You are Invited to Hawaii

Visiting Hawaii? Drop in for a business meeting? Support local businesses yea!

I moved back to Hawaii because people here have got wealth building all wrong – a lot of equity, generational wealth, and saving/losing their money in the Bank. Teaming up to redirect money from the Wall-Street casinos and corrupt financial institutions…To help the endangered ‘Middle Class’ savers find safer, more profitable investments in Main Street opportunities benefiting local communities 808 style. Begin with the end in mind is what the smart folks say… so I am trying to work backwards and continue to bring the best deals to you loyal podcast listerns. Real talk guys… I’m trying to change the world.

SimplePassiveCashflow.com is for working professionals who are looking for diversification and better returns outside of traditional investments such as mutual funds and stocks. The Hui Deal Pipeline Club is a free investor club where I filter investments and underwrite the numbers and partners myself. Unlike other investor lists and groups, my investors have personal access to me and know that I personally have skin in the game investing alongside with my investors.

Make sure you sign up for my Hui Deal Pipeline Club to get sent the deals I come across.

 

‘Drink & Grow Rich’ with Real Estate Investing: Topic – Private Lending

5:30PM-6:00PM – Open Networking

6:00PM-6:20PM – Lane Kawaoka from SimplePassiveCashflow.com will discuss his last Private Money Lending deal where he lent money to a home flipper to collect a passive return. 6:20PM-8:00PM+ Hang out and discuss investing with other members. Open networking.
Make sure you join REI 808:

https://www.meetup.com/REI808-Passive-Real-Estate-Investin…/

https://www.facebook.com/groups/SPCHUI808/

Podcast #85 – Buying and Selling Businesses with Ace Chapman

Ace bought his first business when he was nineteen. It was an online stock market simulator called CoolWallStreet. After selling it and seeing the benefits of buying a business over starting one, he caught the business buying bug. Since then he has bought and sold over thirty businesses and has helped his clients all over the world buy over one hundred businesses.

Ace buys and sells internet businesses. He had done over 40 deals

1) How much simple passive Cashflow are you making today and how are you doing it?

I have a portfolio of over 30 internet businesses that create income.

2) What is your Han Solo moment – Han Solo and his buddy Chewbacca from Star Wars were cruising around the galaxy as lowlife smugglers but then cross paths with Luke and Leia and his life took a pivot point. Describe the resistance that was the catalyst for change. Did you “burn the boats” or did you let it happen naturally – was there an internal (you decided to make a change on own – what was thought process?) or external trigger (ie got fired from your job)?

My moment was definitely burning the boats. I quit college which basically meant that I was not going off have the normal 9-5 corporate life and set on the path towards entrepreneurship ever since.

3) Worst life/business moment and what did you do after? Lesson learned?

Losing my first business after having seven figure offers that I turned down.

4) Current 2-week experiment and 6-month project? (90-180 day goal). A mark of a high performer is to put your ego aside and accept the help of others and mastermind maybe folks can help you by you asking.

● Current 2-week experiment – taking three breaks a day for meditation

● 6 month project – building a life where I live in both Atlanta and Miami

5) What is your simple passive Cashflow number? Now imagine you had 2x that amount… Describe your ideal day, detailed routine, and what projects you are working on.

● Ideal day – Exactly what I’m doing right now. I love what I do. I don’t have to do it but it’s my passion.

● Projects – Buying and selling businesses. Helping people avoid the risk and headaches of starting a business and show them how to buy one instead.

6) Something that you have recently or thought about “burning your cash” on for time savings or an improvement in quality of life.

Jet membership

7) Something that you changed your mind on? Our ego often gets in the way of greatness.

In negotiating deals, sometimes you end up fighting with seller’s egos instead of logic. There have definitely been deals that I have walked away from because I didn’t want to deal with the seller’s ego.

8) Tony Robbins identifies two large concepts that we are continually struggling to gain perfection at: #1-Art of Fulfillment and #2-Science of Achievement. If you died tomorrow and I were to email this to your kids a couple decades later… this is what they would hear.

a) What is your secret/hack for the “Science of Achievement?” Any secret habits to share? Morning or Nighttime ritual?

● My secret hack is avoid what everybody else is doing. The greatest opportunity is always found where the fewest people are looking.

● Morning Ritual – To start the day with as much positive energy and emotions as possible.

b) What is your secret/hack for the “Art of Fulfillment?” How you do contribute back?

● I joined a Big Brother mentoring program.

8) Anything we missed and contact info if you would like anyone to get a hold of you. URL?

● Instagram – ace.chapman

● Twitter – acechapman

● Youtube – Ace Chapman

● Facebook – Ace Chapman

● Website – www.acechapman.com

Defaulting on my mortgage & Credit Score Impacts

I recently attended a local real estate Meet-up and there was a talk from a lender. Instead of wasting your time traveling there and inevitable fluff in these meetings… here are my takeaways from Credit Score SME presentation… 

1) Previously 50% utilization on each credit card (not an aggregate of all cards) is now 30% to have an impact on the score. Things are getting stricter.

2) They now look at “payment acceleration” meaning paying the minimums every month is looked down upon. Might want to pay 50 bucks one month then 55 then 60 then 65…

I recently had the experience of missing the payments on two of my mortgages and went into default for 30-60 days and got register mail sent to me for being a naughty boy. My autopayments got backed up and the mail got sent to my old address in the move to Hawaii. Things are fine now and I got everything caught up. In the end, I saw my score take a 60 point hit, but I don’t really care because for commercial loans it does not really matter what your personal fico is. It just can’t be terrible. And by the way I got caught up and saw some of my credit card interest rates go up.

credit score

After

A lot of you guys who book a call with me are using HELOCs to purchase more properties. The optimum credit score for that is 620.

Also wanted to thank you all for the support this year and wanted to give people of big plans for 2018! Let’s work together to redirect money from the Wall-Street casinos and corrupt financial institutions…To help the endangered ‘Middle Class’ savers find safer, more profitable investments in Main Street opportunities benefiting local communities. Please email the website and podcast to a friend. And remember If you or someone you refer invests at least $50K into one of my future deals you will be invited to my exclusive Ali’i Mastermind with other 12-20 other serious investors to discuss deals and our own portfolios.

Mark Ferguson interviews me on Investing in Out of State Properties

Hi guys, I figure you are tired of hearing my voice but I was recently on Mark Ferguson’s podcast. He is killing it in Denver as a home flipper and doing it right by putting part of his earnings to cashflowing rentals… Here is the post from Mark’s website below:

Lane Kawaoka is my guest on this week’s episode of the InvestFourMore Real Estate Podcast. Lane is a full-time engineer but also loves to invest in real estate. Lane has always worked on the west coast or Hawaii, where it is really hard to find cash-flowing rental properties. He has had to invest out-of-state to find deals that made sense to him. On this show, we talk about how he first got involved in real estate and how he both bought houses from turn-key companies and on his own. We also talk about what his current goals and how he is changing his investing strategy.

Click the green button below to listen to the podcast

How did Lane first get involved in real estate?

Lane graduated college and became a full-time engineer about ten years ago. He wanted to buy a primary residence but had to save up money to afford properties in his area. He finally bought a house for himself, but it was not as great as he thought it would be. He was always traveling for work and never had a chance to enjoy his home. He decided to rent out the property, and that became his first rental.

How to use house hacking to buy rental properties.

Lane realized he loved the passive income that his rental property provided, and he decided to keep buying rentals. He bought a duplex in Seattle for $250,000. That duplex rented for $3,000 per month and was also a great investment. The problem he ran into was the market exploded in Seattle much like it has in Colorado. His duplex was worth $400,000 a few years after he bought it, but rents had barely risen. Finding any good proprieties in the Seattle area was really hard.

How to invest in rentals when prices are high.

How did Lane start investing in out-of-state rental properties?

Lane knew he could not invest in the Seattle market any longer, so he looked into turn-key rentals. Turn-key rentals are properties that have already been repaired, rented out, and have property management in place so that investors can buy a property and start making money immediately.

Lane bought a property in Birmingham Alabama for $70,000 that he rented out for $850 per month. Lane bought a few more turn-key properties and then started to buy properties himself with the use of agents and property managers.

How did Lane make sure he bought good turn-key properties?

Lane has a number of tips for people looking to buy turn-key rental properties:

  • Get a 3rd party to check out the neighborhood and area if you are not familiar with it.
  • Don’t be afraid to find your own property management company.
  • Sometimes, buying properties with a loan can be a benefit because you need to get an appraisal that will confirm the value.

I also think people looking to buy a turn-key should not be afraid to get an inspection done on the house. You could even order a BPO to be done on the property.

How to complete due diligence on a turn-key property.

How has Lane bought out-of-state rental properties without a turn-key company?

If you want to buy out-of-state rental properties on your own, it can be tough, but it is possible. The problem with many turn-key companies is getting a good deal is very tough. If you can find deals yourself, you may be able to make more money. However, you need to find:

Lane has bought a number of properties outside of his areas without using a turn-key company. He said the key to pulling off the investment was finding a great property manager. If you can find a really good property manager, they can help you decide where to buy properties and what they will rent out for, and they can help you find contractors and agents.

How to invest in out-of-state rentals.

How can you contact Lane?

Lane loves to help others invest, and he is also working on syndicating large multifamily deals. Make sure you listen to the podcast to hear what his plans are with apartments and why they have become his focus over single-family rentals. You can find lane at simplepassivecashflow.com,where he has a podcast and many free resources for investors.

2018 Tax Update w/ [Commentary]

The maximum contribution for 401(k) plans is rising to $18,500 in 2018, up from $18,000 in 2017 — this also applies to 403(b), most 457 plans, and the federal government’s Thrift Savings Plan. The catch-up contribution for those age 50 and up remains $6,000 for all of these plans.

Who Qualifies for a Roth

The IRS also increased the maximum earnings allowed by those who can a Roth IRA  to $120,000 to $135,000 for singles and heads of household, and $189,000 to $199,000 for married couples filing jointly; these ranges are $2,000 and $3,000 higher than 2017 respectively.

[I personally don’t like these QRPs or qualified retirement plans (Roth-IRA, Solo 401ks, etc) if you are an active real estate investor. If you are conservatively using prudent leverage and finding decent deals there is no reason you should not be able to retire in 10 years or less and thus negating the very reason for these accounts. 

When you have money in these accounts it sounds good that you are not taxed on gains but you are restricted from getting a Fannie Mae loan. Using the QRP loans get you the second tier financing options, for example, a Roth IRA can buy real estate on leverage, however, will need a non-recourse loan which is often a fraction high-interest rate and lower LTV. No Bueno!

Caveat: If you are late to the game and already have a fat 401k then you should convert it to a solo401k. At that point, you should think about putting it into a syndication since you are restricted on how you can leverage it.]

Transit and Parking

The other types of benefit that has changed is pre-tax payments for transit passes and parking fees; it’s risen by $5 a month, to $260 a month. [These are the scarcity mindset things that are confusing]

Otherwise, other changes for 2018 include deductions, exemptions and income tax credits.

Source: Forbes

Source: Forbes

Source: Forbes

Source: Forbes

Student Loans

The maximum deduction for interest on student loans remains $2,500. Eligibility for the deduction starts phasing out with individual incomes surpassing $65,000 and joint return incomes exceeding $135,000. Taxpayers become completely ineligible when they pass $80,000 and $165,000 respectively.

Deductions in 2018

Single taxpayers and married couples filing separately get a standard deduction of $6,500 in 2018, up from $6,350 in 2017.

The standard deduction is $13,000 for married couples filing jointly, up from $12,700 in the prior year; and for heads of households, the standard deduction is $9,550, up from $9,350 in 2017.

The standard deduction for a taxpayer who can be claimed as a dependent by another taxpayer is a maximum of whichever figure is greater: $1,050 or $350 plus the dependent’s earned income.

The additional standard deduction for the aged and blind is $1,300. The additional standard deduction for unmarried taxpayers is $1,600.

[Expenses for your real estate business are above the line expenses Whoohoo]

Penalties [A cost of doing business]

This year’s penalties for not having health insurance — and not having a waiver or exemption — remains the same as 2017: 2.5% of your adjusted gross income, or $695 per adult and $347.50 per child, up to a maximum of $2,085, whichever is higher.

The IRS continues to impose the penalty of revoking passports for anyone with serious tax delinquencies, and the threshold for that is $51,000 in tax year 2018. [For many of you have that have visions of living abroad parts of the year]

Estate and Gift Taxes

On the opposite end of the spectrum, the amount of money that married couples can pass to each other without taxes goes up to $5.6 million per individual, up from $5.49 million in 2017. Note that the term estate tax is often misunderstood by the media to include heirs other than children when that isn’t always the case.

[Things that I ponder for myself is if I should put more money into my Health Saving Account. I believe you are going to have health expenses before you ever spend a retirement dollar so you should fill this bucket first. I don’t screw around with any Qualified Retirement Plans] 

Bad Data: Class C/B vs Class A

Being an Industrial Engineer by education it drives me crazy how “Bad Data” is prevalent everywhere… much like how English majors get headaches over my writings.

“Lifestyle Asset Class” is the Class A inventory. The place rich people live in (or people who think they are) and what institutional and unsophisticated investors invest in.

“Renter-by-Necessity” is the Class B/C inventory. This is where blue collar hard working Americans live and where sophisticated investors are able to carve out double digit gains with stabilized properties that still produce cashflow in case of a market correction.

Take a look at the data below for All-Classes and compare it with “Lifestyle” and “Renter By-Necessity” tables and take note how you can’t take data you read in the Wall Street Journal at face value. We invest in “Renter-by-Necessity” properties and we need not let the “Lifestyle” data skew our analysis.

All Classes Data

 

Open post

Get out, Get up, and Get Some!

WIth over 200 calls over the past 18 months with investors like yourself, I am amazed how many people get excited about real estate investing and financial freedom but don’t follow through with the action of dipping their toes into Private Money Lending or a Turnkey Rental. Sign up for a call… all I ask is to listen to the first foundation podcasts and please leave a review: itunes.apple.com/us/podcast/simplepassivecashflow.com/id111879534

Everything that you need is here on this website and online (But take it with a grain of salt). You can join my private HUI group for the peer investor group. Heck, I can even hold your hand to drive you toward success in six months or less.

What I have noticed is that when people have good lives and good income at their W2 job… Good is the Enemy of Great!

The second question I ask in every podcast Interview is the Han Solo question. That set of circumstances where life took a pivot and that was the trigger for change. That pressure or conflict builds up either inside them or inspired by an external event.

Unhappiness spurs individuals to improve the condition of their circumstance to find happiness. Unhappiness drives us to make necessary changes in our lives. Are you content or truly happy?

I have done an exercise to write down… “I would be happy when I have…” every six months and my conclusion is that “it” always changes – therefore it is the journey and the constant driving toward something bigger that is what truly makes us happy. Chris Rush’s podcast in September 2017 mentions this concept of always having that next goal.

As a species, we are naturally built to evolve (Darwinism). This prevents humans from becoming too complacent with their happy lives so that they will continue to do things to improve their lives in an effort to chase happiness. No matter what awesome things happen in our lives that make us happy, we always revert back to our happiness baseline. Just reflect back on the last time you had a mini windfall or lucked out? How quickly did it fade?

If we were not programmed like this how else would the world economy work?

If you’re unhappy with your life, get out your notepad or your favorite electronic device and start identifying what goals! Be attuned to your signals and don’t call it greed. Try to align it to a higher calling to benefit others.

And for those who are always making small strides to find that next deal with no success… just remember and think how you are just three feet from gold!

Please share with your friends via email!

Using Life Insurance to be your own bank

Video: Using Life Insurance to be your own bank

Find more videos in the video section. And please share the podcast by emailing it (I know you guys don’t want to share on social media because you are scared of others knowing that you are going to quit your job. I just want to get the word out that there is something other than the stock market!

The inspiration behind this:

I got really upset the other day. A friend of mine was talking to a so called financial planner and was getting sold Whole Life Insurance. To set the stage, the subject client did not have investments or much cashflow. Why the heck was Whole Life Insurance was being prescribed?!? Oh because Whole Life has some fat commissions and the ding-dong financial planner does not know enough to get themself out the rat-race.

I have been doing a lot of thinking lately… about what I really want to do with myself. One realization I have discovered is when something gets you so upset or passionate (like a financial planner screwing regular people… people who don’t have the cashflow or liquidity and being sold on the BS line of “conservative investing”) you have found a higher calling.

My rant is now over… As we covered very briefly on this past podcast. We are not talking about buying these types of policies for “insurance” or death payout, we are doing it for liquidity (to invest) and shield assets from creditors or lawsuits. I spoke to a couple other life insurance guys (smart guys) but they don’t get this either. They just tried to sell EIULs which do have higher yields but don’t have the liquidity component we are looking for so we can take out a loan from ourselves to invest and make a spread on the difference.