Podcast #97 – Investing via Crowdfunding Sites to open the country club – A Chat with Reality Shares

Here are the Show Notes…. But first please leave me a review: http://getpodcast.reviews/id/1118795347

Reality Shares came from the Jobs Act
April 2013 Reality Shares began
Accredited only
14-20% Class B MFH estimates
Also have preferred equity options 10-14% IRRs
1st lien debt or 2nd lien 7-12%
If you are not connected Crowdfunding options
From a syndications view, they are charged an origination fee
1% asset management team (from cashflow) from reality shares
1% Funding Fee, 1% Asset management fee
Some crowdfunding is taking equity upside
Due diligence – credit checks, background checks, 3rd party check of purchase price verification, then look at the deal (market, pricing)
Less than 5% of deals make it to the platform
There is a max the crowdfunding site with one syndicator (2-3M) to diversity risk for the firm
Reality Shares is a Broker-Dealer

Video Walkthrough on new 2018 Buy & Hold Analyser

Spreadsheet download for Hui Deal Pipeline Club members. Sign up by Friday 9th 2018 to get sent a free copy or email Lane@SimplePassiveCashflow.com if you are late. (Current members… no worries it will be emailed out to you this Weekend)

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. Sign up below then email me for the spreadsheet:

Podcast #96 – Interview – Kevin Bupp – Mobile home investing

Mobile home investor
His business is not simple or passive
did no go from a career to REI
Started when was 19 years old
Started buying SFHs and 2008 changed things and made Kevin Rebuild
MFH was not scaleable
Then was introduced to mobile home parks
Everyone should start smaller to learn about working with tenants
Anti turnkey rentals 1) based on comps 2) buying retails
Cap rates are only important on the sale
Only look at cash on cash return (not IRR)
used 35% expense ratio
Work with the broker to come to a price – can you help me understand?
MHP have 50/50 LP GP splits where MFH has a little high 70/30 split
40K a year and under, people making 12-15 dollars an hour
Excercise is the success tip

Podcast #95 – Interview – Andrew Campbell from Passive Cashflow Side-hustle to active investing

Show notes:

Autin Texas Native
Bought Duplex and fourplex to start (76 on own for passive cashflow)
Started out with the intention of getting passive cashflow
Was working marketing in Minnesota when father had a heart attack and started buying rentals with brother
Was doing self-managing when first started on own
Flexibility in what you do with your time
Father getting sick was the turning point
Boots on the ground lead is very important
Value-add can mean both 20-30% occupied and adding crazy value and 90% occupied and taking it to 95%
Developments have 25% returns per year

2018 Trends in Population Movement

2017 Data is in! See PDF report
1) Population migrations
2) Uhaul Report (Blue collar jobs)
3) Van Line Report (White collar jobs)
4) 2018 Best Places for young professionals
Download Here: https://drive.google.com/file/d/1IVzN3besQka_abGTHyMK9vcjrQ3n4Mrt/view?usp=sharing
Hui Pipeline Club Members get access to the 1 hour webinar on 2018 trends!

Podcast#92 – #LaneHack – Coaching & Group Coaching Programs

Fill out this intake form and Email Lane@SimplePassiveCashflow.com

More details: SimplePassiveCashflow.com/coaching

 

Coaching packages including everything Lane knows and following elements:

Pick the path that is right for you:

    • Buy Hold Rentals
    • Remote Turnkey Rentals
    • Go big with Apartment Investing
    • Decoding Syndication as a Limited Partner
    • Raise money from others and Syndicate
    • Building a team

 

Find & Analyze deals

    • Be able to point out Sucker deals for “Californians”
    • Underwrite the property conservatively via cashflow analysis
    • Get every dollar on the table in the due-diligence period and punch list negotiation
    • Get the best financing option with Lane’s preferred lenders
    • Leverage Lane’s Deal-flow and Rolodex

 

Put it all together

    • How to setup your personal systems to not go crazy
    • Balance with your full-time job
    • Optimize taxes with my best practices and the proven professionals to advice you
    • Best technology to use
    • Learn the investor mindset and remove limiting beliefs
    • Future goal setting and clear 5-year plan after our program is over

 

Other possible scope of services

    • Growing your brand
    • Syndicate big and small deals
    • Start your own podcast
    • Internet marketing
    • Networking the right way

More details: SimplePassiveCashflow.com/coaching

Podcast #91 – 2017 Recap – Hui Deal Pipeline Club acquires $50M of real estate and raises $3.5M for syndications

Correction: Hui Deal Pipeline Club acquires $50M of real estate and raises $3.5M for syndications

2017 Recap

An amazing year which started on January 1 2017 me waking up in Atlanta after seeing my Washington Huskies getting destroyed by Alabama in the Peach Bowl and traveling to Birmingham to look at some turnkey rentals.

A year of changes & 2018 Preview

Let me know if you visit Honolulu! Let me pick you up from Honolulu Airport and have a consult for some tax savings.

  • The first change this year was that old website that looked like "Flubber blew up” is gone and replaced with a decent website. I was also looking back at some old email newsletter that I sent out with some funny Gifs which I will post on the email newsletter and website.

 PS THE BOOK IS COMING! EMAIL ME FOR A FREE COPY 😉

Here is video walkthrough of the new one: https://share.viewedit.com/iPBEYsNWW9uuvsZWJewFb3

  • I have been making additions to the YouTube Channel not found on the website so please Subscribe and Share: https://www.youtube.com/channel/UC3cIIsGKx3osVU5rt2P0HfQ
  • Personally I got up to 825 units… most of which in the second half of 2017 after a very quiet 2015-2016.
  • I am migrating to a new database that will support over 900 investors in the Hui Deal Pipeline Club. Please fill out the following form so I can keep you up to date on the latest deals I come across... The new database is pretty slick so based on your answers.
    1. Acquired $35M Total real estate, 589 units acquired, 2M raised for syndications (Coffee, apartments, RV parks, Private money lending)
  • With the success of our last four syndications and raising the following for the Hui Deal Pipeline club (https://simplepassivecashflow.activehosted.com/f/3) I will continue to expand the opportunities by continuing my membership in an Apartment mentoring group as well as a Syndication Mastermind to get access to higher quality deals. I spent $60,000 in 2016 and $30,000 in 2017 on expanding my network and knowledge and will continue to do this to produce the best deals and content. Going to goals seminar in January and will be thinking of where to take this. – The initiative not to “train my investors down” and improve my due-diligence. Help me help us!
"I started the Hui Deal Pipeline Club because I want to see each of you get to your goals financially so you can focus on what is really important to you. There are other fundraisers out there that will train their investors down to 10-15% IRRs on crappy deals and do "deals to do deals" or to pick up acquisition fees. Between investing alongside you folks and wanted to grow my track record the right way with the best product I know you guys will keep coming back and bring your friends."

Projects to come in 2018:

Action Items:

  • Let me know if you are interested in coaching, group coaching, or the Mastermind
  • Let me know what are you working on these days? What has got you blocked? I might have a contact or input that may help! Lane@simplepassivecashflow.com
  • Can you help me spread the word of the podcast? Can you make an email intro to me of anyone you think would like additional exposure on the SimplePassiveCashflow Podcast?

My goal is to help others escape the rat race. Please share it with your friends and family because after all, once you have left the day job you won't have anyone to have a lunch date with during the 'regular' work week.

We have all heard that you are the average of the 5 people you hang out with most but I would argue that the 5 people you keep in company, can be the end of you. Choose your supporting cast wisely and consciously. Be aware of unconscious mentors, ie podcasts, tv, radio, books you read. I'm all about automation and spending my time of things that are more important.

So you can just copy and paste the below:

Hey Man, I just checked out this blog with podcast where they actually show how to buy passive real estate investments to build streams of income to leave the day job.. They have this free 10 course "Think Outside the Cubicle" series with access to spreadsheets, mindset tips, networking offers, and deal-flow access.. Here is the sign-up for just the website updates: https://simplepassivecashflow.activehosted.com/f/1

 

Podcast links:

 

Google Android Phones: https://goo.gl/app/playmusic?ibi=com.google.PlayMusic&isi=691797987&ius=googleplaymusic&link=https://play.google.com/music/m/Iwlprtpxn4qim36w6buokzgg6ha?t%3DSimple_Passive_Cashflow_Podcast

 

Apple iPhone: https://itunes.apple.com/us/podcast/simple-passive-cashflow-podcast/id1118795347?mt=2

 

YouTube: https://www.youtube.com/channel/UC3cIIsGKx3osVU5rt2P0HfQ

And if you want to cherry pick for specific investing topics here is the spreadsheet with a summary of every Simple Passive Cashflow Podcast: https://drive.google.com/open?id=1FJ8rBA-SxQ50KJpQP1lppHC9UNLGLS2mIQS899X8__A

With the year closing I urge you to take a time out and ponder the following.

Don’t just read the questions… set the timer for 10 minutes and just think.

  • In an ideal world, what would your upcoming year look like?
  • What do you wish for in the new year?
  • What dreams would you like to come true?
  • What goals would you like to pursue and achieve?
  • What new knowledge would you gain?
  • What new skills would you acquire?
  • How much money would you make?
  • How much money would you save?
  • How much would you weigh?
  • How many miles would you be able to run?
  • How fit would your muscles be?
  • What new, powerful relationships would you like to forge?
  • What exotic places would you travel to?
  • What new job would you have?
  • What promotion would you receive?
  • What fun things would you do?
  • How much time would you spend with your family?
  • What would your ideal, perfect day look like in the new year?

 

 

 

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

 

SPC066 – Matt Orf – 17 Years as a Continuous Improvement Engineer to Flipper

Real Estate Experience: Matt is a full time real estate investor and coach for new Real Estate investors. In the past two years of full time real estate activities he has flipped 3 properties without using any of his own capital. (Made profit on each flip) One of those flips he contributed most of the labor for the experience. The two other flips he was able to establish a team of contractors and implement some standard processes. He has acquired 3 rental properties in Kansas City, one of which was a subject to arrangement while the other two were acquired through private investor capital and leverage. These 3 properties now have a combined equity value of over $100K. Currently working toward a cash out refi to put toward an additional 4 or more properties in the Kansas City market. He also has a cash flowing duplex in New York, which is funded through a Self Directed IRA. In the last year he has been able to take 6 coaching clients through his program, which takes them from beginning investing knowledge through acquiring their first cash flowing property. Matt’s short term investing goal is to reach a specific passive income amount through buy and hold properties. Once obtained, focus on flipping, coaching, 1031 exchanges and commercial investments.

Relevant Work Experience: Matt spent 17 years working for Harley Davidson Motor Company in many different roles within the organization. He is a Six Sigma Black Belt, which is a system for process analysis and Continuous improvements. In these roles he was able to work in varied parts of the company from Materials, Logistics, Finance, Assembly, Supply Chain, Clean room development, Information technology, Organizational Development and training, to writing training materials for standard practices. The majority of this work revolved around Project Management and focus to details and repeatable processes to minimize defects in all areas. (waste reduction to increase profits.) These projects allowed Matt to work directly with all levels of the organization and with team members from around the world. In 2014 Matt retired and started 3 Real Estate Investment focused businesses.

Real Estate Education and Mentors: Matt is a life long learner. In the past two years he has worked with 3 private coaches focusing on areas of personal self development, Real Estate investing education and mentoring, health, wellness and mindfulness. He is currently in training to become a certified Bulletproof coach. He is certified in Project management, holds a black belt level degree in Six Sigma, is certified in Lean Manufacturing through the University of Michigan, and holds a business management degree from Park University. Matt is a regular participant on the Bigger Pockets online community and the local Kansas City Real estate association. He regularly consumes podcasts, audio books and traditional books that focus on diverse topics such as Real Estate, investing, mindset, personal growth, relationship building, tax savings, business creation and improvements. (and Star Wars) ☺

1) How much simple passive Cashflow are you making today and how are you doing it?
(You don’t need to give a number if you would like privacy. You can be vague such as halfway to quitting my job, cover my mortgage, Make 25% of my expenses, over $10k, although people like when people open up the kimono.) Enough to support my desired lifestyle.

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.
At the time I had a full time career in corporate America, when I met my (currently) fiancé; she asked me a question that made the shift for me. It was the beginning stages of us getting to know each other, we were talking about what we did for a living. After I told her about what I did she asked me if I love my job. I took a few minutes to really think about it. It was at that moment I had the AHAH! I really disliked what I did! It was the first time I really analyzed how I got to this point. I did everything I was told I was “supposed to do”. Graduate high school, go to college, get a good job, invest in your 401K, work hard and everything will be “perfect”. It was far from perfect. I felt like I was living a lie. I had been duped. I wasn’t happy with where I was at all, and it was all based on the decisions I had made. Shortly after my answer to my fiancé, she said, “well if you don’t like your job, what are you going to do?”. I replied, I will be making a change and I will figure it out.”
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)?
I burnt the boats in a huge way. That next Monday (after the talk with my now fiancé) I walked into the office and pulled my manager into a meeting room and handed him my two-week resignation letter. He was floored. He said what are we going to do? You have been with us for 17 plus years, what are you going to do? I replied, I have no idea, but it isn’t going to be this. I was 100% sure that I was making a change in my life to something that I truly desired to do. I took the next two weeks to get all my things in order and transition to a different life. I walked out of that building for the last time and felt as if the weight of the world was lifted off my shoulders. There was also a lot of fear and internal emotions involved I had to deal with. (All of which were great things)

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

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 six month project is my first syndication in Belize. Can talk high level on it, but would love to get other investors to contact me for more info.

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.
I practice the “Miracle morning” most everday. – alarm goes off at 6 am. Meditate, breathe, yoga, goals review, schedule review, affirmations, BP coffee, intermittent fasting until 11am or 12 pm. Spending time with the girls before school- working on Real Estate investments (flips/rentals), Coaching others on building their portfolios and crafting their action plan to escape the rat race. I also coach small businesses and coaches on how to build systems and processes to reduce waste and increase profits. Every 3-4 days I will hit the gym- usually weights- Metabolic Complexes (A metabolic complex is a series of exercises performed fluidly together without rest. Complexes are ideal for fat loss. They involve tremendous amounts of work in a short time. For the time-crunched, complexes are invaluable.) I do quite a bit of reading and consume 3-4 podcasts a day. My top podcasts area:
The Tony Robbins Podcast
The Tim Ferriss show
The Way I Heard It
The Real Wealth Show
Dan Carlin’s Hardcore History
Bulletproof Radio
Bigger Pockets Podcast
Epic Real Estate Investing

6) Something that you have recently or thought about “burning your cash” on for time savings or an improvement in quantity of life.
7) Something that you changed your mind on? Our ego often gets in the way of greatness.

7) 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.
What is your secret/hack for the “Science of Achievement?” Any secret habits to share? Morning or Nighttime ritual?
What is your secret/hack for the “Art of Fulfillment?” How you do contribute back?

8) Anything we missed and contact info if you would like anyone to get a hold of you. URL?
www.MattOrf.com
Matthew@CarboniteProperty.com

 

SPC064 – Fundamentals – Ask Lane – LLCs, Helocs vs Cash Outs, Working in a Sellers Market, Hedge Fund

 

Whats up Chip, thanks for the questions!

I have become convinced over the past several weeks that i should get into my first SFH rental. [Can’t say I agree since I don’t know your situation]

My first question is, i keep hearing the market is overheated and the experienced guys are taking a break. That obviously concerns me. Should i be extra cautious? My thoughts are if the numbers work (i.e. good cashflow on paper) the market should not matter, am i being naive? Since i am just learning, if i break even and someone else pays off the note and i get the tax breaks (one of my primary goals) am i not still ahead of the game? My problem is I am new and may not see a good vs. bad deal. Are there some good resources you can guide me to on rental unit analysis. Is there a big risk people see that the mortgage tax deduction will go away in the next couple of years? That could be a big negative.

[First people say that we are going into a near (6-18 month correction/recession) is based of some true historical evidence. Typically market cycles last 8-12 years. The past does not predict the future. The future my be a correction in a near term or could be the greatest 4-6 year bull run. Things have stopped making any sense after coming off the gold standard and everything is based off emotions/fear.

I personally think that people who say they are taking their chips off the table and staying in cash are ‘playing the game not to win’. The big dogs can do this because they have substantial amounts of cashflow coming in. You may not – especially if you are in the beginning stages of building a portfolio. If you heard the chat I had with Jorge Newberry on May 31st we briefly discussed the “Art of the Deal” where you make deals based on sound underwriting. Because I work in apartments, the deal needs to be undervalued with under market rents to support a 20% IRR with conservative expectations of the market. That means that the current reversion cap rates don’t continue to decrease like how they are. That means you don’t speculate like a flipper that the market is going to go up. It means in one respect that you are operating independently of the market. LOL Easily said than done and requires you to find the needle in the haystack deal and be able to have the dealmaking abilities to take it down. There is definitely a divide between investors who buy (Good) turnkey SFH, (better) some value add MFH, and (best) value add MFH in distress.

Here is some If-then engineering speak:
If you are buying turnkey, then you are buying the (Good) deals and expect to make very little. If a correction happens, then you will be tested which makes it very important that you buy with proper due diligence and with adequate cashflow. So basically there is a razor-edge margin for error. But hey… its better than the stock market… as long as you can hold on to the home in times of trouble.

So you play this game between optimizing your liquidity and deploying in the Better and Best deals which rarely see the light of day in this Seller’s market.

The Real Estate Guys call this quantum (inefficiently deploying funds) the cost of insurance in times of uncertainty.

Me and my business partner were looking at some 8-50 unit properties in Dallas that looked pretty good but ended up not pulling the trigger because the numbers did not meet our standards. The funny thing is after we got a budget from the property management company, we went over our underwriting with them and the property management company told us point blank that we were underwriting these properties correctly and the deal did not make sense. Unfortunately, 95% of investors are buying things 20% more than they should. These are the suckers who are doing deals just to do deals. Part of the problem is that these investors are not investing their own money and are getting lazy but I’m speculating there.

But it frankly sucks how I am sitting here with my fishing pole in my hand not getting any action 🙁 No one likes a dry spell.

On the other hand be a treasure hunter and do anything unless its gold.

In that theme what are some big mistakes you have made or heard about that might help the next guy to avoid.

Buying from the wrong provider
Even if buying from the good provider, not being educated
Not having a mentor to hold your hand and get every cent in due diligence and to pull you back when the deal does not make sense

Next should i form an LLC? As i researched some select turnkey property tax data i see that only about 30-40% of the final buyers have an LLC. Why such a little percentage? Is there a big disadvantage? I of course will seek professional help. But before i do I would like to have a bit of a baseline to hold an intelligent discussion and to detect poor advice.

Let me first say that I am not a lawyer and everyone has different levels of risk tolerance and more or less to lose. Second, this is a #newbie question that signals indecision as someone thinking more about the “how” and the bad things instead of the why. Its a signal that you are heading down the road of no action. That said, I did not start with an LLC but then grew my entity structure and insurance levels to grow with my portfolio. You have to have balance, don’t put the cart in front of the horse but don’t leave yourself vulnerable. That’s basically a non-answer 😉 and I can go more into it as a coaching client if I know your situation but at the risk of people taking me literally in everything I say, I will not answer this directly because sometimes people fail to think for themselves and this is a highly individual advice. Here is some advice from a real lawyer and http://markjkohler.com/how-many-properties-should-i-put-in-my-llc/?inf_contact_key=7798f73b03f34189c37a4fa58d0e0c94b558ac75c935fe8c2a2a87fad33fdded

And check out his live events. I have been twice and going again this year: https://markjkohler.lpages.co/lane-kawaoka-seattle-wtw-2017/

How do i get good local answers? for example here in Houston a 20-year roof may only last 12-15 years, or so the roofers say. Would someplace like biggerpockets be the best place for questions like those?

Network with local investors.
Add value, don’t be an ask-hole
Sometimes you are going to operate in the dark. Like the disclaimer says “in everything there is risk”. If I take anything from my construction management jobs we always eat up the 10-25% project contingency because you never know what the unknown and unknowable is. Its funny because if you don’t spend your contingency then that is a sign that you are over designing (wasting money) and not accelerating schedule enough. You can mitigate it with a mentor looking out for your best interests but that’s about it. Buy right with cashflow and take into account contingency.

Lastly, I am quite nervous over this new unknown but i have the W2 income to cover a rental so its really just head vs. gut. Any links to general info you could pass my way would be greatly appreciated. I am also trained as an engineer and so you probably can sympathize with the need to analyze things to death.

Cool, you can keep doing what you are doing and you know what is going to happen. Or you can follow the less beaten road and follow in the footsteps of people who have what you want.

Really enjoyed the topics on the last podcast. Wouldn’t mind a more in depth analysis and discussion. I’ve been thinking a lot about lease vs buying a used car (a la Millionaire Next Door). Also the renting vs buying a house. What do you think about with buying, you are locking in your payment for 30 years whereas the rent you’ll pay will go up with inflation. Also, when there’s some equity a HELOC can be pretty powerful. Plus, as a physician, I can get a No money down loan with no pmi. Do you think that changes the decision to buy?

I’ll add this to the ask Lane. But I am not a fan of a Heloc cause you cannot get the whole equity amount as a loan. Normal maximums on Helocs are 80% therefore 20% is never really tappable. So when you are comparing the ROI make sure you are accounting for the 20% that just sits there.

People have been showing me a lot of development deals.

I am sure some people would be interested… personally, I just want stable cashflow in this market. I bring up this vague concept of the Sharpe Index. Part of this is that I know what is a 20% a year deal in MFH and that is all I need… I just need to be patient do what I do and I will hit my goals in a few years. It would be unacceptable for me to blow it just to get there in 1.5-2 years.