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Podcast#56 – Interview – Sep Bekam – W2 Electrical Engineer never looks back and why he does SFH and not MFH

Sep Bekam is a full time real estate investor and was able to get out of the rat race when he was 31 years old. He currently invests in 4 states and has acquired a portfolio of 50 houses and 80 apartments with his investors. Sep has been interviewed twice on the Real Estate Guys Radio Show and recently co-founded a real estate crowdfunding company. He enjoys helping other investors avoid making the same mistakes he did when he first started.

Quitting your job frees up so much time to progress business
2009 came around and getting fired was the best thing!
Oh no investing is stocks like Washington Mutual

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.)
• Six figure range
2) What is your Han Solo moment – Han Solo and his buddy Chewbacca from Star Wars were cruising around the galaxy as lowlife smugglers but then cross paths with Luke and Leia and his life took a pivot point. Describe the resistance that was the catalyst for change. Did you “burn the boats” or did you let it happen naturally – was there an internal (you decided to make a change on own – what was thought process?) or external (you got fired) trigger?
1. Live in Orange County, California
2. Love to travel, paintball, attend seminars
2. Went to school for electrical engineering because that’s what I was taught
4. Started working and felt like Office Space
5. Was very stressful, 2008. Recession hit, I had a nasty, egotistical boss (also an engineer)
6. I was told when to go to work, when I could take a break, when I could eat, and when I could see my friends and family.
7. And then I was laid off after 4 months. I go to school for 26 years to be laid off after 4 months
8. Then went on to pursue masters in robotics
9. Cousin introduced me to Robert Kiyosaki’s book called Conspiracy of the Rich
10. Fell in love with real estate investing. Found podcasts
11. Big influencers: Real Estate Guys (Robert Helms & Russell Gray), J Massey, David Lindahl, Ken McElroy
12. Got the cash flow bug. I wanted to own apartment buildings. I thought it would give me freedom so I could stop trading time for money.
13. Tried investing in OC but nothing cash flowed. Then I began searching for markets that had properties with better cash flow. Everyone told me I was crazy and I should invest locally
14. Bought my first 2 properties in Phoenix. Two 4-plexes.
15. Evictions, broken windows, bleach on the carpets, management excuses, etc. while working full time job
16. When I started investing, I made virtually every mistake possible: overpaid for properties that appraised low, meth labs,
Robert Helms: “Live where you want to live, invest where the numbers make sense”
• Investor Identity – Why does it matter?
• Marketplace: How to find good emerging real estate markets
• Team: Team includes: Property Manager, brokers, leasing agents, evictions Attorney, contract review attorney, Mastermind, insurance brokers, public insurance claims adjusters, CPA, tax attorney, securities Attorney if you are raising capital, etc.
• Deal:
-Self managing vs.hiring a property manager. Managing the Manager
-If I fail, it’s my fault. If I succeed, it’s because of my Team.
Why I am focusing more on single family rental portfolios than apartments?
• When the crowd is going one way, there is a lot of opportunity in the opposite direction
• Gurus often compare owning 1,000 apartments to self-managing 1 house
• Why not manage your houses like an apartment complex?

3) Worst life/business moment what did you do after? Lesson learned?
-When a bank tried foreclosing on one of my apartment complexes…even though we never missed a mortgage payment.

4) A mark of a high performer is to put your ego aside and accept the help of others and mastermind. 2 week experiment and 6 month project? (90-180 day goal) Perhaps people can help you out? Any secret habit to share?
Secret Habit #1: Fast way to underwrite deals: 1.5% rule
Secret Habit #2: Surround yourself with investors that are ahead of you. Not the talkers.
Secret Habit #3: Investor Identity

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.
• Simple Passive Cashflow number: $50,000/month.
• Double that: $100,000/month
• Travel to Europe 6 times a year. Underwrite deals while living in Lake Como, Italy for 3 months.

6) Something that you have recently or thought about “burning your cash” on for time savings or an improvement in quality of life.
• I could hire more employees, expand the team, invest in additional marketing to be able to help, teach, and create 1,000 millionaires per year.

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 this was your final words of wisdom, what is your secret to the “Science of Achievement?” And “Art of Fulfillment?” How you do contribute back?
At the Unleash the Power Within seminar, Tony talked about the importance of measuring all of the important aspects of life to ensure fulfillment:
Draw a wheel (circle) on piece of paper and divide it up into 7 or 8 spokes. In each spoke, write the following:
1. Finances
2. Relationships
3. Time
4. Body
5. Emotion
6. Mission
7. Contribution
Then shade each spoke from the center on a scale of 1 to 5. 1 being awful and 5 being excellent. When you’re done shading each wheel, you’ll notice that some areas might be a little bit off balance. Just like the tires on your car, if they are off balance then your car can’t go as fast or run as efficient. It’s important to make sure that the wheel is balanced.

8) Anything we missed and contact info if you would like anyone to get a hold of you. URL?
Facebook: Sepehr Bekam
Like Our Facebook: Real Estate Investing Quotes

 

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American Home Preservation (AHP) looking to close on their biggest pool of 799 homes

American Home Preservation (AHP) is a sponsor of the Simple Passive Cashflow Podcast. But more importantly, I personally invest money in the fund. It literally pays my car lease!

Watch 40-minute webinar here:

Highlights of the investment

  • You are helping people stay in their homes as AHP buys the loans from the banks and attempts to structure a more manageable payment schedule for the existing homeowner
  • AHP pays 12% a year. You get 1% every month like clockwork
  • I use it as an “Opportunity Fund” holding tank because of the liquidity
  • The interface is sleek… check it out

You can start with $100 bucks and then you can incrementally increase your investment however you want.

InvestinAHP.com

 

Podcast #052 – Fundamentals – Caeli Ridge – All About Financing Single Family Homes with Government Subsided Fannie Mae/Freddie Mac Loans

Fannie Mae/Freddie Mae Loans currently at 10 loans or 10 golden tickets
Some Credit Unions have portfolio loans but its all going back to the Government
As of 4/2017 – 0 to 6 rentals is in one book (guidelines) 7-10 is in the other book
1) Credit Score – 720 or greater in spots 7-10
2) Assets – Liquid and Non-Liquid for downpayment (must be sourced and seasoned 2-months liquid) and cash reserves needs 1-6 liquid or non liquid for subject property needs to show 6 months PITI plus 2 months for each other property in addition. For property 7-10 you need 6 months PITI for all properties
3) Dept to Income (DTI) – 50%
We get to use 75% of the supposed rents as income in DTI
LOE – Letter of Explanation
Price adjustments
30 day rate lock
Timing the appraisal
Portfolio loans
Delayed Financing

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Podcast #49 – Fundamentals – Why not to buy cheap $50K properties

Why don’t buy Turnkey under 50k.
1) not worth financing… If your not financing then what’s the point
2) bad tenant quality
3) no exit strategy because no one will want to buy it other than a sucker investor

I am transitioning to MFH syndications and selling my 10 B Class properties in Birmingham/Atlanta/Indy (rents $900+/month). They are going to go up on Roofstock.com for investors to purchase at 1.2M asking. The highs are sorta mediums and the lows are lows 🙁

 

PS: There is no such thing as turnkey. Check out these disaster photos… https://photos.app.goo.gl/R4PZLuOLGHONO5Rl2

And always but with inspection and appraisal.

Let me know if you would like a referral to any good turnkey providers

 

 

Podcast #47 – Fundamentals – City Fines, Special Webinar Announcement, Dealflow

I am opening the kimono and getting naked… I am hosting a free webinar showing my 2017 results from my 10 SFH personal portfolio.

WHEN: 6PM, Monday April 3, 2017

It is only available to those who have signed up for the HUI Deal Pipeline Club. Click here to sign up!

Complete Private Form to get on the Guest List:
https://docs.google.com/forms/d/1gulyiaz7_gb8koqGl91bGPz-mdwlBVz-PcvXDOXOL5Y

You will learn the following:
-See how I use excel to track each property performance per the Schedule E
-See how I track overhead ie meals and other fun purchases like my beloved Apple AirPods
-What metrics I keep track of
-How much money I made last year
-What was my average returns
-How many of the properties actually lost money
-This may never be seen again! – I do not know if I will release/record this to the public for obvious reasons so this may be the only chance for you to see this.

Please reply back to me to unsubscribe and I will not email you again.

Check out the first few foundational podcasts and then start on this checklist:
https://docs.google.com/document/d/1HE9pEJU9s8IZWvQJ-rNOH8qPxCtr9100i9GFiaeVaYQ
And if you need help starting a SFH portfolio or Turnkey Rentals…
https://docs.google.com/document/d/1AuiPk8ABaA3vu1VzbUsfRiFQLEt-LXtUfI6GcwxgnsE

Commentary of the market from my crystal ball:
The Fed and Executive branch are in conflict. Both want control and want to wrestle control away from the other and make the other look bad.

Look out for instability in China as it might be the trigger for economic weakness.

SPC038 – Fundamentals – Insurance w Ed Babtkis – Deductibles, actual cash value vs replacement cost, and much more

 

1)   Why are some policies more expensive than others?

Coverage, deductible, location

2)   What is the difference between actual cash value and replacement cost coverage

Actual cash value will depreciate the claim depending on how old the house is, replacement cost will pay up to policy limits if you rebuild

3)   Why should I care about liability coverage

Many investors will be wiped out if sued if there is a major occurrence on their property

4)   How is coverage amount determined

Many providers have their coverage methodology determined by software that takes into account labor rate and material cost per zipcode and its usually too high. Since premiums are computed based on coverage amount this can be a critical pricing component

5)   Brief discussion on flood insurance

Lender required if in flood zone, if cash purchase owner should at least know if property is in a flood zone or not

6) Shared blanket programs vs Individual policy for each property

Most of the programs offered outside of a couple are shared blanket programs meaning you are an Additional insured vs the “Named Insured”. This means less rights when a claim occurs, kind of like giving someone a power of attorney to negotiate and received an insurance settlement on your behalf

Start Here

“My wife is officially is quitting her job at the end of this year. Thanks for helping us be able to do that. One of her friends had to go back to work 10-weeks after having their second kid because they need her income to pay the mortgage. It makes me cringe just thinking about that.”  –Hui Deal Pipeline Club Member

 

****UPDATED 2/2018 w/ Quick Start List!!!****

Welcome if you are new! And welcome back… here is what I have been working on…

1 ) Just closed my second syndication in my own name. If you want access to these opportunities they are only available to folks with a pre-existing relationship. So sign up for my Hui Deal Pipeline Club and setup a time to chat.

Hui Deal Pipe Club acquisition stats (Estate-2016)- Acquired over $55M dollars of total real estate and $5 million dollars of funds raised.

2) Working with my coaching clients and Starting group coaching. Honored to be part of this paid Mastermind. Email if interested.

3) Moved to Hawaii! Waiting for the right deal to come along in this sellers’ market and ponder life.

4) Analyzing just 5 MFH deals a month for my own deals (quality over quality). Finding another deal I can partner with.

Goal: Turn “C” and “B” class properties, 60-300 units (stabilized with value-add opportunity) with at least 75% LTV/25 year amortization. We plan to hold 3-6 years and sell when we have doubled our investors’ money. Utilize Non-Recourse debt for extra security.

Buying Criteria:
Seeking MFH at least 60 – 250 units.
1. Value-add component: typically 85-90% occupancy for non-recourse loan & discount based on condition or motivated seller
2. Price: $1,500,000 – $9,000,000, per unit cost under $55K.
3. Location: secondary and tertiary markets across
4. Class: D/C/B Property in a B/A neighborhood

Checking out properties with Patrick Herbig

Current holdings as of co-owner of MFPE Investments LLC (1200+ units in OK, LA, IA, TX, and WA).

 

I read a book called, “The Millionaire Next Door” and it explained why my pain points were motivating for me, and how I channeled that  frustration into something productive…the desire to make my family proud and ‘come up’ in life and pull my family into a better socioeconomic situation, and to ‘have what others have but i never could’ but somewhere along the way, I learned quickly that the ‘having of stuff’ is not what brings happiness so I dont pursue the shiniest of immaterial things… just the MED…. minimum effective dose of what I truly want which is surround myself with a few quality people and necessary things to subsist on than a bunch of trendy new things and fads that will fall off eventually” .  –Hui Deal Pipeline Club Member

Networking with other Buy-Hold investors I discovered two things:

1) Passive investors are hard to spot out among the typically ‘active’ RE crowd, therefore trading best practices was very difficult and

2) Passive investing is often boring since this is not a get rich quick method of building wealth and uneventful (if things are going well there aren’t too many cool stories).

This podcast and blog are meant to distill content just to the golden nuggets for the passive Real Estate Investor.  I plan to go beyond the newbie tips that clutter the internet and cocktail parties because lets’ face it, as a passive investor your time should be spent on things that you love to do and those who are important to you (not trolling real estate internet forums or making makeshift plumbing repairs on your property).

As I get more experienced, I recognize that there are a lot quicker ways to make a lot of money in Real Estate such as apartment investing, flipping high-end properties, or development but for the time being I have a full-time job that is alright and until that changes this is the path that I have zeroed in on. So if you are like me, join me on this train and if you don’t like your job and want to quit you can get on board too we will wake you up when it’s your time to escape the rat-race.

Real Estate has empowered me financially I wanted to give back to the investor community.

My Motivation For Creating this Site:

1) Begin with the end in mind and decide now what you want your obituary to read. We are only here on this earth for a finite period. I like this picture because this is what will probably be on the welcome table at my funeral. I hope you can make it! Rich Cohen wrote that there are four rungs of being remembered after death: “newly dead; dead but remembered; dead and all those who knew you dead; dead and all those who knew those who knew you dead.” In terms of YOU…All that matters is what happens when you’re alive. Your legacy will offer you no pleasure after you’ve passed so live how you dream but know that there are some unconventional paths that you have to take (like buying cashflowing rentals not in your home state). And for myself…fame will do you no favors for me once I die but at least people can use SimplePassiveCashflow.com to get out of the rat race. And if that does not get your going listen to the wisdom of Frank Ostaseski.

2) Create a repository of information where my unborn children or others can reference with some context into what I was thinking. Similar to Seattle Seahawk, Marshawn Lynch’s “Beast-Mode”, I have tried to live my life in “Legacy-Mode”. And I really want to have a real book!

Why a Podcast?

I jumped on the podcast ban-wagon in 2007 while I was working on the road when I did not have a friend near me. It got me into Crossfit in 2008, Paleo in 2009, Real estate investing in 2010, intermittent fasting in 2013, internet marketing in 2015, and led to meeting and creating friendships with a lot of you because we are aligned on the same wavelength. Yes… The phrase “we met on the internet” is totally acceptable! Obviously, a few of these interests have come and gone but in the macro sense, podcasts have instilled a lifelong interest and ability to learn.

Vinney Chopra calls it Automobile University.

When you ask a kindergartner how do you make money? Why don’t they say “invest in cashflowing real estate?” Because their parents don’t have a clue!

3) While I am alive I want to teach/empower others to fish for themselves. In real estate, we use leverage and by teaching others, I am leveraging other people to achieve their financial goals in hopes that they will pay it forward. I poke fun at MLMs a lot but I would like to create a pyramid scheme of philanthropy.

What is the change that you want to make in the world even if its a 1% move in the needle?  Financial education – people have such struggle so much to make ends meet.

I was baptized on Easter 2016 and searched for a way to give back.  I want to help others but I struggle with giving money away because I know I can grow my money much faster and I am much more frugal than any philanthropic organization. Bill Gates gave back only after he amassed a fortune. Tithing as you go along has a smaller cumulative impact. My end game is to give away my wealth to rightful causes via a Charitable Remainder Trust.

4) I hope my blog/podcast will help families realize the powerful wealth-building effects of real estate so they can spend their time on more important, instead of working long hours and worrying about their financial troubles. There are a lot of successful families with good jobs (teachers/engineers/programmers/finance) yet they struggle to make ends meet financially. It is their kiddos who ultimately get the short end of the stick(Cool graphs on this subject) Being a Latch-Key Child growing up, both my parents had to work and I was left home alone after school to fiddle with my thumbs.

With Real Estate you are able to grow your wealth exponentially faster than the conventional 401K’s and stock investing, therefore you are able to escape the dogma of working 50+ hour weeks at a job that is unfulfilling. And if you are one of the lucky ones who happen to do what you enjoy… well good for you 😛

Money is not everything but it is important because it gives you the freedom to live life on your terms. And we are being misled by the Wall Street institutions and prevailing dogma. Don’t listen to your financial advisor who gets paid based on commissions.

As a great time in history to be alive with general peace and technological convinced, I see a silent war being waged upon the shrinking Middle Class. This is the Civil Rights movement of my time. In a way, people are having a Stockholm Syndrome with Wall Street profiteers being the captors. Let’s work together to redirect money from the Wall-Street casinos and corrupt financial institutions…To help the endangered ‘Middle Class’ savers find safer, more profitable investments in Main Street opportunities benefiting local communities.

Why this podcast/website/syndicating deals is the perfect storm:

Self-awareness is truly the most important aspect of being an investor/entrepreneur. My job being a syndicator is to find opportunities and lead other investors like you to them and using my podcast and experience makes this a logical step for me. I always encourage folks to find out what their competitive advantages and disadvantages are. I can usually help point people in the right direction in a 15-minute free chat – Click here to schedule.
By doing the podcast I found that there was a lot of things and people that I did not know. As Robert Half says, “When one teaches, two learn.”
What are my downfalls?
Being an engineer and introvert communicating was something I was never good at. However, I think I get it after hearing these “straight from the 1990’s salesmen.” I don’t like to waste people’s time, no tricks, no games, the deals should sell themselves.
What is my competitive advantage?

1) I don’t have kids. After learning about hundreds of listens situations via free calls I hear that this sorta complicates things… 😛

2) I am an ISTJ (introversion, sensing, thinking, judgment abbreviation used in the publications of the Myers–Briggs Type Indicator). I don’t really know what the last three manifest in my life but I am a recovering introvert – a side hobby is this group I started to help others get out of their shell. I believe an introvert has nothing to do if you like people or if you are loud and annoying. Your affinity is determined where you derive your energy. Going to the day job and working with you know “others” was really tiring for me. The weirdest thing is that when I talk to others over the phone or in-person I get so excited and sometimes a little too passionate. That’s how I knew I was on to something. I’ll say it many times but what really fires me up is redirecting money from the Wall-Street casinos and corrupt financial institutions…To help the endangered ‘Middle Class’ savers find safer, more profitable investments in Main Street opportunities benefiting local communities. And it would be awesome to help out people in Hawaii where I now live where so many struggles with finances. I’m not looking to change the world just a portion of it.

3) I do recognize that there are seasons in life and right now I am accelerating my syndication business along with my own investments via my Hui Deal Pipeline Club. Sign up here.

Right now my goal is to get to $10-15k per month of passive cashflow as fast as I can. Once I get there, I plan to put things into cruise control. Sophisticated investors call this going from the “growth stage” to hitting “critical mass”. At that point, I will continue to help others get where they want to be via my syndication business which creates good options for passive investors with so little time on their hands. I trust that at this point deals and opportunities will fall into my lap and the Hui.
4) Some people say they work smart. Bust guess what? I work smart and work hard (2-4 hours every day after I get home from the day job). Right now I am working at a pretty unsustainable pace but I am motivated by being so close to activating cruise control.
5) I don’t think binary. I see the world as shades of grey and zero-sum trade-offs when win-win deals can’t be made. I am able to evaluate deals analytically and make holistic decisions. I seem like a machine sometimes but don’t act like one 😉 Robert Kiyosaki says “there are always three sides to a coin.”
6) Integrity – Through these podcast interviews, I had the idea beat into my head not to chase money. I did it in my W2 career in construction management trading money for a poor quality of life working in something I did not like with people who were jerks. Being a younger investor, I realized that was going to hit “zero-gravity” or financial freedom well before my 40s. And then what the heck would I do??? I plan on doing this for a while… at least a few market cycles. I always wanted to act with my investors best interests in mind. The last thing I want to do is not act ethically and have someone put a hit on me as I check my mail at my PO Box.

“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.”
If you are new to the site here are the recommended posts to read if you had a couple hours:

 

 

 

“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.

 

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

 

Let’s work together to redirect money from the Wall-Street casinos and corrupt financial institutions…To help the endangered ‘Middle Class’ savers find safer, more profitable investments in Main Street opportunities benefiting local communities.”

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