a lot of young people under a quarter million, half a million dollars network buying houses. Cause that’s not what they should be doing. It’s not a good use of money. And here’s a little meme of making fun of the Japanese people I’m Japanese.

So I think fun in Japan because they’re all happy when they want the 20, 20 Olympics, and that’s how a whole leadership is. Everyone’s yay. Congratulations. How’s your home. As it’s nice to be a whole honor. And then you move in and you realize the damn thing costs all this much.

You gave away this big chunk of money that you could have bought a handful of rentals with. You got this big mortgage payment, you have no cash flow, which is your oxygen, which is your ability to buy more rental properties or do syndication deals. And you’re house rich, but cash poor and you’re stuck.

And this is what society wants you to do. Your boss probably wants you to buy a house because once you buy a house you’re stuck, you’re slave to him. You have to do everything. He says as opposed to what I was, I didn’t listen to my boss. Cause I had rental properties. I could choose what I wanted to do.

Yeah. About this controversial subject. Go to simple, passive castro.com/home, but it’s one of my missions and contribution back, especially the young people being misled, some things that I’ve been proud of and derive significant off of, we closed the rig properties this past month.

First one was a small 96 unit in concert, Alabama, which was pretty screaming deal under market events by at least a few hundred dollars. And not just saying a few hundred dollars because most times when you hear that it’s never a few hundred dollars. It’s really like $125 really. But Donna is legit like $300 on market.

I think the average rents, or like in the high four hundreds per month, this for a classy property. Oh, he closed 126 units in Houston and then another 300 unit in Houston also, which has been our biggest property to date. Definitely moving up the the better assets scale and on one of our properties, we refinance.

To a lower rate, we paid a little bit paid like 13 grand, but we were able to lock up a $32,000 per year savings. I call that a pretty good cost benefit analysis. So we raked locked at 3.18 and we use the FHA model for those of you guys aren’t familiar with these. Normally we do Fannie and Freddie Mac.

FHA loans are longer. Amateurization 35 year app and lower rate would be a quarter point half a point less than their Fannie Mae Freddie Mac counterpart. The only problem with the FHA loans is that they take forever and a day to originally difficult in terms of uncertainty. This is.

Kind of what we deal with, right? Like I think all signs point to a good few years ahead of us. I’m very bullish on what you were going to see for GDP growth. The next sport into Porter after talking probably four to 7%, but what’s going to happen with the foreclosures and the residency. If I was ordering rental property right now, that is impacted by residential home prices.

I’d be a little uncertain right now. I don’t care because I own commercial assets. So the insulated from that, and actually benefits a little bit as people get foreclose, they got to come back to a class B or C apartment, but you’re always going to have times of uncertainty, but how can you move forward in a strategy where you’re hedged to the downside, but you can still partake in this case, the potential bull market.

Another uncertain thing we’re dealing with is the lumber prices, right? We’re trying to build 230 units apartments. And this is a one of the security cameras of we’ve got the structure up and we just bought the last trunch of lumber. So we’re good, we locked in that lumber price.

We paid the higher price because the team felt you know what? We don’t feel like the price of lumber is going down because when inflation is here, how else are we going to pay for all this government stimulus money? There’s several trillion dollars pumped into the system. And it’s been unprecedented, nothing like in 2008 was books, anything how it was in the last year, on the last thing in terms of love and connection.

I I’ll be honest. I haven’t left the house very often cause they’re having a kid here soon and I don’t want to be the person to mess it up for everybody. I got my COVID shot. I got really sick for a day. But I really would like to be able to meet everybody again. I don’t know if I’m going to be able to see everybody this year, but for sure.

You guys out there. But the 20, 22 retreat on the calendar or Martin Luther king weekend here at Honolulu, Hawaii for all indications, I believe it’s a goal. So put it on the calendar and we will look forward to meeting all of you guys. I think I’ll be on a lot of good feedback from the virtual mastermind this year.

And a lot of people realized, wow, I didn’t realize this was such a big thing and more importantly, So it’s a hydraulic people, high net worth professionals, people first-generation wealth that, are frugal, good values. I want to pass it down the right way to their families legacies.

And that’s what we’re all about. I don’t think you’ll find a higher quality caliber of folks that are cool and no better place than coming up to on a little for white and hanging out for a weekend in january 20, 22, if not, hopefully I see you guys before that, but I think that is something circled on my calendar that is going to happen.

As you guys always like to see the things I’ve been buying and life and Sam or buy much stuff, because everything is for that kid. That was baby stuff coming in the mail. I stopped even checking the mail personally, because I know it’s not for me, but I did buy these Feasible your glasses.

Cause it’s been getting hot here and I don’t like my drinks to get water dumped by the ice. So I bought these twenty-five bucks, not a bad do dad’s spent for myself. Do you guys have any questions here? Type it into chat, but we get some of it here. So Justin has. What about the 1% physician loans?

These things they’re just marketing tools. The lenders just tell you, they’re like physician notes. I’ve been, then the next guy comes. They’re like, oh, these are the teacher lawns. Yeah. And then they say, oh, these are for the engineers. It’s like when you go to the car dealership, they ask oh, do you work for we have a government, it’s just marketing to make you feel significant.

But. No, they’re not really that great the best molds are the governments Fannie Mae, Freddie Mac, and that’s the baseline. All these other loans are just not as good as that they’re priced up in a way. But that’s just my take on it. And this depends what circles we hang out in, right?

If you’re in single family, home Bora with bunch of non-accredited investors. They’ll call these Fannie Mae Freddie Mac loans, the golden tickets. They’re so good, but they’re not that great. Fannie Mae Freddie Mac loans. Aren’t that great? Yeah, it’s good that it’s 30 year debt and it’s semi low rate, but it’s the fact that the government is backing the loan.

Should it fall through? It doesn’t discount the loan that much. The biggest thing, it’s an investor’s buying the right deal. That’s what’s really going to move the needle, then finding them all the bones are okay for the most part.

And then, so wrapping up here, make sure you guys check out the tax guides that we’ll pass a castro.com/tax and get the free light remote investor. E-course by going to simple pass the castle.com/club. And we’ll see you guys that stuff and everybody. Bye.

Intro to Cryptocurrency w/ Bob Burnett (Part 2 of 2)

https://youtu.be/sbVbyAdbFqk

 Hey, simple passive cashflow listeners. Today, we have part two  of the crypto currency,  alternative Bitcoin, all things crypto and why this is, the big theme here is freedom, right? Professor for freedom, but this is taking the control out of governments and where monetary policy is going.

 

If you guys want to go back to the first podcast we did. I would go check that out first. We  also have a pretty nice slide deck here that Bob’s been presenting displaying on the screen. So your podcasts guys want to go over to the YouTube channel, or I will also put them@simplepassivecashflow.com slash crypto, but so we will start get rolling.

 

Picking up midway here with Bob Burnett. And here we go. Yeah. All right. Hey, thanks for having me back lane. As this is a topic we could probably do part  three through 12 too, but  we’re going to try to pack this in and get all the pertinent information to everybody here in today’s session.

 

A lot of what we talked about for those of you who maybe are a week or so from having listened to the part one was we talked a lot about freedom as lane said in the introduction, what is the ethos of especially Bitcoin? It’s about separating money from the control of government.

 

And a lot of the reason behind that is essentially history has shown that over time when government controls money. Either it has shown itself to be inept at doing so or corrupt in doing so and frequently both. It would be my opinion. And we’ll talk a little bit about it here further today that, we are in the midst of that very thing happening right now.

 

And maybe to apply this to those of you who are business owners or certainly managing your own wealth, we’re all doing that. There’s a great story. I want to start with today to talk about this. And the story is about a company called micro strategy. It’s run by a guy named Michael Saylor.

 

Michael is an aeronautical engineer. He founded a software company, a data analytics company called micro strategy. I think about 25 years ago. And  I find a lot of a kindred spirit with Michael I’m an engineer myself. And I think very similar to similarly to him and what Michael had to do was he had make a decision as a CEO starting about a year ago.

 

And his decision was this micro strategy is a public company. They had $500 million of cash on their balance sheet. And in March of 2020, And as we all know the world turned on its head. In March of 2020, Michael saw the fed pumping money into the system at unprecedented rates. And he realized what we talked about somewhat in the earlier conversation that growth in the money supply is actually the definition of inflation.

 

And he was seeing massive pumping of money into the system. And he said, Hey, I have $500 million in cash. If I don’t do something with this cash, it’s going to inflate. And again, he went through some very similar analysis that I went through and reached the conclusion that inflation. Was on the verge of being double digit.

 

And so even if we use the low end of that threshold, it meant that if he didn’t do something with the 500 million, which was sitting in cash and inflation was at least 10% in a year, he would have lost $50 million in purchasing power. And he felt a ethical, moral, legal obligation for his shareholders to go find a way of protecting that value.

 

So he went through all the standard exercises. Is there something happening in the bond market? Clearly 50 basis points returns on 10, 20 and 30 year treasuries. Doesn’t do it. He looked at gold. Gold was starting to become less and less appealing. It hadn’t performed well in 2008.  It was showing kind of its age.

 

He looked at equities and said there’s a bubble going on. I don’t have faith in equities. So he ended up surprisingly, at least to him at Bitcoin. And you can imagine the scene a fortune 1000 company, a very distinguished board, and Michael walks into the boardroom and says Hey guys, we have 500 million in cash.

 

And we need to protect it. I’ve gone and studied every possible angle for this. And I think we should put it in Bitcoin. And  I’m sure it was crickets at that moment. Just, dead silence. And I know overnight he wasn’t successful, but over the course of a couple of months, he continued to educate himself and the board about Bitcoin.

 

And ultimately he convinced them to take 275 million of the 500 million and buy Bitcoin now being a software company and being a smart guy, he said I’m not just going to go buy $275 million worth of Bitcoin. And he set up a bot with his team to buy $2,000 a Bitcoin. Every second, I believe it was for something like 40 days.

 

That’s how long it takes to buy. It was every second or every minute, whatever the math is. And so he deployed that and then he went to the marketplace after he had finished it and he announced to the world, Hey guys, I have purchased $275 million worth of Bitcoin with our 500 million and treasury.

 

The wall street analysts just crushed him instantly. But interestingly, the market didn’t, the market responded very favorably to his move, his company’s move and the stock price started to go up. And it Rose something on the order of 25 to 30% over the next month. And in parallel, Bitcoin kept rising and the faith of him and his board in this strategy started to increase.

 

So by the late June, he went back to the board and said, Hey guys, we really only need $25 million of operating cash. Let’s take the remaining 200 million we have and buy more Bitcoin. And the board passed the resolution and they went and did the same thing early July. He was back into the marketplace saying by the way that 500 million is now 475 million in Bitcoin.

 

But by that time, Bitcoin had already started arise. He was up several hundred million dollars on that purchase. And if you look at a Bitcoin price chart, you’ll see that through the summer, your thing was still increasing. So then he said, and made what I find to be a brilliant move.

 

He said, Hey, money is cheap right now, the Fed’s paying like 50 basis points on a 30 year treasury. So why don’t I go do a convertible note offering to the marketplace and raise another 500 million I’ll offer 50 basis points of return on a five-year convertible note. And he went in and I got the board approval for that raise $500 million  essentially for free, took that $500 million and bought more Bitcoin.

 

So he’s now in at $975 million, a Bitcoin purchases and micro strategy became somewhat of a superhero in Bitcoin circles and other people started paying attention. So it turned out that so many people wanted access to convertible note. He got oversubscribed. So he went and did it again. So it cut to the end of the story.

 

Now they’ve continued this strategy of taking any free cash coming into the company to buy Bitcoin. And they now own 91,000 Bitcoin. And at current valuations that means they have over $5 billion of Bitcoin. And so in the space of one year, Michael Saylor took the corporate treasury of $500 million in cash and turned it into $5 billion worth of Bitcoin.

 

And he has become champion of this cause telling other CEOs, public companies, private companies, big companies, small companies, basically saying if you have corporate treasury and you are not putting it in Bitcoin, you are doing an irresponsible thing with your company treasury and not basically performing your fiduciary duties to your shareholders.

 

So it’s a story that I think everybody, listening, whether it’s managing the corporate treasury of your personal wealth or the corporate treasury of a company that you may be influential in or run, this is something I think that we all have to seriously look at. I will share with the listeners that for my companies, which I run  three mining companies, some Bitcoin and Ethereum that we hold all of our corporate treasury just like Michael Stratton.

 

We’ve been doing it for several years. We hold our corporate treasury in cryptocurrency and it has been phenomenally successful for us in our little world. We’re not anywhere near the measure of micro strategy, but it’s been fantastically successful for us.

 

What Michael did not go unnoticed though. And so what people are latching on, right? Cause Ilan is, yeah. I don’t know if the it’s very high-profile right, but he’s basically doing the same thing. Yeah. And Elan did it because of Michael and so that’s, I think a lot of people are aware of what Tesla did.

 

But they did it because of what Michael did and taught them. And Ilan paid attention. Michael held a conference. Those videos are available still out on the internet. I would encourage you to look for like Michael Saylor corporate treasury conference. If you Google that you will find it.

 

And one of the groups that showed up by he had 8,000 participants over 20,000 people sign up for this conference and all of them were CEOs and CFOs of companies. That was a requirement to be in the meeting was to be part of that. Tesla did the same thing. They went out, put a billion and a half into it on January 1st, 2021.

 

And now less than four months later, they have basically doubled their money. And now sit on $3 billion of Bitcoin. And it’s successful as. Tesla is then they’ve made more money on that than they have in anything they’ve ever done in their history. So it’s just a phenomenal story to show the commitment of Ilan and Tesla to this though, I found this to be the most interesting news.

 

Not only did they put the billion and a half in, they said, we will now accept Bitcoin as payment for our cars. And if we do get payment in Bitcoin, for one of our cars, we will not sell the Bitcoin. They’ll cover the cost of the car  through other financing mechanisms. But if they get Bitcoin, they are not going to sell it.

 

They aren’t selling their corporate treasury and they won’t sell any money that they acquire. So that, to me, that speaks volumes of. How strongly they feel about Bitcoin now, don’t you think I’m a fan of Bitcoin, obviously you are, but for a publicly traded company to throw their cash reserves into something relatively new, like this, and that’s typically not what  publicly traded companies do.

 

It’s probably going to work out best for them at the end. Like how Steph pro jacks up at three from half court all pretty much goes in most of the time. But is it, that’s shot is obviously like a little out there, right? It’s the same thing here.  I understand what you say.

 

And I think that would be the initial impression of the vast majority of people,  elan may seem like a bit of a Maverick he’s not stupid. And he also, I think to turn that around I’ll pretend I’m them or I am them because my company does it, I would say, Hey, if I have a couple million dollars, let’s say in my corporate treasury, and I keep it in dollars.

 

If I keep it in dollars, then I am accepting 10% degradation and purchasing power year over year. And I think that’s the key thing, right? Yeah, I think we generally agree the crypto Bitcoin is going to go up, but there’s like that added fear that why you want to get out of right. And so it’s two prong, right?

 

Maybe it’s maybe this is not a great example, but it’s you want to go off and move off on your own. Cause it’s cool. But maybe your parents are driving you crazy, right? Yeah. The second reason why to move out well, yeah, 

 

so if I’m CFO of a company, or CEO of a company and I have a certain treasury that I’m managing, and there was a fictitious investment out there that I knew for a fact would slightly outperform inflation and it was guaranteed. Then I think my fiduciary responsibility would probably be to place my money there, but such a thing does not exist.

 

And cause if we go through it, we’ll gold offer that guarantee. No will treasuries. Absolutely not. Is some sort of basket of equity assets going to do that. Nope, Nope. That won’t do that. Can I put it in something like real estate? Maybe that might be the only thing, but  it doesn’t offer the liquidity.

 

And there are still some risk of course of booms and busts within that. Bitcoin certainly has that same variability as measured back in dollars, but the last 12 years show it to be the highest performing asset in history. Nothing in that 12 year history can match what Bitcoin’s done.

 

You might find individual things for six months or a year or two years, but you’ll find nothing. That grew like Bitcoin grew between inception and March of 2020 at 200% compounded annually. And now it’s accelerated. Normally  if you see some sort of investment opportunity that offers 200% compounded for some period of time, there’s a fall off Bitcoin is the fastest thing in history to reach a trillion dollars in market cap, and only a handful of things I’ve ever reached a trillion dollars in market cap.

 

And I think that trillion dollars, by the way, presents a phenomenal amount of stability to these organizations. So it’s almost like a positive feedback loop. Sometimes we talk about it that. Some people say Bitcoin is a speculative asset. Yeah, it is. It is. But almost everything is a speculative asset to some degree or another gold is primarily a speculative asset.

 

As an example, it has certain utility if we talked about its industrial usage or its uses in jewelry it would have a certain value that might be a couple of hundred dollars per ounce. Most of its value is its monetary value, which is purely speculative.

 

So a lot of goldbugs will say, there’s no intrinsic value in Bitcoin say and that’s one of those murky sort of things, but okay. Let’s say I agree with that argument. I would say most of gold is speculative. There’s only a tiny amount that is intrinsic value.

 

So the question is, as you pose at the beginning here, lane is, what do you do if you’re a company like these guys sitting  on hard cash, what do you do with it? It really presents a problem in today’s world. It’s one thing, even in the world where inflation, if you believe the fed and inflation is two or two and a half percent, even then you have something to think about is sitting on cash, a good deal, especially when treasuries are well below the rate of inflation.

 

Typically that’s been flipped, right? Typically you’ve had the ability with treasuries to get a fair value on it, and you could keep pace with inflation, but there are a lot of people now that say basically the bond market is dead. That’s a hundred trillion dollar market. And that money has to go somewhere, where’s it going to go?

 

I personally, I think it’s going to go to crypto currency. I think it will go into,  real estate as the primary two things, because I don’t think anything else we can really rely on. Yeah. And I think like I’m just playing devil’s advocate here, Bob I’m aligned with you on the book of those things.

 

But I think from the standpoint of just seeing dollar the dollar as a sinking ship, and that was the theme of our part one, right? Question the dollar. We don’t know what this other stuff is going to do. We don’t know, but we do know that dollar thing is sinking. And if you’re on a sinking raft, like you’re on a sinking boat, you might jump on a different boat that at least appears to be floating right now. Take your chance on that one. This one’s going down, maybe that’s a good analogy. And I think you made me think about like a way of thinking about your portfolio.

 

Like how, if you’re you have a real estate allocation, your portfolio, one way to look at it is just geographic. Like I personally like Arizona, Texas, Alabama, Florida, right? Like I just rattled off four or five States. Yep. I’m going to bet on those five States over the other 45, any day of the week, it’s like here, right?

 

You’re betting on real estate and crypto out in all these other asset classes. And, it’s just hitting the right side of the couch here and you’re probably gonna hit it and do well by having that strategy. Yup. Yup. I think that’s well said lane. Okay. Let’s personalize things a little bit too.

 

So we talked a little bit about the corporate side. I want to share a thought with you. It’s a concept I’m promoting within the cryptocurrency community. I call it the sat cap and it stands for Satoshis per capita. And the concept is this it’s summarized on this slide for those of you watching. But basically there are about 7.8 7.9 billion people in the world.

 

There are just over 18.6 billion Bitcoin in the world. If you remember, we mentioned earlier, Bitcoin is the visible by a hundred to the a hundred million place. And the smallest divisible unit of a Bitcoin one, 100000000th of a Bitcoin has called us to Toshi. So if you take that all the Bitcoins supply and you divide it amongst all the world’s population, you end up with this number 230, 6,000 Satoshis.

 

So that number  is what I call one sad cap, and it can be purchased for about $128.  So it means that you can purchase today, even if this whole concept of Bitcoin and cryptocurrency is new to you. And you look at everything I’ve said thus far, and maybe even what I will say with some degree of skepticism what I would encourage everybody to do is at least go buy this much Bitcoin.

 

Okay. This is your share, scrape together $128 and go buy 236,000 Satoshis okay. And at least now you’ve secured your place in this sphere.  Because one of the things that I’m going to tell you is I think that over the course of the next decade or so, there is a fair chance that the global reserve currency will become Bitcoin, not the U S dollar or at least they will co-exist.

 

And so if that happens and you say all the things in the world, all the real estate, all the equities all the cars, all the, everything is going to be valued in Bitcoin. It means that the value of the world there’s this, there’s a symbol, it’s says infinity over 21 million. And that’s common in the Bitcoin world where we say,  

 

everything maybe will ultimately be valued in Bitcoin. Right now there’s about 300 and $50 trillion in global assets. At least it’s the number  I’ve seen in somewhat believe if you do that, what you find out is that  each Bitcoin should be worth about $17 million. So I know that sounds like a completely wild ass number, but that’s what happens if Bitcoin becomes.

 

The global reserve currency, and we value things primarily through the optics of Bitcoin. And now  that might sound a little crazy. This Bob guys out there, but remember it was as recently as 1971, we valued everything in the world around gold. So the dollar, while it was the global reserve currency was still pegged gold.

 

And it came back to, Hey,  all the world’s wealth was ultimately the nominated in grams of gold. I’m not saying the U S dollar will go away, but what I’m saying is I believe there will be some sort of monetary system in the future where Bitcoin provides what I call the base layer of money, the ultimate settlement layer of money, and it’s all valued.

 

So if you’ve secured. Your piece of the world pie you, aren’t going to be left behind, right? So  if I’m wrong completely, you’re out 128 bucks. Hopefully everybody listening  would be able to survive that financial blow if that were to happen. But I think I know your theme often in what you talk with is  your passive cash flows and things like that lane.

 

And  I follow the same philosophical approach, but what’s also nice is when you have an investment that is so asymmetrical. So if the upside is growth from 54,000 to 17 million, if that’s your upside, but your downside is this, it 54,000 to zero that in the odds of zero of this thing, going to zero 

 

are almost infant testable. There’s never been a case in history where something reached a trillion dollars in market cap and then failed. It’s never happened if you don’t mind, if you could define like asymmetric risks because I find that a lot of, new investors, which typically are podcasts listeners they’re just skimming the surface a lot of times getting started.

 

And I do free investor calls for folks who sign up for the investor club. And I don’t know, I’ll get wound up a little bit and start naming these things off. And then I noticed that they just shake their head knocked. Yes. But they don’t know what I’m talking about. I think this is a good point for just their education.

 

Sure. So the asymmetric risk, it means that your risk of being successful. Is wildly greater than your risk of being unsuccessful. Now it could be the other way, by the way, I’m looking at this as a positive asymmetrical risk. So we’re saying, Hey, this thing has the possibility of 

 

somewhere on the order of a 350 X rate of return that’s the upside and the downside is a possibility of zero but very little downside opportunity. So the ability to scale up and the likelihood of scaling up on an order of magnitude. Is quite reasonable. And the likelihood of falling back down is very low.

 

We’ve actually seen. Just in the course, since we recorded a phase one and phase two of this podcast, we’ve seen Bitcoin soften a little bit, but it went down to 48,000 and it bounced back up to 54. It has some massive support levels at some pretty high numbers. No. So hopefully that helps.

 

Again, it talking a little bit more about money. We talked about freedom  lane led in on that, talked about freedom. And I like to look at, what happens with the poor and these big monetary systems? When you look at macroeconomic stuff and what you’ll see right now are some people like Janet Yellen, for instance, who’s the U S treasury secretary spouting frequently about doing things in a way to help the poor and lift people out of poverty and fight environmental issues.

 

And I’m going to call bullshit on that people in these political circles have learned the right words to say, but their actions don’t support the words. And this is a classic example because  there’s an economic principle. It’s called the Kantian effect. And I believe it is in hyper mode right now.

 

And this chart summarizes what happens. So let’s just look at high net worth people and low net worth people, as groups, high net worth people keep a very small amount of their holdings in cash. And you’ll see a lot in stock, a lot in real estate, some in collectibles, some in privately owned entities.

 

The poor on the other hand, keep the vast majority of their wealth in cash in savings account, or literally in cash, maybe up to 90% somewhere in the low 90%, they have a very small amount of stocks and bonds often through an employer 401k plan or something like that. Very few owned real estate, very few heaven collectibles, almost none have privately held businesses.

 

So what happens is when inflationary pressures come into the market and remember the fed by definition says, we are going to manage to 2%, even though it’s really 10, but even  they admit they are going to manage to an economy that has inflation. It does very little to hurt the rich. Why? Because the rich have very little in cash and they have things like real estate and stocks and in the future, a lot of cryptocurrency that are insulated and maybe even benefit from that inflation, but the poor are on the exact opposite end of the spectrum.

 

So what I’m saying is the politicians like to talk about taxation and using taxation to try to redistribute wealth and attack the wealthy. But the reality is if they really cared about that, they would completely change their monetary policy and help the poor people have a mechanism where they could have cash, they could save cash and eventually use those savings to get into better performing assets.

 

This is again, an important part of, why Bitcoin and the inflation policy that in an ax is very good for the world. And  this is not just the U S on a global basis the way things work now one other monetary thing that  I’ll walk you through.

 

Cause I talked about global reserve currency, and so the us has been the global reserve currency for something on the order of 80 years. Maybe a hundred depends.  It’s not like a declared thing. It happens. And the U S took over from the British pound somewhere between the end of world war one and the end of world war II.

 

So we’ve held this position for a long time. Now, history has shown that on 80 to 150 year cycles the global reserve currency has gotten replaced on this cycle, the Portuguese than the Spanish, then the Dutch, then the French, then the British and now us, right? So we’ve been on this for several hundred years.

 

We’ve gone through these patterns and on the surface you might say that’s a very powerful position and the us. Should fight to maintain it because as some of you may know, we use it somewhat as a weapon. We are able to put sanctions on countries like Iran and North Korea, and we use locking out the money supply.

 

And  that may be a good thing. That is a purpose of it, but here’s the problem. And it’s a sob effect of something called the Triffin dilemma. But to summarize the Triffin dilemma, it says for a country to be the global reserve currency, it must be a net importer of goods and a net exporter of money.

 

In other words,  if you want to be the global reserve currency or the world even declares you of the global reserve currency, the only way it will work is if there’s a whole bunch more money outside of your country than inside your country. And in the early days of this, let’s say in the post world war II period, the us was a massive percentage of the global economy.

 

And so it didn’t take as many dollars to be outside the us as inside the U S for this to work. And also the world still needed our manufacturing and production capability because a lot of it, especially in Western Europe and in Asia was destroyed, they didn’t have factories, but as they rebuilt and they brought those factories back up they now had the capacity to start building goods for the world.

 

And so I’m going to give you an example of the effects. Of this that you won’t hear from any politician. So then we’ll give an interesting example. I call it the potato example. Okay. So imagine we’re going to start all over  that there is no global reserve currency at a given point in time.

 

So we’re going level set. Okay. And the us is producing its goods and South America and Africa. And after they’re all producing their goods and their own little economies, and we decide we’re going to open the world up to commerce, but we need one of the currencies to be the global reserve currency.

 

So by decree that it’s decided that the us will be that currency. Okay. Now let’s say then that in Peru, There’s a decision by the government that they want to build a massive bridge and it’s a $5 billion project. Okay. And that they searched the world for the best team in the world to build this bridge.

 

And they find a team in Germany. That’s the best to do that. Now the Peruvians don’t have any euros and the Germans don’t want Peruvian pesos. So the decision logically would be well, let’s use us dollars, but it turns out the Peruvians don’t have any us dollars. So in order to build the bridge, they’re going to have to go get $5 billion.

 

And the only way for them to get dollars is of course, to sell something to the U S we’re $5 billion. So the Peruvians look at their economy and say what do we have? We have a bunch of potatoes. We’re really good at growing potatoes. So the Peruvian send one of their sales people over to the U S and they go to Walmart and they go to all the big grocery stores and they say, Hey, we have these beautiful potatoes.

 

We’d love you to buy potatoes from Peru. And all of the U S suppliers say why would I buy potatoes from you? I can buy perfectly good potatoes from Idaho. And they say they go back to the government, say nobody wants to buy our potatoes. And they say there must be some price at which they would buy potatoes.

 

So the salesman flies back over to the U S and he goes back and he says what price would it take for you to buy potatoes? And they go if you’re serious, it would take you under cutting the Idaho potatoes by 15% for us to buy the potatoes. So they go back and they sit in the proving us as well.

 

Okay. We’ll subsidize you the Peruvian potato farmers. So we can get these us dollars in our treasury to pay for the bridge. And so the proven guy calls up the Walmart buyer and the, Hy-Vee buyer and the Ralph Spire and wherever your grocery stores are and says, we’re in.

 

So suddenly they start buying a bunch of potatoes from Peru. Now there’s an outcry, of course, from the Idaho potato farmers who suddenly have seen their orders slashed. And they erupt saying my God the Peruvians, the government is subsidizing all the purchases of these potatoes and we can’t compete.

 

So they go to their Congressman and their Senator and they say, my gosh, we have a problem. We have to protect the Idaho potato farmer. Now, then the whole discussion of what we’ll do. We need a tariff  on Peruvian potatoes to protect the Idaho potato farmers. So I tell you this whole story, because in the end, this is what really happens.

 

We can boil it down. But when we talk about things like manufacturing jobs, being exported all over the world, a lot of it, and we talk about evil practices by the Chinese or the Vietnamese or these other countries about undercutting us production costs. We have to remember that a large part of this problem.

 

It’s self-imposed we want to be the global reserve currency, and this is a side effect of that. Now, no politician wants to talk about that, but the reality is we can’t move massive amounts of manufacturing, jobs, and production back to the U S and still be the global reserve currency. So interestingly, the path to refreshing and giving American manufacturing or any countries manufacturing, a level playing field upon which to participate is by having a currency, which is not managed by a government.

 

If you have  a currency not managed by a government, it doesn’t have the Triffin dilemma tied to it. It’s going to take a while I think for people to understand this. And hopefully I’ve explained this to you in a way that at least sinks in a little bit and maybe lane, you can help me a little bit here too.

 

And, if I’ve skipped over something or there’s a gap, let me know. But I find this to be a very important point that maybe being the global reserve currency is actually not a good thing for the U S in the long run. Why does the United States want to be the global reserve currency?

 

I think because of power because they can sit in the middle and they can dictate whether or not money can move. Cause it still has to clear through something  that the fed manages and it allows them to do things like freeze, the bank accounts of the Iranians and the Syrians and the North Koreans and the Venezuelans.

 

So it’s been used as a political weapon. And it’s a financial weapon as well. The strength of the dollar is in part because of its position as the global reserve currency, it creates demand for the dollar. And for instance, illustrated, in this example, it allows us to buy in this example, potatoes 15% cheaper than they should be.

 

So that’s a benefit to the U S as a consumer, but there’s always a price to pay. And the price to pay in this case is, yeah, you can use the dollars. You already have more efficiently as a consumer. But you can only do so by ultimately creating an environment in which jobs are harder and harder to maintain in the U S but as I said no politician wants to blame the Triffin dilemma on why jobs are being extorted.

 

They want to blame it on the other administration. The Republicans want to play in the previous Democrat administration and the Democrats want to blame the previous Republicans. And it’s neither. And by the way, neither can solve it. That’s the other thing is that they all say they can solve the problem and they can’t.

 

And I think finding a group of people that can look at this eyes wide open is difficult. And luckily I think we’re in a position where Bitcoin may force it regardless. So surely is a dilemma, right? We’re on team USA. Most of us listening. Yeah, I think maybe I’m just summarizing the way I see it, but it seems a little unfair that tactics that would fall, Hey, that’s the flag.

 

We also limited in the morning right. At school. Yeah, it’s a, out of a team, two things here. Yeah. So Bitcoin is going to disrupt this thing. What would be the smart thing for the United States to do a position themselves with this corrupt structure happening?

 

The smart thing for the U S to do would be to start acquiring Bitcoin, to allow people to pay taxes in Bitcoin, to use some of the resources of the U S government to mine, Bitcoin and start building, the U S treasury is no different than the micro strategy story or the Tesla story. Start building a reserve in Bitcoin.

 

And I don’t know. I think they’ll do it. In fact, I’ve got a few things here to show you that makes me believe that they should dang it. But it’s like the right thing to do. Yeah. But I will, I’ll say this, I try not to be political and I’ll share with your listeners. I don’t align myself with the Democrats or the Republicans.

 

I’m definitely independent. And if you put a gun to my head and said, you have to pick some party to be probably be with the libertarians. But I think like I said, I think political system, we won’t go down this rat hole far. I think the political system is set up around these two to six year cycles of reelection, and it forces a series of lines to just prepare actuate people in that cycle.

 

And the monetary system  is a very key part of politics. And if, and when the U S loses control of it, it forces a whole different kind of politics because  like right now, I gave that example of, building a bridge while they’re in the us. We wanted to build a $5 billion bridge.

 

We would have to handle it differently. We would either have to increase taxes or we’d have to print more money. And because the politicians never want to raise taxes, they always choose printing money, and there’s a limit to how much taxes you can raise, right? So our GDP as a country, It’s $28 trillion.

 

So annually. That’s the most, you could raise taxes too, right? You could, most you could do is tax at a hundred percent of GDP and capture all of it of course, way before you got to that point, GDP would drop off the cliff because people would say why am I working? I’m being taxed at a hundred percent level.

 

It presents this dilemma. I’m where we keep trying to add things in. Like I said, I’m not being political here. I’m just being matter of fact, whether that’s to build new bridges or add social programs or add UBI or, whatever it is, the price that we’re paying for that is inflation because there is no mechanism.

 

I don’t care what anyways, there is no mechanism to tax people to pay for that stuff. There is zero capacity for that. It won’t work. The only way for them to get there is to print money. And that’s just, paying tomorrow a much deeper price than you would pay today for something, I don’t know.

 

It’s that high time preference thing. It’s a kind of lighten the mood. You don’t blame them, it’s everybody knows this dilemma. What’s going to happen at some point. You’re in the sunset portion of your career. You just let it go right.

 

As the kids say these days, just let it air it out. Yeah. That’s a millennial term for you. Yeah, it is true.  It’s funny. I have I’m very active in, for instance, the Twitter community and In fact,  my moniker is a boomer BTC. And I acknowledge I’m in the boomer generation and I sometimes face some hostility from millennials and gen Y and gen X who say, Hey, 

 

your generation is to blame for the mess that we’re in and all of this debt and all these social problems are your fault, and so I’ve born the brunt of a lot of that venom, even though I believe I’m a voice trying to fight all that stuff, but still they just, boom, attack me out of my gray hair but I get it, but I get the anger.

 

I understand the anger because I have grandkids and I have kids and I worry about it. It’s why I’m so passionate. So I come on shows like this. I like to talk about this stuff because. Something has to change the way to make the world better, has to come from this grassroots system. And I think it’s the only way 

 

there’s not going to be a willing relinquishment of power from the existing base, whether that’s political or economic, it’s going to have to come from a movement to rest control. And I will say it’s a good segue to this slide. I have up that the fighting of this from. What I’ll call the establishment is starting to get very serious.

 

You can almost see and hear the fear and trepidation and the voices of some of these people. And we’re starting to hear, Hey, Bitcoin, it’s for criminals. Oh, it’s too volatile. Oh, it’s a bubble. Oh, it’s going to ruin the environment. They have all these mantras about why it’s bad. And this is all new and, but  they’re the classic sort of things.

 

By the way, many of them are very similar to the internet itself. If you go back those of you old enough to go back to the, say, the early and mid nineties. The same things were said about the internet, Oh, it’s too risky. Oh, it’s all criminals and pornographers. Oh, it’s gonna damage the youth.

 

And people will never stop, and what we need is more newspapers and we need better journalism and we need, there were mantras like that. And they went well into the early two thousands where people kept that up. As I mentioned, I’m often the brunt of it.

 

Even personally, for those of you who can see this, but I’ll read for the audio people. I got a tweet about a month ago. Directed at me because of my participation in Bitcoin mining. It said we need all the renewal bull energy. We can get. You’re taking these resources away from serving legitimate needs, without creating anything useful in return.

 

You’re part of the problem. So stop congratulating yourself. I’ve got to say that as Bob congratulations, man, you’ve made it. I was so happy when somebody like left A troll, posts on my YouTube channel, brought tears to my eyes because it seems like he made it right. But he actually cares the troll.

 

You. Yeah. Yeah. So they’re listening. Somebody’s listening. Somebody cares. I’m a threat now, my message is the fret and that’s wonderful. That’s why I’m proud to share it with you today. Hey, I’m okay with this and  I’m gonna play here just I did last time too.

 

 I’ll share a Janet Yellen. Who’s the us treasury secretary. From two months ago, February 23rd of 2021. I’ll share a little video clip of her.

 

I don’t think that Bitcoin, I said this before is widely used as a transaction mechanism, to the extent that you used. I fear it’s often for elicit. Finance. It’s an extremely inefficient way of conducting transactions and the amount of energy that’s consumed in processing. Those transactions is staggering.

 

That was on a CNBC interview and the interest of time, I’ve got a similar one from Christine Lagarde. Who’s the president of the European central bank. And  she calls Bitcoin funny business, a lot of funny business being conducted on Bitcoin, but I actually have some stats that I think are very interesting and that’s that because the Bitcoin blockchain is public and there’s a lot of analysis that can be done on that blockchain.

 

There’s an organization that tries to trace. Illegal or suspicious activity on Bitcoin. And it looks like about one to 2% of the money moved on. Bitcoin is in that category. It’s going to funky places. The current monetary system, though, it’s probably more like five to 8% is of this. And, to support that what I find very interesting is we’ll start with Christine, the guard, Christine, the guard used to be the head of the IMF international monetary fund. And at the same time she’s talking about Bitcoin being part of the funny business.

 

She’s actually a convicted criminal who was convicted of a massive illegal government payout through the IMF. And Janet Yellen who defends the banking system is remiss in overlooking  that last year there were $15 billion worth of fines to us banks for money laundering related offenses.

 

So  this is the point being that this is the pot trying to call the kettle black.  It’s a ridiculous inference for them to go after it. But as I said, I think there’s a lot of fear out there and these attacks are gonna keep on.   So let’s talk about one of the things that people say in fact, even Janet Yellen refer to it as well,  Bitcoin it’s not used in transactions today. And to keep this short, what I’ll say is Bitcoin was never designed to be what’s called a transactional part of the economy.

 

It’s it is a little more akin to the role that gold played when gold was in the gold standard, where it’s a store of value. If you want to infrequently move relatively large amounts of money around it’s phenomenally efficient and secure. If you want to buy a a cup of coffee or a happy meal from McDonald’s or something like that in its native form, it’s not the most efficient way.

 

But what it does have is it has this ability to sit at what’s called the base layer of money and work with large payment processors or organizations and move money. So what’s happened now is we have PayPal, Apple pay, MasterCard square American express MasterCard. They all now support crypto currency.

 

So think of it as the difference between, you can move money from inside the bank to cash. And so the cash kind of transactions are occurring at in Bitcoin, where we would call off chain, meaning they’re not tracked by the network they’re tracked inside MasterCard or visa or PayPal.

 

And then. At the end of the day, those organizations settle up with the main Bitcoin network, like a block fire or Jim or NY or point base. Those would all be exactly that they’re exactly the same. They’re sitting up a layer over the base layer. And so it, as you said, yeah, if you’re on Coinbase and you buy Bitcoin you’re buying it from Coinbase.

 

If you sell it, you’re selling it most likely to somebody else within Coinbase. And then at the end of the day, or on regular intervals, Coinbase will settle up back with the Bitcoin network. We’re seeing acceptance though. We talked about Tesla before, but home Depot and Starbucks has mechanisms and whole foods and Twitch, and you can buy Mavericks tickets, I think you can buy the Miami Marlins season tickets this way now.

 

 There is a slow momentum. I don’t think it’s fundamental to Bitcoin’s success, but it’s certainly I think they’re just doing it to be cool and hip, but that’s the. Yeah. It’s the early adopters. Yeah, I think so. I think there’s a certain panache to it because certainly the, these organizations, when they announced, they now accept Bitcoin, get that on the other hand, just yesterday, the CEO of PayPal said when they opened this up it was about four or five months ago.

 

Now he said it’s orders of magnitude more successful than they thought it would be. I just don’t know how successful they thought it would be. So that’s, maybe they didn’t think it was going to be successful at all. So maybe that’s another thing statement or maybe they thought it was going to be semi-successful and it’s wildly successful.

 

I really don’t know.  But regardless it’s here and it’s being used and it’s being accepted. We’re also seeing the more prevalent use of Bitcoin ATM’s. And a lot of the people listening might find keep your eyes open as you’re walking around, you go into a convenience or a shopping mall or someplace where ATM’s are.

 

You might see a box there that’s a Bitcoin ATM, not a traditional ATM. And what that allows you to do is it’s a two way transaction, mostly used for deposits. So you can basically take cash, go to the machine, the posit it and buy Bitcoin on the spot that you could cash it out. But it was interesting. My wife found one a couple of weeks ago, she went into some convenience store somewhere and said something.

 

So I saw it and it had an out of order sticker on it. And she said what’s wrong with your Bitcoin ATM? Are they going to get it fixed? And she said it’s actually not out of order. It’s just full of cash. Won’t accept anymore. I thought, wow. That was a very revealing state that’s here in South Florida, that’s happening.

 

So anyway, let’s th there are different ones to be involved in the cryptocurrency world. One way is mining. Another way is there’s a lot of opportunity in private placements right now. There are, of course, the alt coins. There are some companies that are directly involved in the industry, and then there are some funds, so we’ll dig a little deeper into each of those I’m going to come back to this one.

 

So first is the alt coins. There are something like 25,000 alt coins now picking the right ones is very difficult and I don’t have enough time in the day to examine all of them, as you can tell from what I’m talking about here to them, very. Bitcoin passionate, but I do have some money in a few other places.

 

And I’ll share that with everybody here today. But I do want to say that things like doge coin have gotten a lot of attraction lately.  I’d be surprised if some of the people involved haven’t at least heard of it if not even tried it, but, unfortunately I think those are the type of coins that are very dangerous because in essence, they don’t do anything.

 

They have no intrinsic value and they’re very subject to the boom and the boss. Yeah. And I think that’s important for people to know what that thing is. I’ve been calling it douche coy because that’s exactly like Bob said, it’s useless. It has really bad technology, essentially bad a perhaps management, but it’s a,  penny stock, a micro penny stock.

 

And it’s been doing pretty damn well, but that’s just indicative of the overall crypto. Right market. It’s like buying what’s a crappy retailer, like a Kmart or something like that. Yeah. Yeah. That’s a great analogy. Yeah. You could buy Kmart, stop game stop. But some take some crappy like company and it’s like actually doing really well, it’s a speech of garbage.

 

It’s like bowls out of its competitors. Yeah. And, you can sustain it for a while. It can rise up and, but it’s that greater fool philosophy of investing, hopefully you’re not the last one in, because the last one in is there, there is going to be somebody that buys at the top before it crashes this chart.

 

For those of you can see it plots the top 2,412 coins over the last dozen years. And you can see that beating Bitcoin is pretty hard to do. And why am I so strongly in Bitcoin? Because of this chart that at moments in time, there are going to be plenty at any moment in time, there’ll be examples of a handful of things that are outperforming it, but it has absolutely slayed the overall market.

 

 I think the same way, like in this world of digital companies you take your grub hub. I don’t know all the food delivery people or I know Uber and Lyft, right? Yeah. There’s always going to be one or two MI competitors or back in the old days. People didn’t research stuff.

 

There were so many different grocery store chains, different shopping mall , or, those companies that you go to, there were so many choices and many people could compete, but in this world where education was the best product, the best provider is so prevalent. You have a much more educated at SUMAR, normally there’s only one or two eats the cake, right?

 

And one could say that this is not good for having raising children, because if they’re not the best, they’re going to be the, just another loser out there where it used to be back where everybody could be successful. But it’s, I kinda got off my point there, but if you’re taking this with cryptos, that would mean that my thesis would be like only the top few are gonna probably be surviving, eating the cake.

 

All these other outgoings are going to go away. I don’t know what you think about that. Yeah. Yeah. I agree with you. And I think if you look at the internet which is, quasi analogous if you won back the clock 25 years, we all knew that there were going to be some form of E retail that would take off at that point in time, it would have been hard to identify to Amazon as the King.

 

But at some point, I don’t know when the exact year was, it may have been as early as 2001, 2002, it became pretty clear that they were going to be the King and they have continued to eat. And other people may have come out with other platforms that. For whatever reason, at least some group of people believe they were better technology, better user interface, better, this better that, but Amazon had too much momentum.

 

It had, we call it the network effect. The network effect was too strong of Amazon and all other solutions, even superior solutions. In theory, couldn’t overcome the advantage and Bitcoin’s at that point too, maybe you could say the same about Facebook. You could probably say the same about Google.

 

You could say the same about Apple. That they’ve all reached this point where, there’ll be other things, like Facebook’s success is massive and little things like, Instagram and Tik TOK and other social media platforms came out.  And same with Google.

 

But there’s other search engines, but there’s no doubt who’s a King is. And so when you come into this space, realize that there is a King and that there is only one project that is money that’s what Bitcoin’s job is to be a new form of money. Now, there are other projects. I’ll give you a couple that I like, because they’re not trying to be Bitcoin.

 

They have their own niche, they have their own thing. But I would also say that they’ll never be as big as Bitcoin. None of these other ideas can scale. There may be what’s a good example. While Amazon may exist, there may be somebody that specifically sells shoes or watches, or there was only going to be one line, right?

 

These other things we’ll get some scraps like the hiatus. Yeah, like we call this like the land grab  in modern day business. There’s always a land grab even the first and you can get out there and grab your land. You’re going to be the lion. And I think this is a great way to understand we work, right?

 

We work understood that they need to come on by clients. That’s essentially what they did. And they part it with stupid money, but eventually they realized that people actually wouldn’t jump on board on the scene unless they were spending a crap ton of money on advertising, which is why the thing ran into issues.

 

But if you out there have an idea, just power it with a lot of advertising and marketing. And maybe you’ll be the lion. Yeah. Yeah. And there’s nothing wrong with being, a scrappy or there’s some pretty big scraps out there. I’ll segue here, a theory com, which is by far the second largest cryptocurrency and has about a $250 billion market cap.

 

So it’s, a reasonable I have been a supporter of a theory from since 2017. I have a company that is involved in a theory of mining, but I will say that part of the Ethereum crowd, I think, is getting a little overcooked right now and starting to think that they have some chance of usurping Bitcoin.

 

And I think that’s actually dangerous for them  that. They need to keep their vision and their focus on the things that they do, which is support, decentralized, finance, support, tokenization of other assets. They are also known as the world computer. So you can tap into it if you want to do mathematical modeling or rendering or things like that.

 

 There’s a very powerful network there. So I do support them. I say it with an Astros right now that I’m getting a little bit of reservations about some of the direction of that one,  but I do own it. It’s my second biggest holding one that I really like though. That’s very exciting. It’s called file coin.

 

And again, I’m not here to be political, but I think hopefully everybody’s aware that there’s a massive cancel culture going on in the world today. And I’ll be honest. I even worry about myself being censored. I say some things that I’ve been critical of our treasury secretary here today. And so I worry about myself being canceled at some point.

 

One way to fight that is to move your storage. So if you have a blog, if you have a video stream, just like lane housing in his website, one way to protect yourself against getting canceled is to not use one of the big data center companies. One of the cloud providers, Amazon Google, Microsoft, they control 80% of all the data in the world is held by those companies file coin is a decentralized storage system that can’t be stopped or turned off.

 

So essentially it leverages hard disc space scattered all over the world. I have a laptop I’m using today to be with you and lane may have his desktop and we have some unused disc space. We contribute that to this file coin network, and it stores our web files or photos, our blog files, whatever in this distributed manner.

 

And it’s only the private key that we individually possess that can modify any of those files and delete or add to any of the files in our structure. I really liked that one. I think it’s a very important part of the coming world. There’s a complimentary coin called handshake. Handshake is the concept of unstoppable domains.

 

In brief terms for listeners, if you have a web addressed, let’s say yahoo.com.br for Brazil. Okay. yahoo.com. That BR what happens is when that, when you plug that into a browser, The browser looks at that address in reverse, it will say, it’ll look to the.br first it’ll look at basically a domain for Brazil, and then it will find the dot comes under that.

 

And then it will find Yahoo and then it will serve specific stories. So it goes in that tree. So that, that BR is administered through a group called ICANN and is essentially a group con controlled in a manner that an individual government in the, in that case, Brazil could say, I don’t like what’s going on@yahoo.com under my domain.

 

I’m not gonna let anybody go to that website anymore. Or somebody types that in, it’s not going to go to the files that Yahoo wants. It’s going to go to my government propaganda site. And that, by the way happens in several countries around the world, you can guess places like China and North Korea don’t use that, or they use that  as a weapon.

 

So what it also means is that if you had a website and even if you had the file scattered about, if you don’t have the domain also secured in the same way you, you are subject to being censored. So anyway, a combination of handshake and file coin allows the creation of websites that can not be stopped.

 

Nobody can stop the address and nobody can stop the file serving. So I think it’s an important part of, creating a culture  in the future world that gives people that have a message and have a voice a way of getting that out there. And then the final one I’ll talk about is coin a chain link.

 

So chain link is it’s a, it fits well with other coins, like Ethereum does in that it provides data feeds into what are called smart contracts. So the, one of the other advantages of Ethereum, I forgot to mention is the concept of a smart contract, very powerful mechanism, and in the real estate world, I think we’ll see a lot of changes in this way.

 

So things like title transfer can happen. The blockchain and chain link can be part of the data set that can provide those feeds. So anyway, those are for, if you decide you want to stray from Bitcoin, which I’m not really recommending that, but if you feel compelled to do that, be careful where you stray.

 

There’s a lot of landmines out there. These are four I’ve done research on. I have some money in all four of them. But the vast majority of money is still that I hold is in Bitcoin. And that would be my number one recommendation. Yeah. I think the investment thesis with those folks is they’re like Bitcoin is a household name.

 

Even like the 99% are talking about these days. They’re thinking it’s of the overheated and they think they’re going to get a little bit more bang for their buck with something less mainstream, whether it’s right or wrong. I think that’s what is people’s heads. Yeah. I know that we’re probably running close to where we probably got to wrap up lane.

 

So I just want to say couple other things here real quickly. So one is. There are ways of investing. If you’re not comfortable directly involved in cryptocurrency, there are ways to get it. So if most people have some exposure mechanism to invest in equities gray scale, QB, TC micro strategy marathon and riot.

 

Those are basically stock tickers, that you can go purchase and you’ll find that the performance of that stock is highly correlated to what goes on in Bitcoin. So it’s a nice way of getting involved.  Coinbase has already IPO mode. There are some others that I think will IPO in the next year, crack and block fi bit main bit fury and lightening labs.

 

All those, I think there’s probably something coming. But. Here’s some things to avoid, and I’m almost more important than what you do is what, you need the landmines. If you’re going to invest outside of Bitcoin or even in Bitcoin, hopefully we’ve given you enough education today that you have a basic understanding, but, make sure you understand it.

 

A lot of these coins don’t really solve a problem. Go read about it. And if the problem they claim that they’re solving, doesn’t seem like something’s, we’ll call it a hair on fire problem. Then it doesn’t matter, right?  Don’t get involved. There are three projects that I really don’t like, I don’t like the people behind them and I don’t like the economics of how they’re run ripple.

 

And then two Bitcoin derivatives, Bitcoin cash. And Bitcoin has fee. If you do decide to get into Bitcoin, buy the real Bitcoin,  with the symbol BTC don’t buy BCH or BSV BTC is the one you need to buy. These are I’ll essentially call them imposters be careful with those. So I want to go back here to this slide and maybe use this as a closing one.

 

I think when you step back and you look at everything we’ve talked about think about Bitcoin as having one of seven eventualities. Okay. The first one is. That let’s say you hate everything. I’ve said you believe it’s a complete basket case. And it’s going to implode my advice to you would be to take something on the order of one to 2% of your net worth and still put it into Bitcoin or a Bitcoin related asset, because  at a minimum, the sat cap I talked about before, but I think most of your listeners are a little more savvy and say, put one to 2% in if you hate everything I’ve said.

 

And if I’m right and you’re wrong, you’re going to be in a phenomenally good position 10 years from now. And if you’re right and I’m wrong, this shouldn’t hurt very bad badly. Okay. So second position is, let’s say it just is what it is. It’s reached a stability point. It’s not going to do much better call it the status quo position.

 

I believe it’s proven itself at the level that I would put at least 5% of my money into that level. Let’s say it’s going to tick up from there in a scenario, number three, where it’s used on large scale international commerce, it’s maybe used in remittances moving money from, one country to another.

 

That means it’s still has upside and I’d look at 7%, again, in the interest of time, I won’t walk through all seven, but we’ll see that as you get to like position number six, it’s now taken over gold as the major store of value asset in the world. And completely display.

 

If so, I view it as something where you justify something about 25% of your  portfolio. And if you think where I do that, it’s on a March over the next decade or so to essentially becoming the world’s currency, then I’d look at something around 30% allocation. Now I shared with you I’m over twice, that number myself,  this is not advice.

 

This is the way I’m looking at the world but I think, look at where you are in this spectrum and really sit back and think about it. And I’m not saying  even if you’re a person in scenario number five, which is that it becomes  a currency for maybe some second and third world countries and plays a major role in the world.

 

And that would equate to a 20% allocation. I’m not saying do that tomorrow.  Go sell some properties or go sell some gold tomorrow to do it, but set yourself a plan over the next 12 months over the next 18 months. How do you March your way to this position and whatever position you get there, do it in a dollar cost, average manner where  you’re going to do, if the, if that’s the case, if you’re at zero today and you want to get to 20, do 1% over the next 20 months and you’ll hit some peaks.

 

You’ll hit some valleys, but you’ll get there in a very manageable way without. Taking too much risk. Plus if you decide that you’re either over allocating and under allocating, based on where you sit on this slider, it gives you that chance to do it. So if you become more pessimistic while you just stop early, and if you become more pessimistic while then you keep going.

 

Or missing number eight Dodge Clayton to the moon, 100%, there you go. Yeah. You gave away my secret lane. Yeah. That’s the way you’re going to get financial freedom. Perhaps. That’s a different strategy. Yeah. So I’ll relay my thoughts and you and I aren’t getting any financial advice here.

 

Just a couple of guys talking, right? You guys are gonna take this as financial advice. You guys are idiots, listen guys, a podcast, but the investment level, I liked this. I liked how you outlined it here. Different levels of your thesis that somebody has, for the most part, I guess what you’re generally saying is like one to 10% ish, but then how does that change say if so, what I’m telling my guys and my family office, Ohana group is like part of this, you might be a three, right?

 

Which puts you at 7% of your assets. But if you have a Lord net worth  under a million dollars net worth, maybe you should do less. And if you’re higher, two, $3 million or more, you’d have more play money, even if that money is not needed to put food on the table and I think you would go higher.

 

Then the lower net worth guys, because you have more discretionary money. Yeah. And your time preference too. I’m 56 are obviously much younger than me lane. We have a different time preference and although I still view myself as even though I’m 56 I still think I’m going to live 40 more years of an active life.

 

And so I’m still thinking long-term, even though I’m at that age and I’m willing to wait. But I think that is important. So I think that’s a very Sage thing that you’ve said though, that, depending on where you are on this, move that investment level up or down.

 

 And hopefully it will change over time. I’ll tell you this though. I shared with you that I’ve got about two thirds of my net worth. In currency? The reason I have about two thirds of my net worth in crypto currency is I was at about the 30% this time, last year. And that portion of my portfolio did so well.

 

It’s now two thirds. So I didn’t lose anything in the other side that I met, but I had this massive multiple on this side. And that’s the other thing that can be going on is this could radically change where you plan for five and now you’re at 12.

 

Now that would be up to you to decide at that point, if you want to downshift or not. But  I do want to close with you,  that fought of taking things off the table is a little different in this world. Okay. Because. The only way to do what you’ve said is to move money back into the Fiat’s system.

 

And the reason I didn’t rebalance my portfolio is that I do not want, this is my philosophy. When I move money over, especially to Bitcoin, I don’t move it back. I’ll leverage it, but I won’t we’ll move it back. I think where you’re a little bit different. Bob is you actually spend a lot more time on this than the average cat out there.

 

80% of my portfolio is multifamily apartments because that’s what I do. So don’t pay attention to me guys out there, right? Yeah, everybody’s a little bit different. And I think that’s another way to look at  these numbers, if you’re going to play around with this stuff, Now it comes down to your best alternative.

 

If you are out there and you’re unable to build relationships and don’t have the time to go into real estate deals by rentals, then this is easy stuff to get into, and it’s a loan. Some people can say that is a bad thing. I generally am in that campus.

 

Something is easy. I’m a little hesitant. And that’s my only pause with this stuff. I want to be in stuff where that’s a $20 million asset that not any Brony can get into, to me, I like that unfair advantage, but I don’t know. Just different ways, just bringing out some different points cause not, we’re not giving you financial advice, but we’re just linked some ideas for, everybody’s got to pick their own path.

 

Yep. Absolutely. And I do what you’ve said lane. And I think that the one thing I’ll say is that, I’ve been deep into this space for four years, and I came into it with a pretty, let’s say advanced technical knowledge and knowledge of economics as well. And just like you and your world have a level of expertise, I have a certain level of expertise here and I think to get to my level of knowledge and confidence, you have to go down that rabbit hole that deep 10,000 hours, perhaps.

 

Yeah. Yeah. It is. It is a 10,000 hours and it may not. Seem like it on the surface, but, I can say I have my 10,000 hours in here in cryptocurrency, both directly. And so she, when you add in some of the indirect technical knowledge in economics studying that I’ve done. But I think, much like guys like you with what you do and what I do, hopefully for the listeners,  if you don’t have a chance to do that deep dive Hopefully we can shortcut you to some of the highlights and get you where you can at least get a taste and get started.

 

And I think what you’ll find is , I’m sure this happens with your folks lane, with what you teach them. Once you get in and you start using the system and understanding thing, and you have a little skin in the game, your incentive to go further down into the rabbit hole and dig deeper and acquire knowledge will go up and it becomes a positive feedback loop of the more successful you are, the more you want to learn the more money you make.

 

And it just feeds all on itself. And I think that’s what you and I, both advocates of whether it’s real estate or Bitcoin, like you’ve outlaid it here where it’s simple and it gets started. And this is what drives me crazy with wall street products. Is they try and make it maybe using, yeah.

 

You’ve outlay the starting point here and for people to dive into that rabbit hole and the truth is you don’t need to put in   10,000 hours, but there’s a certain minimal level, maybe call it 500 hours, a thousand hours, maybe less. I don’t know, but just like with real estate, there’s a certain amount of hours. Just do like you guys like talk about syndication deals a lot, just do my syndication. E-course just stop listening to all these random podcasts out and just do the freaking syndication e-course and 10 hours. You guys will know a lot more than most of these passive investors investing in my own payment.

 

Something like that is the minimum effective dose to getting a lot more bang for your buck. And I think with Bitcoin is no different, correct. Correct. I a hundred percent agree. That was my sales pitch your podcast. And I hope your listeners pay attention to that too, because I think, the funny thing is, I talked to a lot of people and I don’t just talk about cryptocurrency.

 

I talk about this concept of, I call it seceding from the financial system. And honestly, I believe there’s only three ways to do it. And I believe it’s cryptocurrency. I believe it’s the kind of the real estate and business ownership principles that you’re preaching about. And I believe there’s a mechanism through whole life insurance contracts to manage your money.

 

I think everything else you’re not in control, you’re very exposed and. Since these things are there for you, they’re right in front of you take advantage of them and use them. And it doesn’t matter whether you’re a young guy, like 20 years old, just getting started, or you’re an older guy like me, it’s not too late to get into any of this stuff.

 

I honestly didn’t learn about a lot of this stuff until well into my forties. And thankfully I did, I’ve said all the would’ve should’ve could’ve if I had started 20 years earlier, but can’t change that. So just do the best you can, where you are. And then start. All right. Bob, any parting words you want to people want to learn more about just like your stuff.

 

You’re welcome. I am on Twitter boomer underscore BTC.  I’m on there daily. I do have a YouTube channel under the same moniker. There’s a little bit of content there. I’ve got several videos. I’ll be shooting soon there. And then you know what I do in the whole life insurance, infinite banking world, you can find on create tale one.com.

 

Anybody wants to talk about any of those things. I’m happy to help, and you can DM me. You can reach out to me. I do a pretty good job of responding to everybody that takes the time to talk to me. You’ve heard it there, guys, as better go check it out before it gets bulls from the face of the earth is as things like certain drugs, once it works, they make it illegal and they get rid of it.

 

Yeah. That’s a joke for the person.  We’re just having fun. Not too serious. All right guys. Hope you guys enjoyed it again. You can check out this and part1@simplepassivecashflow.com slash crypto. And we’ll see you guys next time. Thank you.

Beyond Accredited Status – The SPC Mission

https://youtu.be/t5LMlhVxx20

Hey guys, on today’s podcast, you’re going to be learning about how this will pass a casual mission has been changing and a little bit about masterminding and what happens when you go beyond accredited status and the still idea that I’ve coined the phrase called first-generation.

Personally. , my parents didn’t have a million dollars and, , we’ll be the first generation to go over that threshold. But the journey doesn’t end there, right? In this day and age one to $3 million is not much. It’s, you’re getting off the ground, but what do you do?

And create that legacy. We always talk about getting over that four and a half million dollar network status, because at that point you’ve put yourself on a platform to take it beyond. But at that point you’re comfortable in life. If you haven’t yet, please join our investor club@simplepassivecashflow.com slash club.

Join our email list and enjoy the show as I’m being interviewed in another guy’s podcasts, he’s asking really good questions to me. So I thought I’d also share this with my group. When he treats me

Is going back. So when you’re talking about, okay, I’m in this job, here’s something that can get me out of the rat race at that point.

What did being outside of the rat race mean to you and how has that changed over time? I’ve switched from one hamster wheel to another, ? I’ve gone down this path of putting together a real estate opportunities and I’ve turned it into my new profession. . So I’ve just traded one rat race for another essentially.

But there was a point in there where I was financially free and I realized the point where, for a couple of weeks there, I was this is fun, right? I don’t need to work anymore. And I think you see a lot of personal finance bloggers go on this path, where

they’re just going to go travel abroad for a couple of years. For me, it was a lot quicker than that. It was just maybe a couple of weeks where I was like, yeah, this is late. Taking pictures of my food. I’m posting it on Instagram. It’s lame. . There has to be more to this than just drinking pina coladas with endless time on my hands.

And that’s where this mission came in and when people have different missions, . And when I implore people to help some people trying to find their mission, it’s usually what pisses you off in life. Or at least that’s for me. For some people it’s, battered women, they want to help them louder or homeless dogs, or, for me, it’s just there’s so many hardworking professionals out there that. Worked so hard and did everything that they were supposed to do, pay their taxes by their house to live in which I don’t necessarily agree with. And especially invested on these mainstream, , retail wall street products, where ultimately their returns were just stolen from them.

This is the wrong that I want to correct. And if people just bought a handful of rental properties, I kinda just pressed on with that route. They’d be financially free and by five to 10 years, and that hope and pray in 40 and 50, like the traditional method of it is simple, but it’s very counterintuitive what the wealthy do compared to what normal people do.

But it’s not that hard. And I think that’s why I’ve tried to create simple, passive cashflow.com in such a way to. Distill what the wealthy do, show the paradigms on why you would do it and when you would do it and then put it out in a simple manner that the lay person can understand.

And is your club you’ve met your teachings purely around property, or are you looking at other various sort of passive? Obviously there’s the industry side of the country out of club things as well, which goes a little bit beyond property, but as a general rule, is it in that sort of space where you’re going into all sorts of.

Yeah. I started with investing in stocks and real estate first, but the reason I keep coming back to real estate or kind of three big things, like first real estate is a hard, real asset. It doesn’t just bounce up and down like paper stocks, right? It’s a commodity, right? The brick, the wood, the land, it’s a real asset that sort of acts like a commodity.

The second thing is like a cash flows, right? Cryptocurrency doesn’t really cashflow stocks don’t really cashflow, right? Cashflow is what puts food on a table. And that’s what real estate does, especially when you go after 1% went to value, ratio properties are better, and the last one is like the tax benefits.

Someone needs to make three or four times as more than me in crypto. I keep the same amount of money at the end of it than I do with real estate because of the great tax benefits. And this is where, you start to get insight into how the wealthy do things. Yeah. They invest in better assets, better deals, but when these deals they can do cost segregation, supply all this passive losses out of the investment and use these passive losses to choose how much taxes they would like to pay.

That’s when you start to realize while this is a kind of a twofold kind of strategy here, the whole tax game. Yeah. And going back to your shift in terms of, getting to that point, your financial free a couple of weeks ago and board realizing what your mission was, the thing that pissed you off, and then now driving forward from there.

How is it different from having a mission-based. Business that you’ve got now compared to where it was before. How do you feel about the, what you’re doing? And when I started my podcast back in 2016, it was just a means for me to, a lot of my friends were asking me how do you get buying all these properties that you don’t even visit that are like a couple of thousand miles away?

When I was buying these turnkey rentals at Birmingham, Atlanta, and, I would explain to my friends over lunch, How would do it. And of course, nobody does anything, so I started to make the podcast right, as a way to report the dab thing. So I won’t have to keep repeating myself.

And that was how it started. But then throughout the years, I became more of an accredited investor. The topic materials has changed to more private placements in syndications taxes, legal. And legacy creation. And that was where I started to grasp upon the mission. The mission is that kind of help work and professionals out there learn and see the differences between mainstream financial advice that is put out there.

And what are the real wealthy people doing? And then distilled that and into actionable steps for regular people were really good, hardworking people. It’s the shrinking middle class. They’re endangered species. That’s the target. So how has your relationship changed with your business now that it’s more mission-focused.

I think it it helps figure out like, every day you’re making binary decisions. Should I do use this color or that color? Should I send out this email or that email? Should I put this in my funnel sequence or not? It just kinda clarify as everything, right? What’s the mission?

The mission is to help out, that one dude out there, Andrew, . He’s struggling. He’s struggling to get by. He’s a good saber of this money, right? He’s not financially responsible, but he’s just not seeing she stopped getting any traction. He’s saving up his money, but it’s very slow and he’s paying a lot of taxes at the time.

What does Andrew one, right? What color would I use here at that? But speak to NG one. I know that’s a little weird, but what can I write in this one paragraph here that will resonate with Andrew or have him understand it? And I think a lot of this is like that sort of simple passive cashflow.

The simple part came in. There’s all this noise out there. There’s so much stuff out there. And the truth is. What the wealthy do is very simple. . But the trouble is like getting rid of all this noise for Andrew to understand, all right, what does he do next? Because this is all new to him. And there’s a lot of noise out there. There’s all these lawyers selling this entity, that entity, there’s all these CPAs selling to the strategy of that strategy. You’re infinite banking. This that, that, what is the path? What is the order to implement these strategies? ? What is the simple prescription?

So it gives you clarity at the end of the day, isn’t it, as that’s the word that’s coming through for me there, it’s just, it makes your life a lot easier when you know, what is he doing? . People are strung out. They’re working their butts off, especially with people in my group.

. They’re high paid professionals, high responsibility. They just want to be told what to do for some of the stuff, . Just like when I go into the CrossFit gym, I want to just turn off my brain. I’m just like, tell me what to do. I am running a hundred miles an hour all day at my business. And I’m sure everybody feels the same way at the professional occupations.

Just tell me what to do. . I will listen and I’ll drive a hundred miles per hour, but just tell me what direction to do. And then the hard thing is in this financial world, it’s there’s a lot of, , Bad habits that we’ve been taught by our parents by society. And the real secret sauce is implementing this stuff, right?

So take one thing. If in a banking using whole life insurance, and I think we’ve all heard what how bad whole life insurance is for you, not the case. If you tweak it a certain way, the way the wealthy do it, but also implemented at the right point in your timeline, in your journey.

It has a huge component of a wealth building strategy for the high net worth. But we’ve been all brainwashed by all these, like generalities, right? About sorts of things.

And it’s ironic, isn’t it? That you say that those people in the corporate world are absolutely best placed to. Leverage things up and make the best use of these skills. They just don’t know them. But it is ironic, but then it is not because if everybody did what I said to do by a handful of rentals, get out of these feed later and products invest tax advantage ways. Most people are able to leave the rat race in five to 10 years. Would get our coffee, right? Who would build our bridges with design, the bridges who would push the government paper, who would do surgeries, who would clean our teeth?

Society would likely crumble. Like we have this happen, ? Not everybody can be financially free.

Who should be there. Those who are worthy, that are going to hopefully take the information and do something greater with it. But I don’t know. Maybe it’s just, this is a political statement, but I honestly don’t think that you take a hundred people turn on financially free. I’d say a majority would probably just go and travel abroad to take Instagram pictures of their food that they’re eating.

. But maybe that’s small minority that do get financially through. We’ll find that residents frequency, that they end that their highest and best use that their God-given talent that they’re put on earth to do. And they would make a bigger impact than the other 95% of the people that were financially free.

That’s just me being optimistic. I think it’s a fair reflection on the variety of humankind. Isn’t it? And know that’s the truth of it. Isn’t it. And being fairly flippant in that question, but it’s true. There’s that moralistic element of when we push things in a certain direction, whatever everybody works to do that, but the truth is you got, as you say that just never going to happen because we’ve got a wide variety of, yeah.

They do this in China, right? That’s effective, but communism is right. They give everybody that bare minimum. . They don’t have to really work for it. But what do people typically do they just watch Netflix to chill, right? Yeah. In a theory, it works, but in real life, I think from my point of view, it doesn’t work.

Yeah. And that small 1% or whatever you said, the way they’re actually, then you’re leveraging that freedom or financial freedoms really use their gifts for the betterment of mankind. Do you get to see that with some people you get to work with people in that space? Yeah, , we have a higher level mastermind.

We call it the family office, Ohana the goal of that is to get people from $1 million over $10 million net worth. And that’s the first threshold is getting people that four and a half million dollar Mark. That is a Mark that a lot of people in our world we talk about, right? Because at that 0.4, $5 million net worth, you’re able to pass down a substantial amount of money to your kids.

And they can really try hard to screw it up. And it’s really hard for them to do that. . A million dollars, $2 million is nothing today, ? That’ll be gone in a generation easily. In fact, I think the statistics are like 90% of money is lost in two to three generations. Garren’s it’s gone, but if you can get up to that four and a half million dollar Mark you’re set and something happens along that way.

There’s a phenomenon of like, when you get on an airplane, they always say if there’s any problems, put your own oxygen mask on first, then help out your kid. . Same thing here. There’s a point where people are trying to put on their own oxygen mask, which makes sense. It’s not selfish. ? Some people call this the scarcity mentality.

And I don’t really call it like the say you’re selfish. . But yeah, you get yourself to a good place. First. He stayed first. I think that’s what I call that is getting yourself to four or $5 million net worth. After that point, you hopefully your mindsets. you’re in a good place in your mindset starts to you.

Have you start your transition from scarcity to abundance mindset. When you start to look around and send the elevator back down for others, help out others, figure out what is your highest and best use and kind of help the world. Make a world a little bit better place in your unique calendar, where not everybody who I get from 4 million and go up.

Take that next step to make a platform and create better good in the world. It’s a minority, but if they never ever put their oxygen masks on in the first place, they would have never done it after that. And it’s the old phrases that gets misrepresented is the it’s better to give than receive.

And it’s the people interpreting correctly. And I think it was Francis of Assisi that actually comes from, and the original quote is actually what you’ve just said. It’s better to be in a position to be able to give. Then it’d be in a position where you have to receive. So as exactly that, get yourself up to a point where you are then able to.

Help other people out. Exactly. Money is not everything, but it sure makes life, a lot easier. And it gives you options and money is also a magnifier, right? If you’re a good person, it makes you better. If you’re selfish and only things for yourself. And we’ll you’ll turn into that more.

So it magnifies who you are. I’m interested in that point. Cause it says something here. Have you seen that? In reality, is that something you’ve witnessed? A lot of people come into my group are very frugal, right? They’re first generation immigrants. . A lot of them are Asian.

They’re cheap. They’re super cheap. . And that’s good. I think when you’re starting out . That immigrant mentality, . You’re not spending money on stupid things and that’s how you grow that initial capital to invest. But at some certain threshold that really holds you back and it holds you back in terms of building relationship with other key partnerships, and maybe you’re not doing business each other, what you’re getting trading knowledge.

. And that scarcity really holds people back is what I see. And , it shows up in very small ways, but I think people inherently, , they know you know what I’m talking about when You just feel it right when somebody is like that, when they’re more, that scarcity mentality, they’re just a little cheap or, they’re just not free they’re not a magnetic personality, for the guy who’s just fun, love and buy drinks at the bar for everybody. And not saying you have to buy drinks at the bar for everybody. But metaphorically right in that setting, that’s what that person will be doing in other non-alcoholic situations.

Yeah. Yeah. Or some people were energy they help out other people and it’s free. It’s free flowing and there’s other people where energy stops with them. And they think about themselves only, right? Yeah. You’ve got a podcast, you’ve got a platform.

You wouldn’t be doing it unless you feel like the world is energy flows with us. But there’s a lot of people listening right now better. I’m not saying that you’re bad people out there. But maybe think about people in your network. There are people out there that the energy kind of stumps,

they just think about themselves and not saying that they’re bad people, but what I’m saying is like maybe we have to get their oxygen mask on first. We have to make them feel comfortable, get them in financially abundant thinking so that they do feel safe to them bust out and then become more free giving abundant mindset.

It’s not that they’re bad people, but the situation, the environment has created that type of personality. I think the key thing that you said there is in there is that, whatever mindset anybody has, it has a value for the right context. So that frugality, you said it was the really useful right.

To start off with at the beginning, but then the context shifts or moves. So it’s really common at all levels of. Entrepreneurs, whatever it is that the mindset that has got somebody to a certain point is then the mindset that hold them back from getting to the next level. There’s a whole book on it by Marshall Goldsmith.

Actually. What got you here? When, what got you here, won’t get you there. And so the mindset has to keep continually shifting to move forward, right? It’s moving from starting strategy to mid game strategy and maybe end game strategy. First-generation most of the people in our community are first-generation wealth.

We weren’t born with a million dollars. Her parents didn’t have money. . So we come into this with a lot of baggage, . This frugality mindset. And that’s great, right? Because, we save our money, we grow our net worth and we become first-generation wealth. And how I define that is the first generation to hit.

I don’t know, some arbitrary number, like a million dollars net worth. . That’s pretty decent. , but how do you take her from a million dollars to $10 million? Whether it needs to be a transformation, going through that next stage of becoming and how do you groom generation G2 G2 wealth. That’s the next stage?

And what do you do for your own mindset? How do you keep expanding your head space? I’m a conscious of this. I’m aware of this. I don’t have everything. I’ll figure it out. . But what I do know is magical things happen when you have. People are like-minded that are similar on the path as you, around you in close vicinity.

And that’s what a mastermind group does and for anybody everyone’s slightly different level or different perspectives, so everyone brings their own dynamic and no, one’s exactly the same blueprint. So it’s not like you’re just regurgitating the same stuff.

There’s always a new spark coming off from somewhere. But the problem is at least, filling the room up with people who are broke. And I consider broke under a million dollars. Yeah. You might make six figures, but you’re broke. If your net worth is not well above a million dollars, you’re still trading time for money.

And there’s a difference between people who trade time for money and people who have their money working harder, making more money for them. . Metaphorically. That difference that person has their oxygen mask on and the other person is comfortable enough to take it off and not give the oxygen mask to others.

. But the trouble is well, how do you find people like this? Because high achievers. They have reached this scale on their own, not by being a trust fund kid. They’re hard to find and . They don’t wear different clothes. They don’t have different color hair. ? Yeah. They may tend to hang out in different places, but it’s very difficult to determine those people who are up to the stage and just happen to finance a nice house or a finance, a nice car, buy everything on debt.

. And these are some of the, the more soft topics that we discussed in our mastermind within closed doors, it’s safe environment. And I think I would encourage everybody out there to find your little group of like-minded people that are also thinking about this stuff, because the informal groups with cliff and Larry at the office, got it all wrong.

Those aren’t going to help. That’s just going to hold you back. Your network is your network. As we say. Perfect. Before we wrap up, is there any final thing you’d like to any key message you want to get across over and above what you’ve already said? Obviously the key things coming through nice and clear that you got to get your money to work for you and get the mindset of shifting away from what had been the old traditional ways of thinking and start thinking about how to make it work properly.

Yes. Surround yourself with the right people and start educating, right? Depending where you are in the journey, it might just be buying your first rental property. If you’re under a half, a million dollars net worth. That’s how I started.

And it just takes a while. It is not a get rich quick thing. I bought my first rental property when I had no net worth. Just out of college at 2009, it took me damn near six, seven years to get up to 11 rentals properties. And did you say that, that main line there of, getting yourself in a good position, all that does is enable you to help more people if that’s what’s important to you. So it’s not about in and of itself earning the money.

It, that enables you to do other things from there, isn’t it. And if helping other people, it doesn’t come naturally to you. That’s cool. You’re not a horrible person. I wasn’t like that. I was just pretty selfish and just thinking about myself, , So it says nothing.

We don’t want to shame anybody because we’ve got different needs. So when we first start out, then actually, we’ve gotta be looking after itself, but when you get to that position, your view shifted because you got to the point where you realize actually. The reason I start out in the first place I’ve done that.

I’ve achieved it and now I need something else. There’s something else that needs to come from it. And then you’ve turned it into a way that yeah, you’re still benefiting out for a minute. I’m not knowing no one’s saying that’s not happening, but ultimately it’s a drive to educate more people and get other people to come up and as we go through our own journey, these hour, Requirements shift and change and what becomes important to us?

Yeah. The one theme is I think you got to figure out what is your highest and best use to help other people? I think that’s a pretty consistent theme. Once you get to certain levels of the question is what it is, right? Like for me, it’s finances, money investing. Other people might, might be a gym trainer, they enjoy doing that. That’s their God-given talent. Other people might just be, you’re really good doing a knee surgery I’m cool. . Whatever you want to do, find some way to connect it, to helping people in their darkest of days.

I think that’s where a lot of people find true fulfillment. Yeah. Yeah. And so final question, which I ask everybody on these podcasts and you’re no exception you don’t get away from it. It touches on that lane. What is it that makes your bits Dingle? , I just see a lot of hardworking people out there.

Kind of doing it the wrong way. They’re driving around in the Ferrari with the pen brake on they’re doing all these things that kinda just hold them back buying a house to live in before their net worth hits a million dollars . I don’t really agree with that. Investing in retail type of products, , in non tax advantage things,

there’s just a lot of people pay a lot of taxes and they don’t really need to legally, what if they just educated itself a little bit, ? You don’t need to be spend all your time doing this stuff to relearn things. There’s a lot of people that have forged the path and found the simple, passive cashflow way.

Excellent. Thank you lane. So if people need to find out more, your website’s simple, passive cashflow.com has huge amount of information on there. Brilliant.

Intro to Cryptocurrency w/ Bob Burnett (Part 1 of 2)

https://youtu.be/FvtMiG3R2S0

Hey, what’s up simple passive cashflow listeners. Now I wanted to announce a new project I got going on. The rich uncle YouTube channel. So those of you guys have been following me for the past several years since we started this podcast back in 2016, simple passive cashflow started off with me buying some turnkey rentals, eventually getting my portfolio to 11 and 2015, and I felt the pinch and I realized these rental properties was not the path to financial freedom.

It was the path there, which I still think non-accredited investors under quarter-million half a million should definitely go on buy a rental property. You get that experience, feel what it is to be or moat landlord, and then move off to bigger and better things as you become more of a credited investor or on the verge of.

So it’s a transition into being more of a passive LP partner, diversifying yourself over multiple deals out there where you’re just an LP partner, little to no liability, no debt in your name. You can still Chavel hack all these credit cards, which we’ll have a feature podcast on that too.

And you can also partake in the value add strategy, right? When you’re buying turnkey rentals, which you’re essentially doing is your. Just buying an asset that has little to no built in equity in there other than your down payment. And there’s no business plan to increase the revenue, therefore increase the price where these a large apartments indications, mobile home parks, et cetera.

There’s usually some business plan to force. Appreciate the asset. And maybe we’ll get lucky with some market appreciation in there too. That’s typically real estate goes up in price, but the big thing is that force appreciation. The only way you can do force appreciation is if you do it on your own, in a burst strategy.

And that is that my first premiere video on the rich uncle YouTube channel. You guys can go and check out, So a simple pass, a castle podcasts and YouTube channel. We’ll continue on this path of, as you guys grow with me to be accredited investors, but lately maybe I’m just getting old, but I see a lot of kids these days between the ages of 18 and even.

Mid to early thirties, they already haven’t gotten it together, right? Their net worth is still under a quarter million, half a million dollars. And maybe for you guys listening, maybe this would be that cool hip fun video version of simple passive cashflow for kids where they can learn about this stuff.

Learn more about those basic financial things. In this first video, which we’ll be talking about is the burst strategy. Which you can give them. A lot of these people like to do this by rent, rehab repair. I frankly think it’s a waste of time and not a really good risk adjusted return when you could just be a passive Opie partner.

But what do you do if your net worth is lower and you’re not having any connections, that’s what this video is talking all about. So share it with your kids and listen to the rich uncle as they start to become old and grumpy. In the future, but for now it’s just rich. Uncle is a YouTube channel and on today’s podcast, I’m going to be quickly going over what is a bridge debt and private equity. And I think a lot of you guys have told me, you’re frustrated about other podcasts out there. Just sustain on lane thing.

And yeah, everybody does podcasts these days. They’re easy to be honest. Now, this is a sort of a sample of what’s you’re going to find in the syndication LPP course. And if you guys haven’t checked that out, please go to simple passive cashflow.com/syndication to check out the free guide the syndication.

And there’s a, be a link in there to the e-course. Now the e-course I think it costs like maybe a few hundred bucks. But it’s really good. It’s not just some lane book that just going to tell you every little thing that everybody other regurgitates over and over again, just runs through spin texts, application to regenerate the same old, a hundred page 200 page book, it’s going to tell you the secrets of what syndicators are doing out there to trick you guys into going into whatever deal. Not saying it’s a bad deal, but I think it’s just good to be aware of these things. And today’s podcast talking about. Private equity and bridge check is going to be a sample of what you’re going to find in the e-course, which I think it would , take most people 10 to 15 hours to go through the entire course.

But with that said, here is the content.

Hey, simple passive cashflow listeners. Today, we are going to be talking to Bob Burnett chairman and co-founder to be systems, but he is going to be catching us up to speed on this Bitcoin crypto craze that has been happening. It’s going to be a little bit of review, but a lot of new concepts and good ideas that when I first saw his presentation.

Really helped the whole thesis around inflation and investing in just real hard assets and maybe Bitcoin might be wonderful, but welcome Bob. Appreciate you coming on and doing this for those of you to sing on the podcast I would encourage you later on to come over to the website and the YouTube channel to catch up.

We’re going to have a full presentation on this. If you guys know PowerPoint slides going to have a lot of good hemorrhages that we’re going to be referring to. You guys can also check out our crypto page. It’s simple, pass a castle.com/crypto and join our community too. We have also a lot of discussions on crypto with the group.

But yep. Bob let’s let’s educate the folks. All right. Hey, thank you lane. I appreciate the chance to talk to you again and especially to your viewers and listeners today. And frankly, anytime I get a chance to talk about this topic I do so because not only is this for me, one of the greatest financial opportunities for people, but it’s something that.

I believe in passionately from the perspective of freeing people and creating a quality around the world. And I think nothing represses people more than mismanagement of money or corruption of money. And I come from that spot when I speak with people almost from an evangelical perspective, sometimes I like to say, So as you said, for those of you watching on YouTube, you see the title of this as a freedom and money.

And that’s the perspective that I come from as I talked to you today. And one of the first things I like to do when I speak with people and lean on, I’ve already talked a little bit. But I’ll pose this question, to, Julaine for the benefit of the users, which is, if you think about where crypto is having its largest impact, do you have a couple of guesses as to where that is?

And Where is it? Yeah, I’m going to give away the slides here. Cause I know what the answer is. Here’s where it’s happening, guys. Where’s the adoption of the Bitcoin and all these deals where it’s all these jacked up countries there’s turmoil within their currency.

So as a side here, Nigeria, Vietnam, Philippines, Turkey, Ru. The United States is relatively low on this list, right? Bob? Yeah. And I think that’s important from a couple perspectives. The first one is what this tells you is that, people in turbulent areas of the world are recognizing the value of cryptocurrency faster and appreciating it faster than those people.

And first of all, countries, the bottom of the list for those of you who are only listening is Japan, Germany, us. So you have these really stable countries, which actually have very low adoption rates, like four or five, 6%. And you have at the top of the list, you have Nigeria 32%. So that’s very important to remember.

So when we look at, what’s the price of Bitcoin, for instance, which we’ll talk more about later, is it. Is it a bubble? Is it about to burst? Is there no opportunity for upside in it? The answer is absolutely not. We’re just barely getting started and it’s also important. I think when you reflect on this, you might say why do we need money?

Why do we need a new form of money? What’s wrong with the dollar or the Euro? I’m going to talk to you later. I think there are some. Severe things wrong with it, but I’d say the average person doesn’t see them. And so they think, Hey, there’s no need for some new version of money, but I’ll look at these other places.

They understand it. And there’s a stat that over the last three decades, 57 countries have had their currency fail. Some of them multiple times, like Argentina Chili’s and Bob way. It’s a pretty common thing for a currency to fail. And when it fails, it generally means the people that have held their wealth in that currency.

They’re at a total loss. As you look at this if you struggle and we talk about Bitcoin is you struggle a little bit about, what’s its importance. It may be important to change your optics and say, Hey, am I looking at it just through my eyes, maybe sitting in Los Angeles, California, or Birmingham, Alabama, or some place in a first world country, or would I see it differently if I was in a logo’s Nigeria or Manila in the Philippines, maybe you’d have a different perspective.

The other thing is main my background is actually as a technologist, as an engineer. For those of you who are a little older, I used to be the chief technology officer at a company called gateway, which in the nineties, early two thousands was one of the largest PC companies in the world.

And. In that role, my job was to not only develop the products, but create the vision for the company about where we were going. And it made me a history student about technology. And what I realized through that work was that the most important inventions in the history of mankind have all been from the perspective of creating a degree of freedom.

If the invention creates freedom, then it will be revolutionary and massive and almost impossible to define the economic and social implications of that technology. Things like the cell phone, things like electricity would fall or in other words, disruptors within industries. Yeah.

And massively disruptive. You think about the automobile. It wasn’t just. The automobile, but it changed, what roads look like? It changed how people work, where they work, how far they could live from work where they went on vacation, the implications are just so numerous.

And that’s the same with crypto currency. I can sit here today and I will, and I’ll give you some of my thoughts about the future, but. I’m sure I’ll just be scratching the surface of what it really means and what the possibilities are. So just most of the people here if you were born in, let’s say the eighties or the nineties, it means that you saw the beginning of the cell phone and at the beginning of the cell phone it was just a mobile phone.

It, wasn’t the centerpiece of your life and in this thing, driving social media and the centerpiece of your financial world. You’re absolutely right lane. The other thing I’ll say about Bitcoin, because I have a little acronym it’s called privacy, inflation protection and efficiency.

I think that these things are at the fundamental tenants of what Bitcoin is providing privacy, because what’s happening in the world is we are losing even the choice to be anonymous in our financial transactions. I can’t even decide to buy a cup of coffee at Starbucks and have that be a private transaction

that ability is being taken from us. Inflation, we’re going to talk a lot about this in just a second lane and then efficiency. I’ll talk less about this later, so I’ll do it a little bit now, but when you look at things like for instance, remittance. Remittance meaning, sending money overseas.

And you look at the countries we talked about at the beginning, Nigeria, Vietnam, Philippines one common aspect of all those countries. My wife actually being Filipina and having family back there as a business factor, money is constantly being sent, from the us back to the Philippines.

And when We use the traditional bank wire system, Swift system or Western union, or places like that to send that money. It’s massively inefficient. It’s very slow. It’s very expensive. For instance, sending $200 from here to the Philippines with a service like Western union is likely to end up with the equivalent of $150 in purchasing power landing.

At the end point. Terribly inefficient, but if we use crypto currency, we can see like 98, 99% of that value move. And we can do it instantly instead of over three days or five. And that’s the trouble, right? Like these large companies like PayPal or the credit card companies, they’re all getting their share.

And the buying power that transaction between buyer and seller is being wasted loss. Exactly. And they’re able to do that because in large part it’s an oligopoly, it’s a very small group of companies who. Coordinate and control pricing in those markets. In any market, your viewers are obviously more financially astute than the average risk and reward are generally tied to each other.

If as an example, I’m going to send $200 to the Philippines. And if I show up at a bank or a Western union office and I hand $200 in cash to them, To start that transaction there essentially is no risk in that process for any of the people providing the service throughout. And I’m not denying there is some service being performed, but the risk of taking a 25% cut doesn’t make any sense.

And but that’s what happens when you have monopolies and you have oligopolies and the banking system is, probably no better example of that in the world than the banking system. Okay. We’ll talk for a second now about money and inflation and what’s kinda going on in the world and, the first thing is I’m gonna play just a very short little video clip here.

From a guy named Neel Kashkari who’s president of the federal reserve bank of Minneapolis. This is from a 60 minute interview about a month after the COVID crisis. And I think you’ll find his words. Very interesting. Can you characterize everything that the fed has done this past week as essentially flooding the system with money?

Yes, exactly. And there’s no end to your ability to do that. There is no end to our ability to do that. So very interesting quote, so it basically is saying there’s a certain amount of money out there in the world already, and we’re just going to print. As much as we want without any control, there’s no oversight.

There’s no vote by Congress. There’s no vote of the people. They’re going to print as much as they want and there’s no end to that ability. Very scary. No, what, there’s different theories on this, right? Like my thoughts. And I don’t really care too much. At the end of the day it’s going to become inflation, the reason why I invest in hard assets, but like why can America do that right?

Is it because our military, why doesn’t all the other countries just print a bunch of money too? The truth is lane. They do Canada prints it. The ECB managing the Euro, does it, the bank of Japan, does it. Bank of Japan has been doing it for since 1980, since their financial crisis there.

And as they print this money and they create debt, they create a lot of debt for the governments. Then what they have a tendency to do is repress interest rates. And as they repress those interest rates and the debt grows. They backed themselves into a corner because if they have all this debt, the us has debt somewhere just short of $30 trillion.

Now, if they increase interest rates, they’ll increase the debt burden on their own debt. And they can’t do it right. They back themselves into a corner where the natural thing is at some point, if you repress interest rates, you create certain actions you create inflation. Does, they’re trying to create inflation.

We’ll talk about that later. Their stated goal is to create inflation. At some point, You have to use increase interest rates to dampen the inflation, but they’ve lost that tool because if they increase the interest rates now they’re now their debt burden is ridiculous. It’s a very ugly circle.

And so there’s different schools of economic thought about it. But you talked about like sound money and hard assets. The Austrian school of economics is really founded on that principle. And it would say you don’t do this. If the economy is taking a hit. You have to let it take its hit and you pay the price and it will recover and self balance and everything will be okay if instead, what you do is you just keep printing money.

You’re kicking the can down the road, but the problem at the end gets worse and worse. Theoretically, I’m not actually predicting this, but theoretically you end up with the these embodied way case. Or the Venezuelan case where people are, walking around with wheelbarrows full of cash to buy a loaf of bread.

That classic example it does really happen. It’s even happened in modern days. I think because of, as you said, the U S that won’t happen too, because. At least right now is the global reserve currency that provides some insulation and encounters the hyperinflation forces. But it doesn’t mean there won’t be material inflation forces though.

And again, we’ll talk about that in a little bit. So second thing want to talk about here. This is a little privacy and just a little history lesson. There is an organization, a lot of people probably haven’t heard of it’s called the international bank of settlements.

And I think a good way to think about it is the bank of banks. So if you have the central bank of Peru and the central bank of Austria, and they want to move money between them, they need a bank in the middle of them to make that transaction. And that’s the international bank of settlements. It’s run by a fellow named Gustin Karstens.

He’s a former finance minister of Mexico. And I found this quote which was from January 1st of this year, speaking at a conference about the future of digital money, basically central bank controlled digital money which is called CBDC central bank digital currency. So I’m going to play this short quote for you here.

 

We don’t know. For example, who’s using a $100 bill today. We don’t know who is using the 1000 to date. It gives you friends with the CBDC is the central bank will have absolute control. On the rules and regulations that will determine the use of that expression of central . And also we will have the technology to enforce that those two issues are extremely important.

And that makes a huge difference with respect to what? So hopefully you were able to catch that those of you listening. He does have a little bit of an accent, but what he’s really saying is we’re at the central bank level, there’s an attempt to redefine what cash is and to do so in a way that essentially leaves no room for privacy and financial transactions anymore.

And I think that. Understanding that, a lot of critics of this will say things like don’t do anything wrong. Why should you be worried about people knowing what your financial transactions are? If you don’t do anything or you shouldn’t worry about it. And the big concern is the sex traffickers, the money launderers the drug dealers, we have to protect against those people.

And, my comment is first that. I believe, and this is a us thing that, I have a right to my privacy. And that if, unless I’m suspected of doing something, I shouldn’t be surveilled is essentially saying we are going to surveil everything and not just at the U S level, but he’s talking, this is the international bank of settlements, not the fed.

This is not even a us agency, but talking about a global oversight over this whole thing. Number one, number two, one of the. Powerful things about blockchain, but also the negative things about blockchain is that every transaction is theoretically preserved forever. So what it means is there can be a revisionist interpretation of transactions.

So today I don’t think anybody would dispute that. Filling your car with gasoline is in any way an offense and that something that you should pay a fine for, or be in prison for, but in kind of a potential dystopian future. And I’m doing this for illustrative purposes, not to scare people, but to say, what if 20 years from now global warming does take hold and that environmental concerns get bigger.

What’s to stop them at that point from going back and looking at the blockchain and saying, Hey lane, over the course of the last three decades, you’ve purchased a hundred thousand dollars worth of gasoline and you therefore created this carbon footprint. So here is a tax or a fine for having done that.

Or maybe in a real dystopian view you’ve personally ruined the environment, therefore I’m putting you in prison. So again, I’m using extreme examples for illustrative purposes, but that we never know. But things to think about yeah. Yeah. And I, again, I think what you have to do is you have to say, where is your line?

What is reasonable? And I think for a bank or a federal agency to say, Hey, we want regulations that financial transactions over a certain size or repeated at a certain level with a certain volume maybe those need to be disclosed. Fine. Okay. I understand. I’m not so libertarian or so extreme to say that should be the case.

But I think this line of saying it’s the beginning of this quote, we don’t know who’s using a hundred dollars bill today. I’m like Hey, if I want to use a hundred dollars bill, I believe that’s my right. And if I do something wrong with it, let’s say I buy cocaine with it.

Fine, arrest me for buying cocaine, but don’t use the a hundred dollar bill as the tool and upon which to do that. And these are like, this is why I don’t like politics, right? It’s like the big government spokes against this crypto currency are using this as their argument.

When in actuality, they just want to make sure they can tax people at the end of the day, or maybe there’s a few other things that I’m missing that they want, but they’re using this as the scapegoat. Yeah, I would agree with that. And again, there’s always unintended consequences, so how big is the reach?

So anyway it’s a point in time where I think we have to be very careful. Yeah. That was my big thing against the script though stuff. Yeah. I think it’s great. And I’d sure to not have to send wires off and all this type of stuff and. All these estro companies would go away and all these title companies, cause they would be tracked.

Yeah, Bitcoin, but these are some of the unintended consequences and the governments don’t want this to happen. They lose their power as the central banks and Oh yeah. May not be good to be betting against the big guys. But I don’t know. I think you’re going to get into it later, right?

There’s becoming more mainstream adoption of the big banks by the stuff that it’s hit that tipping point where it’s hit that adoption point. Yeah, absolutely. Absolutely. And I will tell you lane again, this is just one person’s opinion, but I would say the number one reason that governments want to con then you control money.

Is that. If government wants to accomplish something, let’s just say they want to build a bridge somewhere. Okay. There are two ways to pay for the bridge. Federal government let’s say, okay, they can tax people or they can print new money. Okay. So if you tax people there is. No way around it has to be fully disclosed.

People get pissed off, they stop electing their officials, right? So it’s a lot easier to print money because you say we need a hundred billion dollars to build this bridge, okay. If we just print the money and we just dilute the overall several trillion dollar money supply by a tiny bit.

We’re basically stealing the money from the people who already had the money. I use the word it’s insidious. It’s hidden. Yes. It gets the money from people, Roz them in their sleep, but people don’t know. And now the government and everybody’s yeah, inflation happened.

Do you know? It sucks for all of us, it wasn’t our fault. And people buy that storyline. Yeah. I like to call it death by a thousand paper cuts because you take a little piece every day and it’s not enough. To make it hurt. If you don’t, eventually you lose an arm. If you take a big enough paper, if you lock the whole arm off at the beginning, people are going to be pretty upset about it.

But if you take it a slice of skin every day, it’s less upsetting. Yeah. And this is what do you do about it? You buy hard assets. You don’t be a saver. The savers will be the losers. Yeah. Yeah. And see, that’s the, that’s a great point lane because to me, that is the fundamental problem with the world we have today.

That you’re absolutely right. Your community here is ahead of the game because you’re providing yourself by investing in hard assets, investing in cash, flowing assets, you provide yourself. A lot of protection against this inflation, but the sad part of it is that if you look at the wealth distribution, we have a slide on this.

If you look at the wealth distribution of low income people and high-income people, high-income, people have very little cash and a lot of assets and low income people have a lot on a percentage basis. Low-income people have a lot of cash and no assets. So when inflation occurs, it hurts the low-income people way worse than it hurts the high income people.

So it’s this whole thing about taxation. So when the president administration is doing a lot of things to raise taxes on the wealthy, that’s the way they do and to make the poor feel better, not. Fully disclosing that while they are raising taxes, they’re printing the shit out of money and hurting the poor a lot worse than the wealthy.

Yeah. It is what it is. And it’s important to be educated and know how the system works. And I know here’s something funny. We usually get takeout and I eat more than my fair share of for sure. And if my wife’s a safe or weird, yeah. I eat her food and the next coming days, I call it inflation, and I’m being a troll, but I do it because, you only got one time in the world and China’s valuable, blah, blah, blah.

But it’s true. Right? Savers are losers. People who hold onto things and don’t do anything are ultimately going to be for the future. Yeah it’s true. And part of my message here today is in the current financial system, that is absolutely true in the Bitcoin system that can change a little bit.

And in the Austrian school of thought, it can change a little bit where not that investment can’t be rewarded, but that in a true hard money savings is not penalized. They’ll put it that way. You know that, you’re not gonna get obscene wealth through savings, let’s say, but you’re also not going to get robbed.

So this is what I believe an economic system that would have that characteristic would be fair to me because I like to give an example. I have a grandson he’s nine years old and his name’s Arkin. And if I say Arkin, Come over to the house and help me clean the garage.

Okay. And let’s say I give him $20 for cleaning the garage what I want to say as his grandfather is, Hey arch, and put that money in your piggy bank and save it for college. Save it for 10 years. And when you go to college, that’s going to help pay for your college. But I can’t give him that advice today.

That by the way, that advice was given to me by my grandfather, but I can’t give it to my grandson. Why? Because if he puts $20 in a piggy bank or a savings account, he’s going to have about 12 or $14 of purchasing power, 10 years from now when he needs it. It’s ridiculous. So what it does is it forces a nine-year-old into investing.

And one thing about investing is investing always involves risk. So we can do it certainly in a way where he does not taking inordinate risk, but it doesn’t seem fair to me that a couple hours of work that he put in to help me. That labor can’t be preserved and used later in time with equivalent value that, we’re basically robbing from a nine-year-old kid.

That’s what inflation is to me, it’s robbing from a nine-year-old kid and stealing the work that he put in cleaning a garage. And I think when you think about it in that context, and then you extrapolate it and say maybe it’s robbing from somebody who worked for 40 years and put their money in

their savings account and money market funds. And now they’re trying to retire and live off of that. And I think, again your folks listening to this, you probably understand that, it’s a shame that people are taught that, but that’s what our system teaches people because they should get that money instead of in a money market or a savings account.

Should have been going into hard assets and preferably cash flowing hard assets and but that’s not what most people do. And that’s what certainly what not most people are taught. Yeah. And that’s unfortunate. But maybe you should just join your kid, steal his money. Let’s call it inflation either.

He’s going to be really smart in the future, or he’s going to be an email child and. Go down a wrong path. One of the two risks. Yeah. So anyway we will, we should probably keep this thing, moving it not not bogged down too much. What happened with Bitcoin in the last year has been.

Just unbelievable. And certainly several other cryptocurrencies have followed along, but I like to focus on Bitcoin because it’s the granddaddy, it’s a trillion dollar market cap. And I’ve been preaching about it for several years now. And, but a lot of things happened in the last year because of.

COVID and the resulting actions by central banks around the world. And as I said, in a previous slide there, basically a decade happened in a year. And so all of these things the level of quantitative easing concerns over stability of a lot of governments.

It accelerated a whole bunch of things and made the case for the Bitcoin at an unbelievable level. And one of the things we saw and you talked about this earlier lane was this dramatic change and rapid maturation of the market where Big banks, big financial institutions, JP Morgan Stanley, Deutsche bank, et cetera.

They’ve all jumped in. They all have a presence. They’re all providing services, often custodial services being the number one thing that they provide. So this concern like about, Oh, it’s a for instance, Janet Yellen us treasury secretary. Who has as pissed me off, frankly, frequently, lately, because she’s been saying things like Bitcoin, doesn’t have a function other than to help.

Money launderers and criminals. That’s really not true. And we can, because of the blockchain take a reasonable estimation of how much illegal activities going on. Most of the estimates are about one or 2% of the money in the Bitcoin world is being attributed to some sort of criminal, which is less than the U S dollar.

By the way, which is probably more like four or 5%. But nobody blames the dollar, for, to pay no attention to the man behind the curtain. Yes. Yeah. Trust us. Trust us. And we’ve had wants is always wants the best and will always want the tech. Yeah. Yeah. Yeah. Unfortunately a lot of people believe that and, but I don’t think the facts supported very well.

And just on that list, just to expand on it a little bit, not only has. Some of those big companies, but all the big payment processors, visa, MasterCard, PayPal, Venmo, just the other day. They’re all in big life insurance companies, Massachusetts mutual, New York life. They both put several hundred million dollars into Bitcoin.

We’ve got funds like Guggenheim Tesla put a billion and a half dollars in, so this is rapid acceptance across the institutional and corporate. Structures around the world and we’ll dig in a little deeper on that in a minute. I had given a speech in February of 2020 and right before COVID and at that point in time, Bitcoin was trading at about $9,500.

And. We saw a dip. It had it had a big blip on black Thursday, March 12th, recovered very quickly. And has been as high as 65,000 and now sits at 55,000. And a lot of people when they looked at this situation for instance, the gold bugs and maybe there’s some of the on here today, they’ve been dreaming about this day when the world return into this chaotic situation, whether that was a pandemic, a world war, something like that, what happened in gold would suddenly become this massively appealing asset.

Didn’t happen. That same period of time I talked about Bitcoin being up about 300% gold, only up about 20%. And this year it’s only up about 3%. It’s just kinda been middling. It really hasn’t done anything. And it’s my belief. I don’t think I can prove it nor can I think anybody disprove it.

But I think basically what has happened is. I think Bitcoin has stole all that thunder. So the trillion dollars, Bitcoin Rose almost a trillion dollars in market cap between early 20, 20, and today. And I think it stole all that from gold. And that gold is probably be in the 2020 100 range, at least if Bitcoin wasn’t there.

And I think what’s happening is that.

People are realizing that Bitcoin is superior to gold in every metric, except for history. So it’s merely a comfort factor that, gold has thousands of years of history as money, or at least as a store of value. And I’m not saying it’s bad. I don’t think it’s going to crash necessarily overnight or anything like that.

But most of the attributes that have made it appealing as money I believe are diluting. And we’re going to see it kinda middle along and probably float down to more its natural rate of what its value is as jewelry and as an industrial usage, what the gold people like to say, it’s intrinsic value. And I think we’ll find that most of its current value is in the speculative component.

Not in the intrinsic value. And this is happened with silver. For instance, silver is lost it’s positioned as money and this is where a lot of like the gold bugs. And we don’t want to mention names up there, but if you break down, love their thesises on why gold is the thing, other than the fact that they get compensated and get commissions every time you buy and you click on their link Same could be said for crypto.

And so I think we both agree with a lot of these guys’ arguments, but why not crypto? And they can’t answer it other than the fact that their website cannot get commissions off Bitcoin. Yeah. Yeah, it’s very true. And he said, I can tell you laying in that, tell your audience, I’m not here selling anything.

I’m doing it from an, like I said, purely evangelical perspective because I want the world to be a better place for my kids, for my grandkids. And I think this is not to be overly dramatic. There is a one-time chance in the history of mankind left to take control of money from governments. This is it.

I don’t believe they will ever let a Bitcoin sneak up on them again, that they were blindsided by this. They ignored it for a long period of time. And now that it’s it got really big, really fast. They didn’t see that coming. They didn’t see the adoption. Infiltrating, fortune 500 companies and major funds and big financial institutions.

And now they’re trapped. They really can’t ban it legally. There’s no way that’s going to happen, they can’t shut it off. Technically it’s too big and too widespread. They can make it maybe a little difficult, but they can’t stop it. And this is it folks, this is our chance. So if you like your fee out money, then you know, God bless you and, go for it.

But if you want the world to have a hope of having a true free, transparent non-inflationary money supply, this is it. Jump on board. Now w one of the things I’ll say here is I think people often have a hard time figuring out what Bitcoin is. So they like to compare it to things that they already see.

Is it like this stock? Is it like gold? Is it, but the problem is. It’s so many things. I think you have to really say it’s something unique in and of itself. It’s a monetary network, a decentralized monitoring and work. It’s a protocol like the internet court has a money characteristics, very strong as a store of value, some value as a medium of exchange.

It has the ability to be a unit of account. Although right now it’s, doesn’t really have a lot of that. And I think when people think about, should I put some of my net worth into it? How do I think about it? How do I evaluate it? It gets really difficult. And I think people get stuck on that.

I say that you have to think about it completely differently if you’re a trader type person, which I am not, but if you are. It’s going to be very tricky because I think a lot of the things you think you may know about what a certain trading pattern looks like, or a certain shape of a curve or a certain pattern you may see that in Bitcoin and say, Oh if this was happening in a stock, it would mean I buy or I sell, or I do this.

But don’t think that you can apply those same curves to Bitcoin. It might work one time and then be an absolute dumpster fire the next time. Bitcoin doesn’t follow those patterns and again, it’s not a company, there’s no leader, it has no head. It isn’t beholden to anybody. That’s a big thing, but the last thing I’ll say about it here is.

This is the way I look at it. I don’t measure it in dollars. So I view Bitcoin as in the merging parallel financial universe. Okay. And if I move some part of my wealth from the existing, see out universe, primarily dollar base, and I move it over into the Bitcoin universe. I don’t intend on it ever going back.

Okay. That I am not in fact I don’t like to use the expression I bought to Bitcoin. I’m more likely to say I sold my dollars and acquired Bitcoin. And that’s one thing I think people often kind of mistake when they think about money is they forget. That it’s always a two-sided transaction, whether you’re buying a house or a pack of gum, you are selling your dollars and you’re getting this other thing, whether it’s a commodity or an asset.

So if you bring that, let’s say it was an asset. When you bring that asset back to dollars you’re bringing it back into this. Scary thing. We’ve talked about inflation a little bit already. You bringing it back to this thing that is not working for you. So if you do that, you better get it somewhere else quickly because it’s a horrible store of value.

It may be, one of the worst stores of value of all time. And so anyway, this is a important part of, I think about trying to get the right mindset, to think about how Bitcoin works and and how it might fit in your world. Okay. Since I know you’ve seen most of this already lane.

There’s a predominant feeling. If I go out and I spoke last week at at Florida Gulf coast university, and I had a classroom, I had about 80 kids in the classroom and I asked all economics and business students and I asked them what’s the current rate of inflation. And every single answer I got from the audience.

Referred back to this chart for back to consumer price index or PCE. And the numbers that they came back with were 1.5, 2.1 those kinds of numbers. And then I said to them, I said in your life does the last year, does inflation feel like one and a half or 2%? And basically nobody felt that their world felt that way.

And so you have to peel back the onion a little bit and say what are they actually measuring? When the fed measures consumer price index, they’re really measuring the cost of the base and necessities of life. At best, by the way, I’ll even be kind to them. And just say, let’s say they’re just looking at the base standard of living.

They’re not looking at asset inflation, they’re not looking at luxury items. They’re not looking at aspirational items and you start looking at those things and you see a whole different picture and you realize that real inflation. Is way, way higher. My personal belief, if you blend it, it’s probably more like 10 or 12% right now.

And for those of you who can see the chart, this is a growth of the expansion of the money supply, which is up by about 30% year over year. So from a technical basis, that’s what inflation is. Inflation is expansion of the money supply. You don’t feel it’s symmetrically. It’s not like the price of apples and bread and toilet paper all went up 30% directly.

In fact, it usually inflates through hard assets. First, the things that you know, that lane talks about all the time, those are the things that see at first. So when you’re investing your money in those things, That’s great because you’re ahead of the inflation curve and you’re buying those assets with pre inflated dollars, and it might take two, three, four years for all these effects to filter through.

But some of it’s immediate in this world. I just so happen. I have a chart here just current from yesterday, lumbers up 265% gasolines up 182%. Corn is up 84%. Sugar’s up 59. Cotton’s up 54 coffees up 13. You start looking at those numbers and then, for a lot of the folks here, you look at real estate.

I know I live in Florida. Real estate prices are up 16% in Florida this year. One year and it’s, and if you’re looking at things like Miami beach properties or Naples, Florida properties are up way more, in the higher, more desirable areas. I got a direct antidote for that.

So we’re building a 200 unit apartment complex in Huntsville right now getting kick their butts with the lumber prices going on. As I said that’s inflation. It’s not the fact that the Lumber’s more expensive it’s inflation. Yeah, we’ve got contingency to cover. Cool. But how great is it going to be in the future when we finish building this thing and sell it?

Because already, just in the past, I would say a year we bought out another hundred unit out there. The cap rates have come down at least a quarter percent. We have a couple million dollars of equity in that property. And part of that is rehabbing units. I’d like to say it’s our hard work and dedication.

I would say a million out of $2 million of it. Just that one property is inflation. Yup. Rates coming down. Yup. The right side of the curve. I’m glad you’re blessed with that lane and those people doing similar projects that may be watching, God bless you.

There’s an actual name and economics for it. It’s called the effect. And the cancion effect basically says that as new money comes into the system, those closest to the money. Benefit most. And I think you would know it as those people that see new money come into the system, they have access to cheap money.

Like people you land, you have access through the banking system and you have credibility, so you can get access to money at very discounted rates that allows you to get into these assets before the effects of the inflation have rippled all the way through the system. And so you’re going to buy those assets with pre inflated dollars.

And you’re going to ride that whole thing up. You’re gonna ride that whole inflation curve and do really well. But again, the guy that unfortunately is making $12 an hour and, barely covers his rent and food every month. He’ll never get out from that.

And if what I like to say too, is the best measurement of inflation is not what it costs you to live today, but are what will it cost you to live in your dream? So if your dream is a penthouse, condo in Miami beach and a Lamborghini, and you’re 20 years old, let’s say and say how much money is it going to take for me starting at zero to get to that?

You’re gonna have to not only earn all the money, but you’re gonna have to beat inflation the whole time. Let’s say to try to get there by the time you’re 35. If that’s your goal, you’re gonna have to do something really extraordinary in high inflation times. So again, that’s partly why when I started this about.

How did the poor get repressed and oppressed it’s because of this. And another thing to remember is the dollar is the global reserve currency. So all the other currencies in the world are pegged to the dollar. So if you’re a poor person in Manila, like we talked about earlier that the gap to affluence has just gotten so massive.

Like how do you ever close it? It’s almost unattainable. Here’s just a couple other things, just to show, how inflation has changed. No. This is since 2000, average home price, up 5% price of a car up for college, up over six. We have all of those sorts of things collectible whisky and homes in the Hamptons.

We have all those things. All so we’re nearing the midway point here, folks. We’re really gonna, we’d like to, we’re going to have Bob back to finish up the conclusion, but we’re going to make this a wrap up part one here for you guys, because I got to go get my COVID shot so I can save other people’s lives in the process.

And we’ll record this in a future podcast, but thanks for coming by Bob we’ll connect next week and wrap this up and I guess for you guys listening we talked a lot about inflation, right? This is the insidious way that the government devalues your money. If you just had it where everybody else has it in their bank accounts and their assets that don’t really appreciate with the pace of inflation.

So another good reading would be going to simple passive cashflow.com/debt. I wrote an article in Forbes regarding this topic and yeah, this isn’t the stuff that our parents taught us. But certainly, hopefully it’s not the stuff that myself and Bob were going to teach our kids and hopefully you’re going to follow suit, but we’ll catch you guys next week.

 

May 2021 Monthly Market Update

https://youtu.be/0JKNzum9mr8

What’s up everybody. We are going to be doing the monthly market update for May, where we go over the. Latest happenings across the headlines of what’s impacting our bottom line as investors and what to be on the lookout for in the future. My name is Lanco Oka. I read simple passive cashflow.com, currently owner of 4,500 rental units and the creator of the content@simplepassivecashflow.com and civil past cashflow podcasts.

Before we get started, make sure you guys go to the new YouTube channel. The creative is what a fun channel not so quite made for accredited investors, but for the younger kids out there, just getting started under a quarter million, half a million dollars net worth currently 90,000 views so far check that out.

It is called enriched uncle. On YouTube channel at 1,900 subscribers. And that is me, the girl version of me. So let’s get started. Oh yeah. If you want to check out the podcast, it’s on YouTube, iTunes, Stitcher, Spotify, Google play. So if you teach it once before you get started into the news, first one here teaching point passive losses.

So a lot of the K ones are coming back to vestors. Now K ones are the simplified form of some of you guys have rental properties. They are the super cumbersome, confusing schedule. Ease. K ones are so much more simpler. Here, an example investor put in, actually, this is mine. I put in $60,000 into this one investment and got a $47,000 deduction in the first year or 70% of what I put in as a first year.

Some of you run a property owners know you can deduct the pace of the property over 27 years. They get that paper loss, but with syndications, private placements, You can do a big cost say and get a huge amount, more of passive losses. And we are very giddy over all the cool things we can do with these passive losses, which you can check out more@simplepassivecashflow.com slash tax.

You guys are tired of flipping houses. I know I would be is a pain in the butt to do that stuff. You guys need to act for credit. If you guys are getting on the path to accredited investor status your boat to this website, simple passive cashflow.com/burr, B R, which stands for buy rent, rehab refinance for Pete.

I’m not a big fan of this and you read this article to find out why. Now there are a lot of different potential changes coming through Congress. One of those things is called these exclusionary zoning processes. So what this is to say it in a semi PC way is basically what we used to have.

This country needs more workforce housing, right? BC, and even call it D class housing because we have a growing population in America and a growing lower middle-class. The wealth gap is getting bigger and bigger every day. Now in the past, there’s this kind of this saying not in my backyard, right?

The rich people are like, yeah, we don’t want these like low income or semi low income apartment complexes or these basically the projects. And we want to keep them separate. Now this none of my backyard concept is trying to be going away. And I think this is good, right? This is exactly what I invest in, good, lower income properties scattered throughout decent areas.

When you have the, not in my backyard concept going on you, that’s how you have Guedel’s that’s so you have the projects, right? There’s huge segregation between the rich area and the super poor area. This is all stuffed into the big stimulus plans to help produce or affordable units, which this country needs much more of it.

Guess what folks rents are going back up? National rents are beginning to upward trend after being flat-lined in 2020 with the pandemic. So hashtag rents do, if you’re a landlord, rejoice,

we’re going to get into some of the headlines here. And these are some of the macro economics. I think all of the investors like when we dive in, highlight this for them, but I think it’s no secret that people are getting the heck out of the high price areas, such as the Bay area sample say San Francisco.

Los Angeles, Southern California, moving to these more pro economic areas for growth areas where the cost of living is just a lot less. And there is just as good job prospects there. So these are six of the places. A lot of people are moving towards air Phoenix, Arizona, Austin, Texas, Las Vegas, Dallas, Texas, Miami, and Atlanta, Georgia.

And where are they coming from? I think. California San Jose and Los Angeles are more of the likely candidates, especially for the Texas and West coast markets, such as Phoenix and for Atlanta and Miami. A lot of people are moving away from your Chicago, DC from those areas. And if you guys are checking this out on the podcast form, which this also gets released once a month we have this we have nice slides and cool pictures for you guys to check out on the YouTube channel.

Also, if you haven’t yet joined our Facebook group the GUI, which we have, we engage in conversation on these topics there moving onto the Bloomberg article where San Francisco residents cause there’s a big Exodus leaving the Bay area. A lot of them are moving to Sachar Bentall, which is adjacent which is an obvious fit for people who don’t want to totally relocate out of the area.

But a lot of them are moving to Dallas, Austin, Houston, Texas, and Phoenix and Tucson, Arizona. In addition to Las Vegas. Yes. So more demographic trends. Now, what we’ve got displayed here on the screen are the red States of the top States for outbound migration. Red is bad and green is good in this case. So that’s where the inbound migration is coming in.

I think a lot of investors have been clamoring about Boise, Idaho, but you got to remember about Boise. It’s still under a quarter million population, which is absolutely nothing. In my opinion, it’s smaller than a tertiary market. I won’t really invest in places unless it’s maybe half a billion or greater population, unless it’s a really good deal, of course, but I still want to stay with solid tertiary markets.

A little bit of humor for you guys. Not endorsing any drugs, but come the simple passive casel.com. You want to be happy?

So Yahoo finance reports that the fed holds rates near zero notes, rising inflation as U S economy strengthened. So I think this is no secret interest rates are still on a historic low. They are creeping up a little bit, but still all time lows for the most part. But inflation is here. Inflation is here.

Folks, if you don’t believe it, this is the game that governments play, where they go into all this debt. The United States has the best military. So we have the Liberty of creating all the free money we can create so that all we’re trying to do is basically inflate our debts away. When your parents bought that 30 year mortgage way back when, that debt is nothing compared to debt.

That’s essentially what the government is doing today, which I think is pretty smart. A lot of people get all wrapped up in what’s the debt number today. It really doesn’t matter my opinion. But how I’m playing it and where I’m putting my money. It was my mouth is I’m buying assets that go up with the pace of inflation.

I think one thing is certain those people who. Keep money in assets that don’t rise with inflation are going to be the losers. People with cash in the bank will be the losers of some more population growth statistics from the Yardi matrix. Where are, where is the rent growth went up and up? I think a lot of the investors, they key in all types of different data sources like.

Job growth, they key in on certain employers. But to me, I think the biggest thing that I look in just terms of a numbers perspective is what are the rents doing on a quarterly and annual basis? And this kind of sums it up right here. The rent’s still going up five, 6% in the inland empire Sacramento, Phoenix, Las Vegas, Tampa are the top five.

The places where they’re decreasing New York, San Jose, San Francisco, Seattle DC are the users.

This is just another same data, but broken up based on the left side, you have all asset classes. And then in the middle, you have this lifestyle asset class, which is more your luxury, your higher end stuff. And then what we like to invest in is this asset class club renter by necessity. In other words, people got it right here because they don’t have too much money.

They’re stuck paying $500 a month for a one bedroom to $1,500 a month, a lot better at that facility or work first housing. Whereas some of our clients, they decided that they don’t want to have this house. It’s too much time it’s old, right? So they’d rather move into a luxury, wanted three bedroom apartment, get all these luxuries, get a pool that they don’t have to clean, even get trash valet.

That’s a non-traditional approach to spending on money on where good accounts and getting money out of that down payment that, that equity and getting it working to build a stable, financial future for their families. As opposed to doing it, the traditional way of buying a primary residence to live and seeking that big down payment.

And there’s dead, lazy equity, not doing Jack and also for going on. Now, they have that big monthly payment and then other stuff to hear some rent, growth trends from some of the top markets. I think, a lot of these top five markets I don’t invest in Sacramento in an empire.

I don’t think I ever invest there. It’s just too expensive for the rent that I get there. Again, I follow this threshold of 1% men to value ratio greater. So you take the monthly rent divided by the purchase price, and I need to get something that’s 1%. So I’m able to cashflow on a monthly basis. Because I don’t really invest off of the appreciation potential of it.

Great. If it happens, but I consider that gambling. So folks who’ve have rental properties in Seattle, California say they have a lot of appreciation. Good for you guys. Easy come easy, go. I want to invest for cash. Okay. Those people investing in that nature are like I said, gambling, and these are the, what I call them. On sophisticated or dumb money or in this graphic, John Burns calls these, the investor mania 2.0 categories. There’s four of them. So the first one is the single family home landlords. Now, the reason why these are the dumb money is because it’s easy to get a rental property, anybody can just get into it. And there’s a high competition value, and this is why we try and buy apartments that are higher than five to $10 million. So we can arise above these types of mom and pop investors. The next one that I think everybody thinks about when they think of investor mania is the house flippers, right?

The HGTV stuff it makes for great TV I’ve met, but you’re a hundred percent reliant on the fact that the prices are going to keep going up. Sometimes if you’re flipping in the right location, like a secondary market, like Birmingham, Atlanta, Indianapolis, Kansas city, little rock. You have the exit strategy to be able to cashflow on the property with it 20% down payment.

But other than that, you’re bleeding money. If things go wrong, you have to switch to a forward strategy. This is why in our group, we do not flip or do Andy’s first strategies. Another one is foreign investors buying secondary. All right, this is the international dub money. And they’ve got a lot of money.

They can do what they want. And then home ownership, helpers. So these are the people that have both rental home groups or shared home equity platform.

Another Yardi report here. This is showing the average units absorb per property. So this is where do we call it? Absorption. So basically how much stuff you have there? How quick is it going to get the stuff. And as you can see, the blue was 2019 and the absorption, it was a lot more than what it was, and it was a lot higher than in 20.

Watch it.

Red cafe came up this full table of the top 30 hottest rental markets. And what’s a hot rental market. They defined it as the same thing as absorption is another way of describing it, but the inverse of it is vacancy days. If there was a vacant unit, how long did it go before getting filled?

Some of the hottest and the countries are in the low twenties. So it takes just under a month to lease up that property.

Some of the occupancies on some of these markets are in the 96 to 98% range. We like to run our properties in the mid to low nineties. Anything higher than that. It’s just a sign that you’re a restaurant high enough. You’re not charging for your properties. You want to attract the best tenants.

And you want to always be pushing rents,

Yahoo finance also reports Warren buffet is right. Relation is running Rapids. And I quote, here we are seeing substantial inflation says Warren buffet said this at the Berkshire Hathaway annual shareholders meeting. We are raising prices. People are. Raising prices to us and it is being accepted.

And another quote here, people have money in their pocket and they pay higher prices. It’s almost a buying frenzy. Buffett said noting that the economy is red hot. So there you heard it there from Oracle of Omaha but a buffet knows what he’s talking about. And unfortunately, this whole pandemic it’s hurt a lot of people and yes, we want to be sensitive to that, but we also want to call it the fact that a lot of folks, especially on the higher end, the white collar workforce out there maybe some of us the same to this reporting.

We’re doing pretty well, right? If you’re able to keep your job and work from home, Yes, you weren’t able to both traveling and going on a nice vacation this year and pay for those sports tickets, the football tickets that you wanted to. That’s a little annoying, but overall, people are putting money in their pockets.

These stimulus checks are going out. It’s just going to calf savings. I think it’s unfortunate that it’s again, it’s the rich getting richer and the poor getting forwarder and divergence of wealth between classes. And here the government is trying to do a good thing, but Oh my goodness.

I fear that this is becoming a 401k 2.0. So the headline read here is secure 2.0, which stance or some kind of governments trying to help people save for their retirement on the secure two on our retirement bill clears committee and move closer to passage. By no means is this finalize and it’s going to be different ways to get it to change, but you can go to our Facebook page and download the actual transcription of

what that document is at this point. Like I said, it’ll probably change many times over, but. My attitude on this is I’m a little worried because this is just like the damn 401k again. And to me, the 401k wasn’t really that great of a deal. I see it more as a way of the government getting what’s with all of these brokerages.

And now these brokerage, which are able to sell all their products of mutual fund projects, which are fee Laden. And have carried interest on their side, where they get compensated, whether or not the price goes up. And ultimately, this is what robs a lot of hardworking Americans of their retirement. Why else can you just buy a rental property?

You make 20, 30% on your money. If you don’t believe me, go to simple passive castro.com/returns. Take a look at that video. Or I’d break down all the numbers how you’re making money, my cashflow, which is the monthly revenue, the tax benefits, the mortgage paid down and the property appreciation are you making money four ways again, you want to take my word for it?

20 to 30% a year, if you don’t trust me, go look@mymathandofthepassivecashflow.com slash returns. But this is very early on. When I bought my first rental, I was like, what the heck? How’d you make it like eight to 10% in all my stock stuff, the stuff that I’m supposed to do, but I’m doing so much better in these like a simple rental property, a turnkey rental of all things that aren’t that great.

And then I discovered the church, right? If everybody just did what I did and bought a handful of rental properties, they’d be financially free, very quickly. I would society function. But, and how would all the wall street executives get all their salaries and build these big buildings in the middle of New York or all these city centers in the financial districts.

We can’t have that happen. We need all the American students that put their money in mutual funds so we can just feed on the debt in their state. But anyway, I digress. If you guys want to join our community, we have the founding office Ohana mastermind to learn more, go to simple, passive cashflow.com.

Slash journey. This group is pretty much a accredited investor only. So million-dollar network and above, or you make over $250,000 a year. You get access to all the products that I’ve created and doing the remote investor. I-Corps syndication LP guide 12 month investor plan, shade line hacking guy. But the power of this group is that network, right?

So we do biweekly zoom conference calls. You get access to the entire library and we have more than eight deal vetting group, but we are here to share best practices for tax legal, infinite bank and legacy creation. And the big thing is the network, right? Magical things happen. You get other like-minded working professionals around you that are pure passive investors.

If you guys are new, check out the incubator@simplepassivecashflow.com slash incubators here, you’ll learn how to buy your first rental property. If you’re just starting out. Now a little bit of background of what I’m doing, firstly, in my own life, every month I try to do a recap on what I’ve been working on in terms of these six categories versus growth.

So I’ve been trying to whoop thing. So it’s like this bracelet I wear, but it’s not like some like the Fitbit, I think it’s lame, but this thing is pretty cool. Like I’m a big techie and into fitness. And I haven’t seen anything like that. This it does her HRV. And it also tells you if you can hit an art at your workout today, that’s what this recovery thing is.

It tells you what your HRV is. Ideally, you want to have a lower HRV, tells you how much you’ve worked out that day. So this is great for me, cause I’m always in self-preservation mode. I don’t want to work out too hard and it tells me, Hey, you should hit a seven or a 14 today because your recovery is good.

And it also is a sleep coach. It also tells you how much sleep you should be getting. And the cool thing about this is we can create teams. So I joined my CrossFit gym. I have a household that I’m a part of. So we compete. It’s fun, it’s growth, it’s something different. I’m always moved to get better of how do I get contribution in my life while I started the rich uncle YouTube channel.

And this has been an idea for quite some time. Simple passive cashflow caters towards a credited investors today. We help people buy their first rental properties as turnkey rental rentals. And then eventually it’s become a credit investor at beyond that’s where the private placements and syndications and all these high net worth wealthy people, tactics come in.

But what do you do if you’re just starting out, right? You just graduated college, like how I did back in 2007 and I had a good paying job. But what do you do? Where do you start off? Cause everybody’s telling you all this nonsense about the 401k, each of fun diversifying and 25% international stocks, 25% midcap, all this type of stuff.

I am tired of listening to people who don’t know what they’re talking about and still working their job. The idea is don’t take financial advice from people who are not financially free. So I quit my job. So you know what? I’m just going to make this rich uncle channel and try and help people the way I think I can.

And if you guys are interested, check it out. Maybe if you guys have younger folks in your life pass it on. It’s supposed to be a little bit more fun and a little bit less dry than the content we’ve covered here. We’ll pass passive capsule land. There, I am trying to help. Get them away from their other coworkers at work, telling them to, Hey, if you wait till you’re 67 years old, you can get a lot more money from your pension fund.

That on drives me crazy. Another category that I was trying to do this month was significance. We passed 90,000 views on the rich people channel and why do I do this? I was super upset that everybody’s putting all their eggs in like this pensions, which. If you’re on Hawaii, 55% of it is funded.

If you’re in California, 69% of it’s funded my friends in Washington, here’s this actually pretty good. But for the most part, these States are hoping that you don’t make it to your average life expectancy. So they’ll have enough money and that’s messed up. My most, you guys are pretty prudent. So you guys have your own 401ks and stuff like that, but yeah.

What I realized is all that 401k stuff is a bunch of nonsense. It’s like a cafeteria of garbage investments. And in a way these brokerages are in boots with the government, right? Put your money in this 401k stuff. So you’re captive to all these garbage mutual funds where there’s high fees where you don’t see them and are frankly like you don’t get that much return.

You could get, do so much better. So here I am, I’m giving you that red pill to help you as you get educated. So you can make these better decisions and learn how the wealthy do things, because it’s not much different than how we do it. How you’re taught. We’re actually it is they’re different, but it’s not something that the average guy can implement themselves.

How did I get a low uncertainty in my life? I’ve committed to. Investing a lot of money into Bitcoin crypto. When, a little, certainly anywhere from one to 5% of my network here is a little table of the number of, I guess the way they read this is like your investment level based on your net worth.

And potentially it goes all the way up to maybe a quarter to a big chunk of your network as a very huge Part of your portfolio. Me Amy I’m in this one category, right? Because for me, I operate real estate and that’s what I know when I try and stay in my lane. I have a couple upcoming podcasts on Bitcoin and crypto.

I am a libertarian and I believe in the currency as a way of taking back control from countries and putting it back into people. So I do see it as something like that. And I do see it as a sustainable thing. And right now I see it as a land grab, but yeah, definitely not going to go crazy with this stuff, but like anything, educate yourself as opposed to just opening up an app and asking your buddy what they’re investing in.

How I balance that uncertainty is with certainty. And if you’ve taken a look at some of my past tax returns, you’ve noticed I don’t pay very much taxes. Because I use passive losses from my investing to offset my passive income and I try and lower my ordinary income as much as possible. You can learn more about this.

It’s simple, passive cashflow.com/ . You can also see my tax returns on there, but here’s a good one. On J 80,000 investment got $176,000 of first year passive losses. That’s almost like a hundred percent return of losses right there. Some people think it’s kinda messed up that the wealthy don’t pay taxes, but then again, not everybody’s pulling out their wallet, I’m putting money into each of these K ones represent a business venture that helps low income middle-class families with housing making, improving their community.

And that’s where the tax code is written. It is what it is. Those are the rules that government wants you to invest, especially in things like real estate and the way the IRS says it. If you do not invest well then bro, you got to pay some taxes, right? If you’re a doctor making 600 grand a year and you don’t invest to get losses and you don’t implement real estate professional status, do all these other things.

You got to pay taxes. That’s the rule? Lastly here how did I get a little loving connection in a world where I can’t see and yeah, you folks we’re having a baby. We did a book drive by shower, which I’m not super thrilled about the drive-by thing, but it is what it is. But there was I make all my social media stuff.

I know a lot of people that drives me crazy. Like it’s so lame. Like people have these quotes of like cash flow or passive income, like man’s boring. I make all my social media stuff and I try and keep it light. So fencing the perfect COVID sports masks, gloves stab anyone that gets closer than six feet.

And we try and network virtually, right? We’ve done this as a group within the foam and the incubator groups. Yeah, but, hopefully we can start the in-person events here soon. And if you guys want to learn more about that, join the mailing list and join the clubs that will pass a castle.com/club.

I normally tell people what I bought is that usually I like to go shopping Amazon, but I’ll be honest. I haven’t bought anything because I’ve been buying all this baby crap and I don’t even check the mail anymore because they know it’s not even for me anymore. But yeah, none of this was should have been construed as legal tax financial advice because I am power all your folks to think for yourself.

And now’s the time. If you guys have any questions, type it in, and this thing will feed it right to me. But Hey Craig, yes. Said I agree. The 401k is garbage. I think it was Craig that said, that the 401k is like signing a deal with the government that you don’t want to sign where the government ultimately has a lead over everything you’ve got.

So you know, the government’s got this big debt, right? All they have to do is say, Oh, now we’re going to tax this stuff at this rate. As all the baby boomers taking money out of their return. I thought that was a great way of explaining it. Craig, so thanks for that. Yeah, you mentioned the cares act was a golden opportunity to jailbreak money from the 401k.

I don’t know if you can still do it. You can backdate it for 2020, but if you guys can read the article to get ideas and talk to your tax professional, if you need a referral, let me know. But. You can go to simple passive cashflow.com/covid to learn more about that cares act, Joe breaking a hundred grand from your retirement account.

Oh, somebody wrote a question. Are you noticing tenants wanting an extra or meeting that other rooms so they can have their home office separate from their bedroom? Do you think that an ongoing trend is this a B. Class and above class thing. So generally, like I think people are putting more money into their living conditions is evident by like the substantial loss of home renovations going in.

And I think this is partly to do with residential real estate prices going up. There is a trend people, they’re building larger. Bedroom unit mixes. So two bedrooms and three bedrooms, not a huge amount, more, but like very small, right. As these trends develop.

I don’t know what the mix is. We get the engineers and we figured out what we just copied, what the big developers are doing in terms of 27%, one bedroom, 30%, two bedrooms, or whatever that mix may be. But definitely I think this is more of a B plus class or Hey, minus class thing, a lot of our tenants are hanging anywhere from $700 to $1,400 a month.

The class B minus class tenants. And a lot of these guys don’t really work from home. And we have a few properties where we did have a lot of more white collar blue collar mix. But for the most part, a lot of our tenants are working those jobs where they need to get out of the house or they’re essential workers they’re the backbone of America having an extra room that’s, that’s first world problems.

I think that’s more of a, your E-Class kind of vicinity. And if you guys like this, let me know. And hopefully we can do this again. And if you guys want to join us next time, you can check us out on the YouTube channel.

And the Facebook group is where we will live stream this. So another question here in one of your podcasts or investors calls, you had recommended not to deploy more than $250,000 in a year. Is there any checks reason for this? I don’t remember the context of this. I think what I was getting at, lot of investors low need that rich dad, poor dad book, that purple book that is the red pill of finance for a lot of people.

And they’re like, Oh my God. I got to get out of this, like crap, been investing in, for all my life and they go bonkers, they’re going into all these alternative investment, private placements and syndication deals. And I’ve had people that invested half a million, million dollars at nine months.

I personally am Whoa that’s a lot of them investing, cause the thing is what’s hard about syndications. Anybody can put one together, right? Anybody can invest in it, but like in terms of putting them together, Anybody can do it, you just pay a through $30,000 and supposedly you can magically do it.

So I say that jokingly, because not everybody should do it. And I sure as heck am going to invest in those deals, but those sponsors how do you determine who’s legit? It’s really hard to determine who’s legit and if it were me, I would take the approach of putting my money in. Going with the minimum and seeing how it works.

Call me crazy, but I think that’s a prudent strategy, especially when, lot of people that come into our group, they’ve been investing in the regular 401k stuff that traditional investing model for 10, maybe even 40 years, we have a lot of old people in our group. Maybe I shouldn’t say that, we have a huge range of ages in our group.

Don’t throw it away on some bozo who you just met. I just, today someone just mentioned that, yeah, they lost a hundred thousand dollars investing with this other sponsor and they’re happy that they found this, but that takes some luck. And I think to really feel confident to knowing that you’re putting your money with good stewards is to build your network with other passive investors.

So that you feel comfortable knowing that, other people have had good success in the past, but likely a lot of us and myself included, we don’t have any people who were investing in these types of alternative investments. Most of the people that we associate with or go to work with, or our families or parents just invest in the traditional mainstream retail stuff.

So we don’t have that network. But what I’m saying is that’s why we created simple passive cashflow. So that, that there is an opportunity to find like-minded individuals. And when you do, that’s when magical things happen. And if you want to stop screwing around, that’s where you join the family office on a mastermind, the fault I’m just saying, but, I think that’s the way into it.

And maybe I said the $250,000 in one year thing, I think maybe where that came from was. Like maybe you can go on. So a handful of deals in that first year, within a minimum investments being anywhere from 50 to a hundred thousand dollars. So you could go onto a few deals and you can sit and wait and watch, see how the sponsor performs.

Did they run off with your money to Mexico? They say that they were going to do it quarterly distributions. That start when they started, when they said it was going to So that would be the way I would do it. When I started to buy rental properties, I bought my first three in Seattle.

And my big first pivot point as an investor was investing sight and scene in Birmingham, Atlanta, Indianapolis in 2012, 13 what did I do? I bought one property in Birmingham. I see how it worked. I pause for six months to a year, and then, you know what the damn thing works. So I’m loaded. I loaded all those Seattle properties that have poor cash cashflow.

And I went into and parlayed my money into those other investments. So to me, I’m not saying that you’re going to do this, but I liked the approach of getting proof of concept and then going all of them. And they’ll bark. You’re not old. You were actually very youthful at heart.

Any last questions here? But once going twice, you guys like it does content. Please join the clubs will pass the cashflow.com/club. You get access to the free e-course to start learning more about this stuff and check out the podcast. Again, all of these monthly webinars are held@simplepassivecashflow.com slash investor letter is where I house all these monthly webinars.

And thanks everybody. And we’ll see you next month. Right?

Are Bridge Debt and Pref Equity Good for Deals?

https://youtu.be/vDCJ0suvLac

Hey, what’s up simple passive cashflow listeners. Now I wanted to announce a new project I got going on. The rich uncle YouTube channel. So those of you guys have been following me for the past several years since we started this podcast back in 2016, simple passive cashflow started off with me buying some turnkey rentals, eventually getting my portfolio to 11 and 2015, and I felt the pinch and I realized these rental properties was not the path to financial freedom.

It was the path there, which I still think non-accredited investors under quarter-million half a million should definitely go on buy a rental property. You get that experience, feel what it is to be or moat landlord, and then move off to bigger and better things as you become more of a credited investor or on the verge of.

So it’s a transition into being more of a passive LP partner, diversifying yourself over multiple deals out there where you’re just an LP partner, little to no liability, no debt in your name. You can still Chavel hack all these credit cards, which we’ll have a feature podcast on that too.

And you can also partake in the value add strategy, right? When you’re buying turnkey rentals, which you’re essentially doing is your. Just buying an asset that has little to no built in equity in there other than your down payment. And there’s no business plan to increase the revenue, therefore increase the price where these a large apartments indications, mobile home parks, et cetera.

There’s usually some business plan to force. Appreciate the asset. And maybe we’ll get lucky with some market appreciation in there too. That’s typically real estate goes up in price, but the big thing is that force appreciation. The only way you can do force appreciation is if you do it on your own, in a burst strategy.

And that is that my first premiere video on the rich uncle YouTube channel. You guys can go and check out, So a simple pass, a castle podcasts and YouTube channel. We’ll continue on this path of, as you guys grow with me to be accredited investors, but lately maybe I’m just getting old, but I see a lot of kids these days between the ages of 18 and even.

Mid to early thirties, they already haven’t gotten it together, right? Their net worth is still under a quarter million, half a million dollars. And maybe for you guys listening, maybe this would be that cool hip fun video version of simple passive cashflow for kids where they can learn about this stuff.

Learn more about those basic financial things. In this first video, which we’ll be talking about is the burst strategy. Which you can give them. A lot of these people like to do this by rent, rehab repair. I frankly think it’s a waste of time and not a really good risk adjusted return when you could just be a passive Opie partner.

But what do you do if your net worth is lower and you’re not having any connections, that’s what this video is talking all about. So share it with your kids and listen to the rich uncle as they start to become old and grumpy. In the future, but for now it’s just rich. Uncle is a YouTube channel and on today’s podcast, I’m going to be quickly going over what is a bridge debt and private equity. And I think a lot of you guys have told me, you’re frustrated about other podcasts out there. Just sustain on lane thing.

And yeah, everybody does podcasts these days. They’re easy to be honest. Now, this is a sort of a sample of what’s you’re going to find in the syndication LPP course. And if you guys haven’t checked that out, please go to simple passive cashflow.com/syndication to check out the free guide the syndication.

And there’s a, be a link in there to the e-course. Now the e-course I think it costs like maybe a few hundred bucks. But it’s really good. It’s not just some lane book that just going to tell you every little thing that everybody other regurgitates over and over again, just runs through spin texts, application to regenerate the same old, a hundred page 200 page book, it’s going to tell you the secrets of what syndicators are doing out there to trick you guys into going into whatever deal. Not saying it’s a bad deal, but I think it’s just good to be aware of these things. And today’s podcast talking about. Private equity and bridge check is going to be a sample of what you’re going to find in the e-course, which I think it would , take most people 10 to 15 hours to go through the entire course.

But with that said, here is the content.

 I get asked all the time, so bridge notes on these large deals, as opposed to agency longterm, fix Fannie Mae, Freddie Mac, agency debt, is it good or bad? And, same thing pref equity, when there’s a small layer of a wan or pref equity investors, which sort of acts as like a mezzanine debt layer, is that good for a deal?

 

 It’s yes and no. And  I found this  analogy watching ESPN  it’s been the NBA trade deadline somebody, I forgot which player it was, but they were like, bringing over a person, who’s got their contract expiring soon to bring them on your team.

 

Do you do it or do you not right? Is it a good thing? Is it a bad thing? It can be a very good thing. It can be a very bad thing. And I thought this is a very analogous with  originals as a good or bad or pref equity is a good or bad. If you guys aren’t NBA fan or basketball fans, you guys can probably still understand the concept.

 

You bring over a player  a guy who doesn’t really want to be on that team and you bring it over to the new team. You bring them over to hopefully make your playoff run. , you get up and usually a pretty good talented player who wants out of their contract and is a free agent for part of a year, or maybe at most, a couple of years.

 

And it can be really good or bad. The bad thing is that this player doesn’t want to be where they’re at and they’re whatever. I’m just gonna play out to get my contract, , get my numbers up. So I can get my maximum value on free agency,  Which can be bad thing because they just want a ball hog and get their numbers up and they don’t want to play as a team and for  a playoff team, making that playoff run.

 

This can be not good for your success. On a championship runs to have a roll guy who’s just trying to  pad their stats. It can be a very good thing. On the other hand right now, here’s this player who’s really motivated and maybe they’re coming out of bad situation to coming on new team. And they really want to, they’re trying to make that playoff push and they want to win that championship.

 

It can be a very good thing. Is it good or bad? I don’t know. There’s, it can go both ways. And now we’re bringing us back into what the question of the day here, bridge notes, ? When you’re going in with a bridge note, ideally you want to be going into a situation where you have severely under market rents.

 

So you know what this bridge, no, the bridge is ideally from one to three years, you might have some extensions to be able to add on to it. But the bridge note is you exactly what name implies. You’re bridging yourself over to the side where you can refinance with that new net operating income to be able to capture that higher worth.

 

And at this point you pull out a lot of equity. You give back a lot of returns to your investors and you get an maybe at that point, you go into the longterm agency financing. So it can be very lucrative and very good idea. But sometimes, and I’ll use this term are the same bridge notes pro equity in mix.

 

Good deals better. And worst deals worse. Makes good deals better. And worst feels worse. It’s a magnifier. So it’s not as simple as Oh bridge don’ts are bad. Bridge debt is bad or preface equity and situations are good. It’s bad. It’s always, if you have a good deal. And this is what’s hard for most passive investors.

 

You don’t have the P and L you don’t have the rent rolls. You’re not able to do your own analysis. You’re really taking  what your general partner is saying. You gotta really trust them. Who knows? They might be doing a bad deal and trying to push it through. And at this point, a bridge note or private equity may be bad.

 

Yeah, the bridge, no, ideally you want to be having that situation where you have undermarket rents, so then you bump it up. You get all the value out and that’s the perfect situation, right? The bad situation is maybe it’s not that under market rents and you have your struggle and you’re essentially already know by getting that extra leverage and kind of behind the gun.

 

It’s  not as sure thing as fixed rate debt. It’s a bridge note and it’s taking a little gamble in the beginning and sometimes gambles don’t pay off. It’s a calculated risk, right? And I think in that situation, we’re using it the right way that calculated risk can be way more returns, maybe way more reward and certain situation.

 

It makes sense. Now, moving over into the pref equity, Situation. Now a lot of times pref equity is seen as a small layer of mezzanine debt or additional leverage, right? The bank will give let’s just go with 80% loan to value on a property or maybe 70% loan to value on the property. They might be, the sponsors might be using a small thin layer of pref equity.

 

It’s always a small there, maybe five to 10% at most sometimes of the capital stack. So they’re going to get loan for 70% of that. And then maybe you get an additional layer of 5%. So if overall, be at like maybe 75 to 80% on the value, sometimes it’s possibly even to get higher than that. If the bank is giving you 80% on the value.

 

And you’re able to stack another 10% of pref equity. Now you’re 90% on the value. Most investors on sophisticated investors that are know a little bit about this stuff. They’ll be like, Oh my God, that’s too high loan to value. I always say as investors, you got to look at it and not just, obviously that’s probably like that knee jerk reaction.

 

Oh my goodness.  It’s too risky. But let’s pause that way. If you’re covering your debt service coverage ratio every month, like a 1.2, five, as far as coverage ratio is what the bank is looking. Is it really that dangerous? You could have a terrible deal at 50%.

 

Loan to value and it’d be still bad deal. At that point. You wouldn’t want to stack another layer of private equity on there, but if you have a really sweet, strong, solid deal, where under market rents strong financials, then, it is prudent to put on additional risks, which is pref equity and get that leverage point higher.

 

So  it’s all situation based and yeah, I think that it’s hard as most passive investors. They can’t make that determination, even if it’s a good deal or bad deal. Yeah. A lot of things in the pitch deck, it’s very misleading in most cases. And. Passive investors are not able to do to competence this period.

 

You guys can go on rent to meter, whatever the websites, but it’s just hard. And unless you walk the property, then you know, what kind of vibe the property is, or you, especially, if you walk calm, so you don’t have that delayed GTE to do this. I to close out right bridge Nolan’s prep, equity.

 

They can be good about. But yeah, if you guys have any questions like this, let me know. But will stick this into the e-course in the originals and pref equity section. So you guys can refer to it in the future. And if you guys want to learn more about this, go to simple passive cashflow.com session syndication, check out the free guide.

 

 If you want to get that. LP syndication e-course the links will be on there too. simple passive cashflow.com session syndication, I don’t think there’s anything else like it out there for plastic LP investors to be the best LP investors you can be. You’re not gonna be underwriting specialists, but there are things to be aware of, right?

 

The little tricks and games out there that are being played at least know, eyes wide open going into a deal, is this a good deal or is it, are these just sucker assumptions that the sponsor is using? If you guys have any questions email isLane@simplepassivecashflow.com. See you guys next time.

 

Bye.