Banking from Yourself & Leveraging/Hedging Stocks

This page is still under construction…

Last year I learned this cool financial hack utilized by the smart money. By being your own bank and using the Infinite Banking Concept you can create a dividend-paying whole life insurance. Its called life insurance but its just a tax code loophole to make a tax free yield in an account that is sheltered from lawsuits and creditors. I can assure you this is another thing you financial advisor or life insurance sales guys just does not get… likely because they are still working for a paycheck and it actually decreases their commissions.

And for you high-net worth folks still dabbling in paper assets you won’t want to miss this other trick that I will reveal on there too.
For a warm intro to the guys I recommend email me at Lane@SimplePassiveCashflow.com

Wealth Formula Banking w/ Lane Kawaoka Outline

 Downloadable excel example

  1. Purpose statement: Wealth Formula Banking is how cash flow investors enhance the investing they already are or will be doing
  2. Vehicle:
    1. Net 5–6% Return
    2. Tax-Free
    3. Safe / Predictable
    4. Liquid
    5. Loan Provision
    6. Death Benefit / LTC
  3. Strategy:
    1. Same dollar creates value in 2 ways
      1. Simple vs. compound
    2. Replace the bank
      1. Opportunity fund
      2. Safety
  • Liquidity
  1. Higher return
  1. Real life example: WFB vs. Bank

 

Next up is this method of hedging yourself to a 0% loss. So if the stock market goes down 10-20% in one year you lost 0% 😁

Unfortunately, by taking this type of deal (that the rich do) you cap your upside at 12%. So if the market goes up 14% you only get 12%.

Here is where the strategy comes together… We leverage your investment by using 3X leverage. So if the market goes up 7% you get 21%. In that case, where the market goes up 14% you only get 12% you actually get 36%.

I know it sounds crazy. It’s like bowling with the bumper rails in place.

 

Velocity Plus w/ Lane Kawaoka Webinar Outline

  1. Purpose
    1. Leverage
    2. Max income w/ least dollars
    3. Alternative for retirement plans
    4. Great for groups
  2. Concept Structure
    1. Leverage
      1. $100k for 1 property?
      2. No. $100k for 4 properties
  • Do the work of $400k
  1. Years 1-5: Policyholder and bank contribute
  2. Years 6-10: bank only
  3. Ratio: 25% policyholder, 75% bank
  4. No collateral needed beyond policy
  1. Product: Indexed Universal Life
    1. Use an index
      1. Cap
      2. Floor
    2. Capture 80% of upside
    3. No downside
    4. Policy structure: max cash growth/min costs
  2. A Look at the Numbers
    1. 46-yr-old
    2. $1M total going in
      1. $50k from policyholder / $50k from bank
      2. Then bank takes over total
    3. @ year 15—pay off bank loan
    4. Age 65-90—tax-free income of $115k/yr
    5. $250k goes in, total of $3M comes out!
  3. How it Works—Leverage Throughout
    1. Spread—growth vs. loan interest
    2. Leverage the bank for 15 years
    3. Pay off bank loan using policy loan
  4. Leverage Throughout—A Snapshot
    1. Example numbers at year 15 after we pay off bank loan
    2. Figures:
      1. Total Cash Value: $1.8M
      2. Loan Balance: $1.2M
  • Net Cash Value: $600k
  1. Let’s say we get a 10% credit the next year:
    1. $180k (calculated from Total Cash Value)
    2. Loan grows by 5%–$60k
  • Growth in Net Cash Value–$120k
  1. That’s a 20% gain on our net equity
  1. Overall return is 18%!
  2. Estate planning
  1. 2 Primary Risks
    1. High Interest Rates
    2. Poor Performance
    3. “Stress Testing”
      1. 80’s interest rates–$98k/yr income
      2. Great Depression–$78k/yr income
    4. Baseline income was $115k/yr

Backward Engineering Happiness

Life is funny, about the time you achieve something you realize that there is something else to go after.

When I was going after that magic number “10” single family homes I was all consumed by the chase. Then when I got there the next goal was 1,000 units. Got there and it was the same result. Taking a step back I realized that happiness was not about getting to a magic number or properties or money (although it is a great way to keep score).

I wanted to get back home to Hawai after 14 years of living in Seattle. Done! (And you can see why by visiting)

For a long time, I have written down my “I would be happy when…” or IWBHW’s and they always change and I am always chasing the next thing. Not until recently did I realize that it was not about the chase to the next goal but embracing and enjoying or the Journey… Follow along on mine.

We all have heard about the Gallup article that said that once someone has $75,000 of income a year their happiness does not grow by leaps and bounds. I’m not here to debunk it but to ask why and more importantly how can I apply it?

I have built up a large network of other investors who have enough “simple passive cashflow” and the common thought pattern switches from making money to getting back time and living a more fulfilled life.

These days I ponder… how I can hack happiness? After all, more money won’t make that much difference. (Although I would like a Mercedes Tesla)

I tried using Maslow’s hierarchy as a framework to dissect happiness but I have found it to be a little too bit “basic” as it applies more to those in third world countries and people with real problems in life. I don’t want to sound basic I mostly have “first world problems” which I am very grateful for.

In 2016, I went down to Texas to attend a Tony Robbins seminar and discovered my current framework to backward engineer happiness.

Mr. Robbins outlines six human needs:

1)         Growth

2)         Contribution

3)         Significance

4)         Uncertainty

5)         Certainty

6)         Love and Connection

 

The lowest on the spectrum of human needs is to be Loved/Connection. I talk to so many people in my free investor calls and it is very apprent who are givers and who are takers. Why do people act so selfishly and so seriously? Perhaps it takes an old soul to realize it but in the end relationship that we build on the journey are what really matter and what we will cherish. (per Ray Dalio)

Action item: How can I get more Love/Connection? Schedule it? Attract more people of that nature? Create a podcast and network of other like-minded investors.

Certainty and Uncertainty are complete opposites. Certainty is having a reliable and safe life but at some point, we thirst for spontaneity.

Action item: How can I get more Certainty/Uncertainty? How do I build a routine? How do I put myself in places to get lucky? How do I free myself to go on more controlled impulses?

Significance is about feeling special.

Action item: What do I do that is my competitive advantage? Where can I get praise?

Contribution is about aligning your life’s work for the benefit of others. A mission. Apparently, Mr. Robbins did not endorse the mission of sitting on a beach with an unlimited supply of piña coladas and taking food porn pictures while gallivanting the world as a tourist. Nor did he support playing it safe with a bunch of passive investments.

Action item: What has been your biggest pain point growing up and maybe you can help others? What pisses you off most in this world? Realize that you might have to take a bit of monetary risk here to make a bigger impact.

Why do you think I accept non-accredited investors into my projects? Not because I love being super careful to follow SEC regulations. Certainly not because I have to expend so much energy to educate non-accredited investor and they invest all their money in just a couple deals. I do it because the middle-class non-accredited investors who go to work every day need these types of investments the most and damn it, I’m going to do that because it’s the right thing to do.

And the final need is Growth. Improving as a person.

Action item: Think about the different aspects of you life (physical, relationships, money, spiritual, to name a few), which ones need work? Many call this the wheel. I call it a stool (four pillars: health, relationships, spiritual, money/business) because I try to make things simple.

Tony Robbins six needs is a great starting point to see how we can increase our happiness. If you really think about these are the things that really make us happy. Lets us put focus on what makes us happy because in the end, that is what really matters. And the score of the game 😉

In another study, researchers asked 10,000 people to list 10 happy moments. This generated a corpus of 100,000 happy moments called HappyDB.

Here are the patterns that came up.

 

Here is where the team/comradary componet came into play…

Complete study write up.

Too often passive cashflow is associated with scammy multi-level marketing ploys to get people who don’t have the money in the first place to buy into expensive education systems. If the goal was to just make money and not to create value there are many things you could do such as sell drugs or sell a testicle.

“Hey man… let me tell you about passive cashflow and how you can get rich with little to no effort… do you feel that… its called entropy man!” (In a sleazy tone)

As mentioned before SPC-1.0 is getting into the rental property game and getting your mindset out of the Dave Ramsey/Millionaire Next Door lizard brain where you are just focused on putting food on the table and making ends meet. As you build up your cashflow you move from more scarcity mindset to abundance mindset.

SPC-2.0 is turning into more of a passive investors as I have traded my single family home rentals to more scalable limit partnership positions in syndications, and now after I have cashflow (food on the table) I can take some risks and go after SPC-3.0 which is Simple Passion Income.

Being a working W2 professional I have a soft spot for those in my position… It makes no sense for a computer engineer who has a family and working 50 hours a week at a $200K W2 job to do what is required to become an operational lead on an apartment deal. Doing such would require 12-18 months of relentless work without monetary gain and little success to build relationships with brokers, travel to the markets.. and put up hard money to close the deal.. I have tried to make a team atmosphere where talented professionals can dip their toes in to “scratch their entrepreneur itch” yet keep their regular salaries.

“Entrepreneurship is all about you! A job is more about sucking up and politics.”

All too often the entrepreneurs out there reaching success are not those who possess the skillsets but they just went after it and got lucky. Don’t get me wrong they deserve it because of all the sacrifices but imagine if you combined that grit with talent?

Ikigai is the alignment of doing something that is 1) you passion, 2) makes money, 3) you are good at and 4) good for the world. When you get this it is like arranging the Infinity Stones on the gauntlet and a higher level of achievement and happiness.

What is SPC-4.0? Maybe mentoring the next generation but at that point, we are playing with house money!

“What do I love to do and get paid to do it” Russell Grey or the Real Estate Guys Radio show.

The pursuit of an entrepreneur dream is not for everyone.

It requires an investment in time and money. And whenever you make an investment, you take on risk. In this case its taking time and energy away from a day job that already makes a lot of money.

In order to get enough critical mass behind an idea to turn into a thriving business, you must devote time, often many years. There are no guarantees that your efforts will be rewarded a lot of time luck is required. This Time Risk is that all of your time will be for nothing.

The saying “good is the enemy of great” comes to mind here. For many high paid working professional, you make enough money to be happy but part of what we are going for is not the extra wealth but “passion income.” Feeding that entrepreneur itch or as Buck Joffrey says that primal to our core instincts.

 

 

Except from the 12+ Time Best Selling Book:

The One Thing That Changed Everything: The Engineer Who Escaped the Rat Race and Achieved Escape Velocity

I walked the linear path for much of my life. Raised as part of the disappearing “middle-class” programmed me to study hard in school, checking the boxes on extracurricular activities, cramming for the SATs, and getting a high GPA to get into college, all to live a “practical” life.

Growing up, we were told to “waste nothing” and turn off the lights every time you leave a room. I still feel guilty to order a soft drink at a restaurant as opposed to tap water.

In college, while other cohorts were playing Frisbee in the quad, I was stuck in the basement of the industrial engineering lab. Why was I not playing the sun? Because Google told me what the highest paid undergraduate professions were. Driving on autopilot for much of my early twenties, I went for a higher-level master’s degree and tested to become professionally licensed as an engineer for the job security.

Upon entering corporate America, I spent my first five years of my career working for a for-profit, private company as a construction supervisor managing a bunch of entitled journeymen who were older than my parents. Facing the rigors of junior level employment, I played my role as the young guy, traveling 100% of the time for my company, sacrificing quality of life, as I navigated the operational clusters, toxic management, and other backstabbing pawns in the company.

I have a lot of scar tissue from that decade of working for the man not to mention building someone else’s dream. You tell me how engaged you would be if meeting protocol was to sit next to your superior and not speak unless directly instructed to or if you were asked to address a director two levels up by mister or misses!

One day an internal company email went out notifying of a friend/ex-direct report had died in a work accident. My boss was uncompassionate about the situation, looking out for the big bad machine first (mostly his annual bonus and agenda). This really put things into perspective for me.

As a corporate road warrior, it was novel being on company expenses all the time and maxing out on airline and hotel points, but you can only have steak and lobster so many times… The only people who cared about my platinum status were the other suckers in first class who were working for the paycheck or an acceptable quarterly review. Although I am grateful that I had a well-paying job post-2008 recession, I traded the most important resource, time, for money.

The linear path instilled delayed gratification, living below my means, and an overall scarcity mentality of saving money instead of earning more, being more. I was entranced by the pervasive Wall Street marketing to blindly put money into a company sponsored 401K plan only to “hope and pray” that compound interest would carry me to a secure retirement.

Let’s not even talk about the student loans I had…

I knew where this path was going…I mean I did the math and it told me so. This is my story of how I freed myself financially, how I took ownership of my life’s direction, and the series of events that allowed me to find my calling.

 

Seeing the (Economic) Matrix

A steady diet of ramen noodles and a free birthday latte per year made it possible in 2009 to purchase my own home to live in. Being a bachelor who was only home on the weekends, I realized that having this large home was a waste of money. I made a decision to rent it out and became a real real estate investor. You might be thinking that this was the big change, but at the time it was simply a lot of beer money after collecting the rents and paying the mortgage.

I don’t know if it was the beer or being love drunk with cash flow, but I opted out of the linear path in my early twenties.

From that point on I devoured podcasts, books, and online forums on every keyword iteration of passive real estate investing. At a few hundred dollars of passive cash flow per home, the process was simple, buy a rental property where the income exceeded the expenses and mortgage, then rinse, wash, and repeat. Like a space shuttle that accelerates through gravity and escapes the atmosphere into Zero-G, this was my way to financial freedom. Up to that point, the biggest breakthrough in my life was discovering the .MP3 format that compressed and played music digitally in my teens. Using this intellectual technology, I progressed intentionally to eleven rentals in 2016.

At that time, a few of my friends wondered why my ramen noodle diet was being replaced by Starbucks coffee and yummy double bacon and egg breakfast sandwiches. They wanted a piece of the action too. Duh, it was about time seven years later, said the little red hen who did all the work by herself…. As much as I liked helping people, I got tired of answering the same questions. So what does any other late Gen-X/Millennial do but start a blog? Unfortunately, the words I write, even if spelled correctly do not usually make proper statements in English, so I uploaded my Simple Passive Cashflow podcast to iTunes where I could ramble and honestly talk about what I was going through as an investor.

I began living more consciously, opting into more meaningful engagements with people and projects, and searching for meaning and purpose. I was beginning to ask myself, “after sitting on a beach with my unlimited supply of piña coladas and time…then what!?” Needless to say, my motivation for working in the hostile work environment that I once tolerated dwindled, so I switched to work in the non-profit public sector. I started to see the economic “matrix” where people essentially trade time for money and the rich let others build their dreams.

Being an introvert, it was paradoxically energizing to see my audience grow as I began in-person meetings and online groups I sponsored. I provided hundreds of free coaching sessions to guide newbie investors. With my engineering background and a little “bro-science,” I saw patterns arise in the stories from well-paid professionals who were led into an unfulfilling lifestyle unaligned with their passions. Abolitionist Henry David Thoreau said, “The mass of men lead lives of quiet desperation and go to the grave with the song still in them.” People do not have any time to look inwards and are constantly living with anxiety and self-doubts because they are working like machines in order to meet their basic needs without the freedom to find their true passion.

Why did so much hard-work lead to financial scarcity and lack of fulfillment?

This self-selecting group of hard-working professionals searching for more all had a common thread. A moment that pushed them over the edge and made them realize that the path they were on was unacceptable.

These are some of those tipping points:

  • Seeing younger, less experienced workers being “red-circled” as future management and advanced through the company “fast-track”
  • Being fired to cover up shortcomings in a budget
  • Internal theft by upper management
  • An affair by a superior lead to bankruptcy of a startup company affecting many innocent employees
  • Chronic drain of working with deadbeats
  • Getting lost in the office politics of getting your objectives completed when they do not align with your boss’ objectives
  • A retirement party for a coworker is catered with crappy Chinese noodles due to the cost control
  • When you don’t get the job because you do not have enough grey hair
  • Because you have too much grey hair
  • Being criticized for not being business savvy from those who live paycheck to paycheck (when you have a personal portfolio of a few hundred rental units)
  • Sitting through endless meetings that should have been sufficed with an email
  • Circle jerk meetings where the boss’ dumb ideas are exalted by their minions
  • When your boss with no technical experience misuses terms like artificial intelligence, big data, machine learning, and deep learning
  • Being enslaved with the “golden handcuffs”
  • Seeing an ambulance come to the office routinely during layoff season
  • Being around the negative W2 worker speak and adopting the prevailing victim mentality
  • The road warrior gets an early quit on Friday only to see the spouse at home with the pool boy
  • Watching your friends receive the Seiko stainless-steel watch retirement gift

If you have found a calling in something you are good at and truly love doing it…clap, clap, good for you. Keep doing what you are doing and consider yourself lucky. If you relate to any of the moments above, read on.

 

The One Idea

My online journal resulted in many emails of gratitude and acknowledgment because I was empowering people with the “how to” and inspiring them to take a leap of faith to change their financial life forever. I suspect the most effective part of my message was showing people that if little, awkward engineer me could do it, how bad could it be?

I started up-leveling my peer group, and through osmosis, this brought me to a Tony Robbins event where I literally walked on burning coals! There were a multitude of top-down and bottom-up techniques Tony Robbins spoke about during the intensive four-day event. One of those lessons was “things happen for a reason,” and boy, was I glad I did not leave to use the restroom when he outlined the six human needs:

1)         Growth

2)         Contribution

3)         Significance

4)         Uncertainty

5)         Certainty

6)         Love and Connection

Here was the game-changing moment…. Tony Robbins said, “The most important thing is contribution because the secret to living is giving. If you catch onto that, you start realizing that there’s nothing you can get that comes close to what you can give. Life is calling all of us to be more than just about ourselves and that is when we get that spiritual hit.”

Apparently, Mr. Robbins did not endorse the mission of sitting on a beach with an unlimited supply of piña coladas and taking food porn pictures while gallivanting the world as a tourist. Nor did he support playing it safe with a bunch of passive investments.

Later that Easter, I was baptized, and the message there too was “go forth” and help others.

Then another of my mentors, real estate legend Robert Helms, said, “When you are successful you have an obligation to send the elevator back down.” I made it to my penthouse and now I and this elevator are heading back down to get folks!

We all have a finite time on Earth and an empty canvas to create a legacy. This was my one shot! Opting out of the linear path was not about getting financially free and sailing off into the sunset, but it was about standing up for change and creating the greatest impact!

The fan mail all followed a common thread of pain. Many hard-working professionals who are busting their butt on the linear path are being misled down a comfortable life of un-fulfillment. Many of them were enslaved by the “golden handcuffs,” running in the hamster wheel of the day job working for someone else. Some, like doctors, lawyers, dentists, accountants, and engineers make more money to get the big house and nice car, but in the end, they are just a bigger hamster. The dogma of the Wall Street “buy and pray” method is a cover up to insidiously steal investment returns from the people who are doing all the work.

Life is a three-phase screw job:

Phase 1: You enter the workforce with the worst jobs with the lowest pay. Time is abundant.

Phase 2: When marriage and kids enter the picture (and ailing grandparents) this is the time when one should be excelling at their time- consuming career. Money is abundant.

Phase 3: Your teenage kids hate your guts and your health starts to fail. Time is abundant.

 

The Next Chapter

My mission is to teach and empower good people to realize the powerful wealth-building effects of real estate so they can spend their time on more important ventures and passions instead of working long hours and worrying about their financial troubles.

In real estate we use leverage, and by teaching others, I am leveraging other people to achieve their financial goals in hopes that they too will send the elevator back down for the next person.

SimplePassiveCashflow.com seeks to educate those looking for diversification and better returns outside of traditional investments such as mutual funds and stocks. This is part of a large effort to redirect billions of dollars going to the corrupt Wall Street roller coaster and help the shrinking middle-class find safer and more profitable investments in projects that benefit Main Street such as affordable workforce housing rather than luxury housing for the rich.

The true meaning of wealth is having the freedom to do what you want, when you want, and with whom you want. Building cash flow via real estate is the simple part. The difficult part occurs after you are free financially to find your calling and fulfillment. But that’s a great problem to have 😉

Time is the most important thing… If not now when?

Time is the most important resource. You can trade time for money and vice versa. It is pretty rare that you can not throw money at a problem and make it go away.

Some hacks I have implemented updated 8/1/18 (See how far I have come

  1. Using disposable chopsticks, plates, bowls, clubs, and forks to minimize time to wash dishes and put away. Also need less space for more of this “stuff”. I think we do not realize how much not only time we waste on this but water and electricity go into this.
  2. Use Uber as much as I can to minimize stress, the chance of an accident, 50 cents a mile per the IRS in wear and tear to your vehicle but most importantly you can bring your laptop and get some work done.
  3. Leasing a car – such a great decision. Its fun, the numbers make sense if you are able to grow your money at more than 14% a year, and don’t have to deal with any maintenance issues.
  4. Eat out. It just tastes better too. And no cleanup, prep, grocery shopping, etc.
  5. Send me some of yours!

I stumbled upon a great visualization of your time.  Basically, the yellow below is the time we sleep, blue is leisure, and light blue is at work. See the diagram here http://flowingdata.com/2017/05/09/adulthood-days/

Two takeaways:

  1. If you have not started investing… when the heck when? Get a mentor and compress the learning curve, decrease costly mistakes, and get on with your life!
  2. There is only a limited amount of time to create a legacy… VAs or Virtual Assistants I use.

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Some of you had questions about Virtual Assistants which I have had some growing pains with…

Take 1: I went to various countries/regions Craigslist where I heard there was cheap virtual labor such as the Philippines, Ukraine, Latin America, Eastern Europe, Etc. I created a generic posting for a Virtual Assistant and a link to a Google Form that I created that was supposed to farm data of willing workers and ask binomial questions such as if they had experience with graphics, audio editing, Excel, English, and how much their hourly rate was. This was a success and the idea was that I would create a database that I could BCC the emails to competitively bid projects. Unfortunately, when I sorted my list for the desired skill I was looking for, I discovered that many of the potential candidates sent generic resumes back. They did not even read the job description. I guess as the saying goes “shit in shit out.” Tim Ferriss talks about giving strange instructions to potential job candidates such as a requirement to fax in their application (in an age of limited fax access) to see which candidates follow directions and can overcome minor Resistance of not having fax machines.

Take 2: It seems like the tasks are taking a lot more time than it should. To some respect, that is to be expected. What I am trying to wrap my head around is the cultural differences not to mention the language barrier. In some of these Asian cultures, honor and face are utmost importance and sometimes it is culturally the normal to lie to save face. In America, we preach stepping up and admitting fault and moving on which I believe is a true demonstration of high value. So it’s a little frustrating… I know the internet sucks at these places but give me a break. I am just surprised they are not telling me their dog ate the GoogleDoc. Successful people take ownership and I accept this as MY fault in terms of me not having my job scope defined and linear instructions for the virtual assistant to carry out. If my virtual assistant misses on the deliverable or takes too long I take full responsibility.

Afterthoughts: A great discussion at a recent Mastermind I attended around this topic. Seems like a lot of people are backtracking from cheap (sub 8 dollar an hour labor) and opting for higher quality workers. I believe the vision of an employee is to get something done cheaper than your personal hourly rate, also get it don’t faster, and with a “Sir… I was completing task X and I found this wrong in our process so I took care of it and wanted to discuss this with you.” I don’t know if I will ever achieve this level of initiative in any person trading their time for money but one can only dream. Until then I will try to switch to a more project-based system as opposed to having a VA on call for a 10-40 hour set time. The cons of this project-based methods are that it requires more touch points for me to keep micromanaging each project and this is the exact reason I am looking for help in the first place. Time is the most important thing Jelly Bean. https://www.youtube.com/watch?v=BOksW_NabEk

The Random list of tasks to outsource:

1. Organize your travel (including learning your travel preferences). This includes making all your travel arrangements,
organizing all your flight info into your favorite travel app, and even remotely monitoring your travel to be ready to deal with
any missed flights or oversold hotels.
2. Handle billing disputes.
3. Help setting up bills onto auto payment on your credit card.
4. Address and mail cards, letters, and packages. Sure you may still handwrite the thank you, but do you really need to look up
the address and post the letter?
5. Update your contact manager (or CRM database).
6. Screen your e-mail and handle low-level responses. This includes deleting or archiving things you don’t even need to see.
7. Update your blog and social media accounts.
8. Organize and manage your filing system, both paper-based and scanned e-files.
9. Take dictation (either live or via recordings, perhaps using Voxer, one of my favorite apps).
10. Set up appointments and hold your schedule.
11. Gather all the needed data and prep information for all your appointments. For example, I ask my assistant to put to the
memo of any appointment she posts to my calendar any recent email exchanges and the contact information of the person
I’m meeting with. This saves me untold time when you compound this service over 15-20 meetings I hold each week.
12. Daily clean-up of your office, including refilling items.
13. Screen phone and e-mail so you don’t get the interruptions.
14. Take notes at key meetings and follow up with attendees on key deliverables.
15. Keep a master chart/list/calendar of your projects and deadlines and set reminders.

16. Tickler all birthdays and anniversaries, holidays, or other important dates, and even arrange for gifts, cards, or phone calls
that make you look good.
17. Update his or her own “Project List” so that all the tasks and deliverables they are responsible for in one place for you to
review.
18. Get, open, sort, forward, handle, and if need be shred your mail.
19. Coordinate with outsourced vendors when you have an IT issue. You just work from a back-up computer for the day and let
him or her troubleshoot it with your IT vendor.
20. Order things online for you and handle any product returns or service issues.
21. Handle any personal errands or schedule any household repairs. Yes this is perfectly reasonable as it saves you time that
you can reinvest in creating value for your company.
22. Notarize your documents by becoming a Notary Public in your state.
23. Help you to streamline your office—filing, sorting, and systematizing wworkflow
24. Basic updates to your Web sites.
25. Create and continue to refine the “expert system” for how to be your assistant (this one should be part of their job function
right from the start). This way if you promote your assistant they have created the core system for your next hire. If they leave
you to work elsewhere, the transition is much less painful.
26. Dealing with tech troubles on your phone or tablet computers. They can do this during the day when you’re in the office doing
other more valuable work.
27. Any parts of your projects that he or she is capable of doing for you. Constantly be on the lookout for things to try them out
doing. For example, my assistant helped expand the syndication reach of my business articles by over 100,000 annual
readers.
28. Download movies or audiobooks
29. Search for contacts of people you need to meet
30. Bookkeeping with a CPA or without one
31. Edit videos
32. Make calls
33. FInd sellers
34. Take Calls from leads
35. Call banks to find a portfolio lender
36. Assemble a list of podcast guests to contact

Podcast #113 – Buck Joffrey – Medical Surgeon gets fired and goes into freefall

For the limited offer coaching from Buck and program: Simplepassivecashflow.com/buck

Video Version: https://youtu.be/jq0MhXDEzzA

Audio Version: https://youtu.be/TUmVLqNNtlE

 



Text “simple” to 314-665-1767 to download the Hui Google Drive files and the  2018 Rental Property Analyzer

For a free electronic version of my bestselling book in 12+ categories text the word “ebook” to 587-317-6099.

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Join the Hui Deal Pipeline Club! SimplePassiveCashflow.com/club

Pardon the grammar – I’m an Engeneer, Enginere, Engenere… I’m good with math!

________Here are the Show Notes________

 

We heard you on podcast 17 and you told your story – http://simplepassivecashflow.com/podcast-17-serial-entrepreneur-dr-buck-joffery-wealthformula-podcast/

Hearing your story high paid doctor. Describe yourself as an employee?

Great butt kisser

Lane’s getting fired story

So you were fired what gave you the security to not go back?

Lane’s getting fired story

 

http://richhabits.net/catastrophes-reveal-inner-greatness/?mc_cid=610082b2da&mc_eid=a129173ca3

 

Why professionals are trained to go through the system

 

The two excuses why not to leave the professional system

 

Wealth formula – Mass (money) x Velocity (Leverage) = wealth

 

You need to make money

 

What happen to assisted living project?

 

Taking shots and trying things out? Where is the transition point from taking singles to going to homers?

 

We are talking about Jorge from Simplepassivecashflow.com/ahp

 

SPC listeners are usual creatures. Get me in a room with a bunch of W2 workers talking about their frequent flier miles and their cars and I’m completely turned off. What are your thoughts on coping with this?

 

What are some ways you teach the entrepreneurial spirit with your kids?

 

What if they just want to work for the man or do peace corps?

 

Simplepassivecashflow.com/buck to get the free 1-hour coaching offer from Buck.

—————————————————–

 

Our worst W2 moments which were our Han Solo Moments

 

How to make it as a medical professional? – Kiss Butt 😁

 

We are robots.

 

For more content go to Simplepassivecashflow.com/buck

Apartment Video Walk-Throughs on YouTube Channel

Check out all the videos on our YouTube channel. Subscribe to get the latest and hidden videos.

Des Moines, Iowa – 52-unit C+ Class Apartment (April 2018) – Video

San Antonio, TX – 192-Unit Class B+ MFH (March 2018) – https://youtu.be/-5h2GKZ3I58

San Antonio, TX – 253-Unit Class B+ MFH (March 2018) – https://youtu.be/vj8ZMteppfg

Oklahoma City, OK – 170-Unit Class C MFH (March 2018) – https://youtu.be/3n4Kan6fmAw

SPC110 – My Story – Evictions, Flip Project, Market Updates

YouTube Link: https://youtu.be/BXbgwbCcTnw

Text “simple” to 314-665-1767 to download the Hui Google Drive files and the 2018 Rental Property Analyzer

For a free electronic version of my bestselling book in 12+ categories text the word “ebook” to 587-317-6099.

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Join the Hui Deal Pipeline Club! SimplePassiveCashflow.com/club

Pardon the grammar – I’m an Engeneer, Enginere, Engenere… I’m good with math!

________Here are the Show Notes________

Dealing with an eviction:

“Hi Lane! I delivered an evection notice to tenants yesterday and had the opportunity to speak with husband at the door. He stated that he and his wife had both started new jobs and would be able to make one full payment in a week (this was the story for seemingly a month or two) and would be able to make a partial payment in 10 days. Before we proceeded forward with an agreement, wanted to see if that works for you. They are currently $3,000 behind before for a total of two months.  

Here is what I did…

I okayed the concession to give more time. I requested some sort of proof of new job status (a hire letter or email). I am more than willing to work with people… These have been long tenants of almost a couple years and B+ /A- home that rents for $1500 a month.

Caveat… I am really near to selling these properties this year and don’t really want to rock the boat in terms of enforcing long-term behavior.

Revamping my turnkey rental content – simplepassivecashflow.com/turnkey

I have currently sold 2 of 10 SFH rentals (P&L offer)

One of them Columbia is had $27K to get back online. Going to pay 37K to sell retail.

Another property Riverwood just went vacant. Going to pay 20-30K to sell retail too.

  • Talked with my team – PM, Contractor, couple other hui members
  • Is it a good area to go retail
  • Will I recoup capital overlay based on comps

Soon I will unrolling my private lending platform. CrowdfundAloha.com! So if you are looking for a 1st lien property with my partners let me know. We are talking about even providing turnkey services.

This is not really a money making things cause the margins are just really tough these days.

After over 1000 strategy calls with investors and coaching clients over the past couple years here is what I tell W2 employees… For those who are able to save more than $30k a year or have substantial liquidity (over 200k), being a landlord and especially flipping is a lot of work. If you like it cool/good for you… but just remember why we got into this… To be free from a JOB. A lot of us (80%) who stumble upon simplepassivecashflow.com and start drinking Kool-Aide will be financially free in 4-7 years pending taking action. So I always urge people to start with the end in mind and take a more passive approach.

Do the math here… you with 300 dollars per property (2 months of work to buy a turnkey rental) you are going to need 20-40 of these to replace your income. I have 10 of these and have systems in place but have 1-2 evictions a year and 3-4 big things that happen. Image if I had 30, just 3 x those numbers.

Directly investing in a turnkey rental or small MFH is a good way to start to learn and build up the war chest to go into my scaleable investments such as private placement syndications. Whatever you do, try to be as close to the investment as possible. This is the fundamental problem I have with Wall Street who takes too much fees off the hard-working efforts of the middle class.

Looking at some deals. So folks in the Hui Deal Pipeline Club (who have reached out to me and built a relationship) will see those really soon. 😛 I hope I have enough liquidity… I might need to borrow some money 😛

Single Family Homes becoming a legitimate asset class – Spring 2018 Conference

The lending requirements and new loan products is slowly changing. I know a lot of you have heard that Short Term Rentals (Air Bnb) income is starting to become part of the loan calculations.

Something I’m following is lending on large portfolios of single-family homes. Some of the highlights:

1) up to 10-year term with 1.25 DSCR

2) portfolios minimum size of 50 properties

3) assumable

Pilot program details download here – https://drive.google.com/open?id=1aTIbru2HEPbw_KLHTvU5-Iyk0aoQB8Gx

Look even a SFH conference – https://drive.google.com/open?id=1cI15DnBUn8LRA54NTCh667exeR3OtlIu

Other Fannie Changes – https://drive.google.com/open?id=1WumUWsduuLnHqDi6IJXNipX7IsT9AUFa

AirBnb lending requirements loosening

I read this following article that described rent concession in a few major cities that I like as apartment markets.

http://www.nreionline.com/multifamily/more-apartment-landlords-offer-free-rent-lure-tenants

Here is another article citing industrial as the sector to be in:

http://www.nreionline.com/industrial-cre-market-study/exclusive-research-clear-sailing-industrial-sector-through-2018

My takeaway is that this is important to monitor especially if you are developing because this is a leading indicator of softness in the market. It might be economic reasons or just because a bunch of new build inventory is coming online in that area. Either way…

Robert Kiyosaki has a saying, “there are three sides to a coin”.

People argue that its a good time to buy or bad time to buy. For example “mfh” is overheated or commercial is getting killed by Amazon and e-commerce. I think these are mental justifications by tire kickers not to do anything.

Sophisticated investors live on the edge of the “coin”. They buy deals out our reach of amateurs due to the lack for network/knowledge. These opportunities are undervalued, with undermarket rents, with value-add opportunity.

They are patient and don’t stray from standards that make them get crushed in a market correction. (Cashflow from other investments make this possible) They invest following the macro and micro trends and don’t gamble on gimmicks such as guessing where Amazon’s next HQ is going or where the hurricanes just crushed a market.

The trouble is as an outsider is figuring out which of these deals transcends the two side of coin and is on the edge. And starting out its going to be slim pickings due to lack of network but you have to push through this rough part.

I am from the camp that you need to become an expert or get beyond the surface level investor stuff in some freebie pdf guide or video. Or just find the right people to work with. To many people get shinny object syndrome and float from sector to sector, from a money-making activity to another, read book after book and never get anywhere. You see these people at a lot of networking events. There is a lot of movement but no tangible results. This is where coaching comes in but for some people not able to get over having another person call them out on their BS you need to get laser focused and take massive action or quit fooling yourself.

I’ll be at the notebuyerbootcamp on the panel for syndication in Chicago next week. Notebuyerbootcamp.com

Turnkey Rental Wisdom (2012-2018)

Dear prospective turnkey investor,

The following is my constantly updated guide to turnkey. (Updated 4-2018) Email me for any additions or feedback. In the spirit of the Hui Deal Pipeline Club where we crowdsource due diligence together!

I don’t flip or wholesale or do any of that. I have a w-2 job and not looking for another job or chore. I am all about leveraging my money and more importantly, time. For people like you and me who live in places (Seattle, West Coast, Hawaii, East Coast, to name a few) where the Rent to Value ratio is 0.5% or less we have no other option. It drives me crazy when the Real Investor Peanut Gallery (internet forums know for big pockets small wallet) say we are overpaying… well if I didn’t have a life and I had the time to lick stamps and swindle distressed buyers I could buy a distressed property at discount too and probably do it better 😉

I don’t know about you, but I have full time professional job that earns more per hour than most folks even in real estate and more than these Turn Key providers do. So I’m like sure… I’ll pay retail and rely on their volume and expertise. But you have to find the right ones. Investing for cashflow is not a get rich quick schedule but a prudent way to build lasting wealth a few hundred dollars at a time.

Update – 8-2018 – Almost done selling the rentals on Roofstock!

Today I buy apartment buildings like this 193 unit in San Antonio where I work with deal finding specialist on my team but it took me almost ten years to get there.

 

When I started this blog/podcasts I was totally into these Turnkey Rentals. I even started to blog on a couple of them in detail:

Rental #4 – Birmingham

Rental #5 – Birmingham

I moved onto bigger more scaleable assets mostly because of stuff like this happening every few months:

“I do have some unfortunate news.  My crew showed up this morning and there was an empty police car in the driveway along with a note from the officer.  Overnight, the outdoor section of the AC unit was cut and stolen (no sign of breaking in).  My crew said he spoke with the neighbors (to the right of the home) and at about 1-2 in the morning a black truck was going around the neighborhood cutting AC units and taking them.  The neighbors called the police and they came out to do their work.  I called the Dekalb County Police and asked them what I would need to do and what the next steps are.  They said, if we want a copy of the police report to come down to the office and present them the case number and if there is any news they would let us know.  I have attached photos of the card the police officer left along with photos of the damage.  It is very unfortunate and I do apologize this happening.  The AC just got inspected and serviced yesterday and everything else is running smooth.  I am waiting to hear back from the HVAC tech about what it is going to replace the missing unit and repairs to the lines, once I receive the service report.  I will be sure to keep you up to date with any news or information.  Please let me know if you have any questions.  Once again, thank you for your time and I do hate that this has happened.”

As much as I poke fun at the asset class and jokingly call it “turkey” instead of turnkey rentals it all started here and is the foundation of my investing portfolio.

 

When I first started buying the rehabs done by the turnkey guys in the blue collar areas, if you posted “hey I’m looking for turnkey” in the forums you get the usual suspects soliciting you for marked up properties. It’s off market because they rehab it for the investor with more durable and less visually appealing materials than your normal retail product. I’m all for the wholesaler to make money because they do spend a lot of time and money on mailers and advertising but the layers of middlemen who add no value is excessive and is almost as bad as Wall Street.

I bought my first couple rentals back in 2009-2012 in Seattle (Primary market/no cashflow). As the prices started going up I was forced to go out of my comfort zone and purchase out of state rents because I needed cashflow in order to achieve my goal of replacing my W2 income as an engineer. I bought one I Birmingham, without seeing it and set up a professional property management company to manage the day to day. That was proof of concept for me to sell my two Seattle rentals and buy 9 Properties in 5 Months via 1031 Exchange.

I work with a lot of engineers and a lot of them say they get analysis paralysis because they like data. I call them out of it and tell them they are just scared and losing $500 of opportunity costs and time per month! A real engineer would look at the numbers. IF rent minus expenses (with contingency) minus mortgage is greater than THEN fricken do it!

Example of capital expenses that need to account for in your expenses and contingency.

Let me be clear, I don’t flip or wholesale or do any of that. I have a W2 job and not looking for another job or chore. I am all about leveraging my money and more importantly, time. For people like you and me who live in places (Seattle, West Coast, Hawaii, East Coast, to name a few) where the Rent to Value ratio is 0.5% or less we have no other option.

It drives me crazy when the Real Investor Peanut Gallery (internet forums) say we are overpaying… Our time is better spent at our high paid professions that we busted out buts going through a couple decades of schooling for.

My full-time professional job that earns more per hour than most folks even in real estate and more than these Turn Key providers do. So I’m like “Sure… I’ll pay retail and rely on their volume and expertise.” Its all about leveraging your highest and best use, which maybe your day job.  Sorry.

The problem is that you have to find the right property and people to work with. And have a mentor so you are not getting screwed. Investing for cashflow is not a get rich quick schedule but a prudent way to build lasting wealth a few hundred dollars at a time.

When I first started buying the rehabs done by the turnkey guys in the blue collar areas, if you posted “hey I’m looking for turnkey” in the forums you get the usual suspects soliciting you for marked up properties. It’s off market because they rehab it for the investor with more durable and less visually appealing materials than your normal retail product. I’m all for the wholesaler to make money because they do spend a lot of time and money on mailers and advertising but the layers of middlemen who add no value is excessive and is almost as bad as Wall Street.

“I don’t work with top tier turnkey providers…. For the same reason I don’t buy a Dyson Vacuum.. I’m cheap and buy value and buy the sub-100 dollar Shark brand from costco with the excellent return policy.”

These days’ people in the Hui Private group are not on internet forums. They say its 95% of active people who are not high paid professionals and marketers. Here is some of the chatter:

 

The most important thing to do is to grow your network.

So you can bounce ideas off other investors and not a salesperson. I still do free calls but please review the free content I have put on this website first. No, I do not just give recommendations to good people to buy from because things change and I am not going to throw my brand around like that. And by the way that’s an “ask-hole.” I know your character and the trajectory of your success but how you add value to others first instead of taking first. Some people are unaware of this which is why I’m saying something so I aplogize. This could be the reason why people are not helping you out and you feel like a lone wolf.

Webinar with 2018 trends is sent out to Hui Deal Pipe Line Club members sign up below:

I don’t really see much difference in the secondary markets with robust economies (Memphis, Kansas City, Birmingham, Atlanta, to name a few). I have tried to set things up so my different markets complement each other. For the most part I buy in the 1.1-1.3% RV range. I take home 70% in 2015 but now in 2017, I buy in the 0.9-1.1% RV range and take home 60% of the rents after all expenses (vacancy and Cap ex).

I made this diagram in 2016 and it illustrates some of the popular “secondary markets with robust economies” that a lot of out of state turnkey buyers like to invest in. Things have changed a little but as you can see you can either have appreciation or cashflow. It’s tough to get the best of both worlds.

I stress NOT to spend too much picking a market. If you sign up for the newsletter as a Hui member you will get more than enough data to create analysis paralysis. The biggest thing you can do is vet the people. As you can see the same principle is what I use in my syndication due diligence: 50% people & 50% the numbers of the deal.

There are three ways to purchase a turnkey rental:

  • Marketer – I would not recommend going through a marketer, they don’t even invest themselves and they did not add any value. The only one I can recommend is Marco but that is because I know like and trust the guy. By the time I bought my 3rd rental I knew way more than those folks did. Unfortunately, I probably overpaid by a few grand on each of those first few properties not knowing what I don’t know, Work with me only if you want to compress time and want me to look over your shoulder to get my unbiased opinions and guidance. Plus you will be setup with a plan and not shoot yourself in the foot like I did by buying a dozen non-scalable investments.
  • Direct from Turnkey Provider – You cut out the middleman and go direct to the source, theoretically getting the best price. Just know that you are not represented by a broker who supposedly has a fiduciary responsibility to you. (BTW never trust a broker) The transactions are done with their paperwork and their rules. They are the pros and it’s dangerous for a newbie to go down this route. There are household Turnkey Providers (TKPs) out there but I call them the “Prada of Providers”. You pay for what you get and often times more than what it’s worth – I’ll just say you are paying over 105% of retail.
  • Hybrid method – When I was going through my buying spree in 2015-2016, I was going (off market) via an agent that had a fiduciary responsibility to me to check all the BS that the providers give you – this is what I recommend only after going through the process a few times. Usually, the agent helping you is not an investor and does not really know what type of amenities/floor plans and locations are best for rentals. You will need to drive the ship. Note: I see brokers all the time trying to sell junk to new investors.
  • Another cool site out there is Roofstock which is where I sold my turnkey rentals to step up to syndications. Use the link get a $500 credit when you register… They give me $50 credit but I don’t think I will buy another turnkey rental again ;P

You seemed bored reading… There is no such thing as turnkey. Check out these disaster photos from an eviction that ended up being a $37K repair bill… https://photos.app.goo.gl/R4PZLuOLGHONO5Rl2

As I was in the middle of my 1031 buying spree (#6 of 11), a lot of TKPs started to come out of the woodwork and offered their properties to me and gave me the royal treatment (discounted prices from what they normally offer). I got to meet a lot of them via meetups and national conferences because I had this podcast and they were interested in getting at the Hui Deal Pipeline Club ecosystem. Since I was pretty experienced and they liked working with me they offered me referral fees to simply send guys like you over to them with a simple “CC’ed” email. Sort of like a referral source where they would give me $1000 per home sold. I thought it made sense for them because it was a lot cheaper than paying $6000+ to a Marketer (#1 above), but as you know when you go with a marketer or this sort of referral program the buyer (you) don’t really get any value add. That said if you want $500 credit at Roofstock use this link.

Personally, I’m not really into picking up $1000 referral checks and passing you off to the TKP (never to hear from you again) since I’m more looking to give back to other investors and build my network for my larger syndication deals in the Hui Deal Pipeline Club. I think turnkey rentals are ok for people starting.

After over 1000 strategy calls with investors and coaching clients over the past couple years here is what I tell W2 employees… For those who are able to save more than $30k a year or have substantial liquidity (over 200k), being a landlord and especially flipping is a lot of work. If you like it cool/good for you… but just remember why we got into this… To be free from a JOB. A lot of us (80%) who stumble upon simplepassivecashflow.com and start drinking Kool-Aide will be financially free in 4-7 years pending taking action. So I always urge people to start with the end in mind and take a more passive approach.

“I have B- class rentals and high that rent for at least $900 a month and I am still having a hard time selling dang properties to other cheapo investors”

 

Do the math here… you with 300 dollars per property (2 months of work to buy a turnkey rental) you are going to need 20-40 of these to replace your income. I have 10 of these and have systems in place but have 1-2 evictions a year and 3-4 big things that happen. Image if I had 30, just 3 x those numbers.

Directly investing in a turnkey rental or small MFH is a good way to start to learn and build up the war chest to go into my scaleable investments such as private placement syndications. Whatever you do, try to be as close to the investment as possible. This is the fundamental problem I have with Wall Street who takes too much fees off the hard-working efforts of the middle class.

I currently work with one business who I can align with because they offer sort of a hybrid between the marketers (I know you know the reasons why to stay away from them) and going straight to the TKPs since you lose a lot of the protections when you do that and it’s sort like signing agreements in the “wild wild west”. The reason I do it this way is that I get a licensed agent that has a fiduciary responsibility to your best interests and guides you through the transaction as you buy through the TKP. Basically, it’s like having MLS agent to cover you for the off market deals. All the properties are aggregated from only the good TKPs and the same price that you will find on the weekly digest that is sent out by the local TKP. This is the way I buy my properties and if nothing else it’s good for browsing what’s out there.

Can you please recommend a good turnkey provider? You said you would help…

The short answer is not really. A provider will try to size you up and try to pull a fast one on you when they get the chance. I will not endorse anyone! The only way to protect yourself is to network with other investors by providing value first – if you are a cheapo. If your net worth is over $300K, have at least $50k liquid, and have a time crunch (kids) I think it’s a no brainer get me on your team and stop screwing around.

There is really no reason why you cannot put in an offer on a property and start collecting $300 a month with a $25K down payment in under 90 days. Someone who is still “reading”, “contacting investors”, or “picking a market” frankly lacks focus (finish one course until success) or scared of making a move. Every day you don’t do anything is $500 a month of opportunity costs!

My rentals in Seattle were cash flowing each with $600-800 a month but it was because I bought at the right time and I did not look at the numbers like a sophisticated investor does. Although my cashflow was good (bad in terms of percentages) I realized that my return on deployable equity was very low, in fact it was under 5%. Now each rental I get typical cash flows by $350 but I think of it like $250 to be conservative and more importantly, my money is not being lazy. I think if you’re making less than 8 percent you’re better off in the stock market despite my aversion toward stocks or mutual funds. A sophisticated investor does not say “well… at least I’m able to cover my mortgage”. They are constantly monitoring their return on equity.

I wasted a lot of time in 2012-2013 looking for rentals in King, Snohomish, and Pierce County (Washington state) and nothing cash flowed. I still have the spreadsheets where I underwrote how crappy the Cashflow was. Now prices are even worse.

I helped dozens of people with this out of state investing game and have pretty much figured it out after making a bunch of mistakes that I didn’t realize till later – this is why it makes me laugh with the “do it yourselfers”.

One mistake I see people making is going after these sucker properties that only can be sold to “Californians,” “Hawaiians,” or any rich person not from the area perceived to have trees that money grows on, from a trust fund, and drink seven Mai Tais on the beach everyday. (Personal Note – I have lived in Hawaii for about six months now and I have only been the beach twice).

These types of people (not follows of SimplePassiveCashflow.com) like to pay a plumber for ten hours to fix a small toilet leak.

Sucker properties are in the wrong area that none of the locals would touch with a ten-foot pole. They are C or D class properties that the Broker calls “B-Class or good area” and usually cost sub $60K for $750 rents a month.

“It may look good on paper but stick to rents that are higher than $900 a month”

The second thing I see newbies doing is buying 2-8 unit properties after hearing all the good things about multi-family and scaling. I think most highly paid professionals will graduate to syndications (which is why I structure business and own investing around them) and therefore will need to sell these SFHs to move up. The exit strategy on selling 2-8+ just is not there. They look good on paper but the exit strategy kills you. If you are thinking you are going to hold on to these properties for cashflow for 7+years think again because that is not what sophisticated investors do because they monitor their ROE and they know the cap-ex tidal wave will hit them in year 5-12 taking back all those profits from the earlier years.

How many turnkey homes are people buying. Here is one data set I found from one popular turnkey provider. Takeaway – most (82%) get a few properties and the rest don’t get it or are too lazy.

The main thing is building the relationships and knowing who has the integrity out there. More importantly, you have to buy a few and go through the process of buying/selling and operating a while to learn how this mouse trap works. Tactically, it’s no different than what I have learned in corporate America (although I’m trying to leave the rat race) by setting expectations and keeping people accountable via email remotely. Trust but verify and financial freedom will be yours.

 

Frequently asked questions:

FAQ from past coaching clients and questions you ask:

Where is your spreadsheet with turnkey providers because I am lazy and want to just copy what someone else does?

That might have been smart a few years ago but things have changes and good providers have gone out of business or more expensive. You don’t need to be a super active investor but by not putting a minimal amount of effort you are shortchanging yourself the necessary lessons that will minimize a big mistake down the road. If you need the provider list sign up for the Hui Deal Pipeline club and it is in that share drive.

What’s the deal with REI Trader and the partnership with Simple Passive Cashflow?

I would do your own due-diligence and learn about rentals by talking to as many people as you can.

I know eventually you will find that working with my team is the going to be the optimal path forward as I am committed to mentoring you as an investor so you will continue on this investor journey to bigger and better deals.

I stand behind REI Trader and support you through the entire buying process – I don’t just pass you off to the Turn Key provider and say peace out…

The properties have good value for the purpose of rental real estate. The due-diligence that we do after the purchase contract is signed is the secret sauce and the unfair advantage over other turnkey options. Yes, there are a few perennial Turn Key companies however you will pay over market rates (110% retail).

The broker that helps you with boots on the ground with REI Trader is property agnostic. In fact, they don’t care if you buy that property or not.  We know you will buy the right one eventually.  We want to build a relationship with you the investor. Most clients buy one property, come back for more, and tell their friends.

Where do I find tax information in Birmingham?

http://eringcapture.jccal.org/caportal/CAPortal_MainPage.aspx?IsHTTPS=0&IFrameURL=CA_PropertyTaxSearch.aspx

Should I be concerned about a septic system?

Do you know if it was inspected after you purchased? What future maintenance should I expect? Will the property management company know when it needs regular maintenance?            A lot of properties have septic in Center Point and most PMs have this down to a system. We went through this including myself as before.

On another property the investor hired his own septic tank inspection. They checked in and said it was not working but when we sent our own service out to reconfirm, it was working as required. Often some of these third-party services are not as honest as they should be with out of state buyers. Regardless, the home warranty you receive covers septic service. This is just an FYI for future purchases where a septic tank is involved. This property is on city sewer so we don’t have these issues.

How much and what comprises the attorney’s fees that will be split 50/50?       

Typically, on financed transactions it’s about $650 split 50/50.

What if there are issues getting an inspection(s) completed with tenant in place?           

This is an issue with the seller not being easy to work with and could be grounds for you to back out.

If there are delays, we then have both parties agree to an extension of the inspection period with an addendum. Only time this happens is if your inspector can’t inspect and provide report back within the 14-day period.

How do I decide on an offer price?

Property in good condition and in a good area that meets the preliminary numbers go fast. Dude, it’s a sellers’ market and anyone can swoop in and grab it. I have seen the amount of turnkey buyers go up exponentially in the past few years as everyone is jumping on the band wagon. News flash incase you missed it… Real estate has been good for the past decade.

From the rehabber/flippers prospective to complete project geared more toward the retail buyer to take part of the emotional buyer market. Selling to cheapskate and annoying investors like us just does not make sense on many fronts. So don’t we a whinny investor and don’t try to make like you have leverage.

Properties that have a tenant in them are often owned by investors and non-owner occupied owners. The good thing is that it’s a numbers game and they have a profit that they are looking to get. The bad news is that the property performs as an income producing asset (that’s why you are buying it) and the sell is content holding on to it indefinitely – after all it cashflows.

Turnkey sellers will allow minimum flexibility on their pricing. Remember, they don’t have to sell and sometimes it does not make sense so move on if that’s the case. That being said, the average discounts I have seen is about $1500 off asking price. Seller is asking $69,900 and I would suggest initial offer of $67,000 and see how he responds. Point is know what is a deal and know the price.

How to handle property inspection report          

You really need a mentor or have someone look over your shoulder who has done this before and knows what is fair. Here is my advice:

Have a 5-10 minute call with the inspector. Tell him “look I know we aren’t going to get much more than 2-4K of repairs” so…

#1 would you buy this?

#2 what repairs will bite me in the next couple years?

#3 what is the best use of 2-4 of work?

#4 do you have any contractor contracts I can have?

Take this to the seller and negotiate but just know they have a line around the block waiting to buy their property sight unseen. Even without appraisal and all cash.

I want to make my own turnkey company? I know a rehabber?

Here is a spreadsheet with the math behind making your own turnkey company.

I think multi-family properties are my future 1-2 years from now.  Would you start 4-8 units or get a partner and go bigger?  

This depends on your trajectory (how much money you have and earning ability). High paid professionals I work with are going to go into bigger deals I would recommend going with SFH because you will likely sell in a few years and vault into bigger stuff. 2-8 units have a horrible exit strategy as only people who want them are cheap investors. “looking for a deal man!”
My buddy FI Fighter also calls these Turkey rentals too but I disagree with his sentiment about going for the “best assets.” I believe you can invest in undervalued value add Class C and B assets as long as you have a capped time horizon. This is why I like to look for 1975-1990 properties because our business plan is the squeeze out the last of the value of these properties with still having high single digits of cashflow as the hedge to a downward turn in the economy. You can’t really do much with a 1960’s property. You really have to go through 500-1000 deals to find one of these and you are not going to find these being in the game with only 6 months of experience and no track record. This model is not infinitely scalable (and too small for the institutions to bother with) but what small sophisticated investors are quietly doing in the 2-8 million dollar asset range.
Setup a short coaching call because it will be worth it. Don’t be like me and buy 10 of these sfhs because it will be a pain to sell them later to go into more scaleable syndications.

 

Here are more resources:

  1. *The Analyzer Video Walk Through- https://youtu.be/qr8M6NMBhRw
  2. *Download 2018 Buy & Hold Analyzer Spreadsheet – https://drive.google.com/open?id=1kMAn962d52UN-ObKNWmjT11z6gqATR1I
  3. *SPC005 – So you want to buy a Turnkey Rental – http://simplepassivecashflow.com/podcast-5-so-you…a-turnkey-rental/
  4. SPC014 – 22 questions to ask a turnkey provider – http://simplepassivecashflow.com/podcast-14-22-qu…turnkey-provider/
  5. SPC015 – 9 Turnkey listener questions Part 1 – http://simplepassivecashflow.com/podcast-15-9-turnkey-listener-questions-part-1/
  6. All the SFH related material – http://simplepassivecashflow.com/tag/sfh/

Refer me to a friend via email and I will personally send you both my spreadsheets of usual suspects of turnkey providers plus the questions I used to ask them for due diligence. And let me know if you would like a referral to my exclusive partners.

Here are the books I think you should read before moving forward.

***Put a red circle on your calendar 60 days from now and see where you get… and how much of your family’s time you waste as you consume websites, books, and podcasts.

You know what I mean ‘Jelly Bean’

https://www.youtube.com/watch?v=BOksW_NabEk

“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.”

LANE KAWAOKA accepted into Forbes Real Estate Council

Lane Kawaoka, Podcaster & Real Estate Investor, Honolulu, Hawaii has been accepted into the Forbes Agency Council, an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies.

Lane Kawaoka joins other Forbes Agency Council members, who are hand-selected, to become part of a curated network of successful peers and get access to a variety of exclusive benefits and resources, including the opportunity to submit thought leadership articles and short tips on industry-related topics for publishing on Forbes.com.

Forbes Councils combines an innovative, high-touch approach to community management perfected by the team behind Young Entrepreneur Council (YEC) with the extensive resources and global reach of Forbes. As a result, Forbes Council members get access to the people, benefits and expertise they need to grow their businesses — and a dedicated member concierge who acts as an extension of their own team, providing personalized one-on-one support.

Lane Kawaoka, says “Excited to share my viewpoint of real estate investing to help the hard-working middle-class emulate what the wealthy do and interacting with this exclusive group within the Forbes Real Estate Council Members”

Scott Gerber, founder of Forbes Councils, says, “We are honored to welcome Mr. Kawaoka into the community. Our mission with Forbes Councils is to curate successful professionals from every industry, creating a vetted, social capital-driven network that helps every member make an even greater impact on the business world.”

For more information about Forbes Agency Council, visit https://forbesagencycouncil.com/. To learn more about Forbes Councils, visit forbescouncils.com.

 

Podcast #103 – My Story – Money Savings Ideas Before the Simple Passive Cashflow (Scarcity Mentality)

YouTube Link:https://youtu.be/HOeBP0w00eI

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Download the FREE 2018 Rental Property Analyzer

I started to a hobby to make Mead or fermented honey wine. It’s pretty healthy because of the good bacteria cultures.

I started it because I needed to diversify from my Kombucha hobby because moving to Hawaii I was worried that there was going to be a fruit fly infestation that would wipe me out.

Got to be diversified with multiple streams of income!

It’s been a busy month after wrapping up the closing on these two latest deals. If you are interested in the deal flow, make sure you are a part of our Hui Deal Pipeline Club.

I recently met George Ross who came to speak to my Syndication Mastermind for a private dinner. If you have need the movie “The Founder” you know the lawyer had a very big impact to Ray Kroch.  George was the legal counsel to Donald Trump during his rise and “retired” once he hard Trump was running for presidency. George He held court to the remaining 15 of us for 3 hours after dinner until midnight telling stories for the past. Very insightful to know that this man shaped the Trumps business sense.

He is known as a master negotiator and he gave us the following relationship advice:

“In marriage, I tell my wife that I make all the Major decisions and she can have the Minor decisions… In all my years of marriage, we have not had one Major decision come up.”

The recently launched YouTube Channel just clocked in at 17,577 minutes or 293 hours or 36 working days. So there much be one person watching my content around the clock which on the clock.

I need a little bit of a break and took the time to reflect back on how far I have come from 2009 and buying that first rental property. By the way remember to incorporate “play” into your day.

The first twenty tips came from myself but after sharing the list and finding the other ex-cheapskates out there we have been slowly syndicating more and more bad ideas. Note: they are not in any particular order.

Our parents will be so proud of us!

If you want to add more, please email me and I will keep growing the list. And if you like I can add you initials at the end to cement your legacy.

If you call me collect, I will not pick up!

Money saving ideas for the shameless… (the before)

  1. Stack Mr. Rebates shopping portal and Groupon discount codes with gift cards purchased from eBay or Safeway with more gift cards and Mr Rebates shopping portal. To sign up go here: http://www.mrrebates.com?refid=413597
  2. Take a shower at work to save on utilities, water, and electricity – as a side benefit you go to the gym more often (do your 3S’s there, shit, shower, shave)
  3. If you work in a startup company that caters food, it’s a no brainer— eat at work and bring food home. Maybe you can even befriend someone that works there and join them for lunch from time to time. For extra credit consider a life of “intermittent fasting” and totally binge at these free meals.
  4. Wash your car in the rain. No mineral deposits left while it dries. Video of me demonstrating this: https://youtu.be/kZkYnkXOI7Q
  5. Costco leasing to own program
  6. Buy an Anker powerbank and charge it at work.
  7. Always take a pee before leaving for the day.
  8. Try to poop at the same time every day while at work… get paid to poop. Time is money and flushes cost 10 cents.
  9. There are soft drinks available at restaurants?
  10. Why are you eating at a sit down restaurant, you have to pay tip?
  11. If you must, order food to go and eat on the premises. Best of both worlds!
  12. Wear clothes with the tag on it and return it.
  13. Buy a snorkel from Costco to go to Hanama bay while visiting Hawaii to return it. Another Hui member cautions that on many electronics there is a 90-day return policy. Lady who returned a dead Christmas tree on Jan 4th.
  14. Use an app like GasBuddy to find the cheapest gasoline station, better yet, double stack your Costco credit card (4% cash back on gasoline) and buy Costco gas.
  15. Cash flow, cash flow, cash flow. Also, see uncle Kohlers team for tax optimization (easily the single largest expense in your life) http://keystonecpa.com/~keystone/images/5_Cash_Flow_Strategies_for_RE_Investors_eBook.pdf
  16. This one is a bit morbid, but an important one. Set up a revocable living trust with your lawyer to avoid probate expenses following the death of your family members\
  17. Susie Orman’s advice – make coffee at home and save yourself the $5 Starbucks Vente frappucino
  18. FAST (intermittently, not forever)! Skip breakfast daily (work yourself up gradually) and when you’re ready to get to the big leagues, attempt to fast for an entire day (no breakfast, lunch or dinner)
  19. Solar panels (maybe?)
  20. Free (coffee) money, this one’s really easy ($25/quarter or $100/yr) w/ BofA and Amazon http://www.magnifymoney.com/blog/consumer-watchdog/better-balance-rewards-card
  21. Maximize and optimize what you’ve got BankPurely has a 1.30% APY since April (not sure if promo rate?) but most banks have 1.0+% (which is 10x the 0.1% APY rate given by most conventional brick and mortar banks like BofA, Chase, WellsFargo)
  22. https://www.depositaccounts.com/savings/
  23. Become an Uber driver or deliver post maters? (not a big fan)
  24. If you have a spare room not in use, AirBnB it from time to time
  25. Check out EventBrite or other social event platforms for free lunch/dinner/drinks
  26. InvestinAHP.com        or email me for a few Burnzone book with your mailing address
  27. Buy Mod Pizza’s mega salad for $11.27. Dinner for days!
  28. Paid online surveys (not a good use of time)
  29. Coupons (think http://www.freestufffinder.com/)
  30. Use www.bensbargains.com or slickdeals.net before buying anything online
  31. Use Honey or Ebates or other discount portals for Amazon/eBay or other internet purchases to save a few %
  32. Certain credit cards provide 5x bonuses (Chase Freedom has rotating categories) and Chase Business cards are good for auto-pay things like internet with extra bonus categories
  33. Make a Ghetto Latte at Starbucks and other fun
  34. Charging up your electronics/ph0nes/Gameboys at work before you leave for the weekend
  35. The things we do to save money…

Growing up in Hawaii where a gallon of milk is $8, I was taught to save money in strange ways. (I don’t drink milk)

Some of those were pretty bad which develop into unhealthy money mindsets and can translate to negative social profiles.

Some downright unethical but hey if you are a cheapskate, own it!

I don’t condone any of these tactics but look, it is no coincidence why you folks continuously have so much money to invest and pay your bills on time unlike 4 out 5 of my Birmingham rentals every month.

Trading money for time… (the Recovery) – updated 8/1/18 & Migrated here… 

  1. Using disposable chopsticks, plates, bowls, clubs, and forks to minimize time to wash dishes and put away. Also need less space for more of this “stuff”. I think we do not realize how much not only time we waste on this but water and electricity go into this.
  2. Use Uber as much as I can to minimize stress, the chance of an accident, 50 cents a mile per the IRS in wear and tear to your vehicle but most importantly you can bring your laptop and get some work done.
  3. Leasing a car – such a great decision. Its fun, the numbers make sense if you are able to grow your money at more than 14% a year, and don’t have to deal with any maintenance issues.
  4. Eat out. It just tastes better too. And no cleanup, prep, grocery shopping, etc.
  5. Send me some of yours!
  6. For future updates go here.

Join the Hui Deal Pipeline Club!

Podcast #100 – My Story – The 100th (Drunken) Episode with Abhi Golhar – Who is Lane 2.0

VIDEO VERSION: https://youtu.be/azbjx9fhVbU

 

YouTube Link: https://youtu.be/x1FsDcF0d2E

 

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Pardon the grammar… I’m an Engeneer, Enginere, Engenere… I’m good with math! Here are the Show Notes:

Lane is dringing Maui Brewing Company Makawao beer and POG IPA and homemade mead (honey wine), Abhi – Whiskey

Hi, I’m Abhi!

How old are you? 1985

How much simple passive cash flow do you have coming in and from what investments?

At this point my cashflow is a little lower because some of sfhs are offline because I’m trying to sell them and my syndications are in the ramp up stage but I’m around 3k. more importantly I have very low expenses and essentially financially free. My salary from my paycheck is 4k at the-end if taxes and that’s what I use to put right back into my business. That’s 3k not including my day job.

– What are your healthiest habits? How do these help contribute to being your best, most productive self?
Intermittent fasting.
Used to do paleo but has evolved to keto
I used to do crossfit but the 225 lb deadlifts twenty one times for three rounds really got old. Its for people in their twenties
Got a trainer who won the hawaiian iron classic
Keep changing goals

– What do you attribute your ability to be prolific and productive to?

I don’t have that many distraction
I got lucky with initial positive feedback

I work really hard/consistent
Make tweaks frequently. If you follow me around I do weird things. or going to the restroom put coffee in microwave and then take a call like a machine

– Looking back what do you wish you had done differently along your journey so far?

I wish I would have gotten a personal mentor to call me out on my and minimize the hours of mental planning and scenario

Q1) You mentioned that you have spent close to $60K last year in coaching & mentoring programs/events, can you share some insights on how do you determine which ones worth investing your time & money into, which aren’t, and how to avoid the scammers/pitfalls? Are there ones that you recommend trying out or avoiding?

Get feedback from actual students. Make sure there is no referral fee going on.

Allocate a development allowance. 10 percent of your income.

A mentor taught me never to speak bad of others so I won’t here publicly. But if you guys get to know me I tell you what I think. Another example of going an inch wide mile deep.

Q2) I’ve listened to most of your podcasts (and yes I did leave reviews :-)) but can’t say every single one so apologize if I missed it if you shared already – how do you manage employer/manager after they learnt you were doing this REI “side gig” with the eye of quitting your day-job? I am sure quite a handful of your listens work for companies that have requirement of disclosing outside business activities that require either company/manager approval, or Compliance clearance, varying level of scrutiny , or maybe just a disclosure. What would be your words of advice or caution on how best to navigate this when one cannot fully launch into investing full-time?

I have a humorous article of what to do in a day job.

But honestly people don’t rreally know what I do. I am a government worker who drives a mercedes at work and smiles a lot. It does not make sense. Its good that my parking lot is really big so no one really sees me.

I work in a non profit so I try to respect that they are paying me for my time.

Honestly if they find out I bet the “clock watchers” will become whistle-blowers. my mindset is that it won’t be a bad thing. It will just pressure me to work my ass off and get out of day job and take that leap.

I just like how authentic I can be in the way I work with people… In the I interviews for the this last job they asked why should we hire you?

No one else has a masters degree and real world experience that I do and willing to be paid the salary level and will be happy there.

If people give you a hard time this is all about lifestyle creation. Financial freedom gives you the freedom to do what you want. a recommended real is Mark Madsen “How to not give a fuck”. Its not about living life like a cavalier but opting into a conscious life of people and projects that are aligned with you.