April 2022 Monthly Market Update

What’s up everybody. This is April 2022 monthly market update where we go over some of the highlights that I saw from the news this week and a little bit of commentary, not too much politics. Cause I think that’s a little bit of a waste of time. But it’s sometimes fun to talk about, but if you guys have any questions, comments, feel free to type it into the chat.

This is being put out in our Facebook group. And it is also being replayed on YouTube. And also you guys are listening to this on the podcast form, which by the way, we have a great whole presentation with highlights and experts from these articles. And most of them have a bunch of graphs and graphics.

We all know how you guys like that type of stuff. So if you guys want to come on over to the YouTube channel, if something was interesting to you or you want to bookmark it or check out all the past investor letters of these monthly reports, that we upload every month at simplepassivecashflow.com/investorletter.

Welcome everybody. This is the Monday market update.

Alright, before we get going into this, if you haven’t yet checked out my Amazon bestseller book, you can get a free e version at simplepassivecashflow.com/book. And we also made a financial e-course for the new people. We talk lot about simple passive cashflow is for folks who have pretty good financial skills.

They’re putting a lot to their retirement accounts and they’re buying houses, even though we’re not huge fans of that, that’s all what we were taught. But if you’ve got a niece and nephew, you get a kid that’s just learning the basics. You can text the word BASIC to 3 1 4 6 6 5 1 7 6 7.

And if they’re a little bit better than basic, or, their net worth is anywhere from zero to two quarter 4 million, I suggest downloading the free remote rental lite e-course, which you can get by texting the word REMOTE to 3 1 4 6 1 4 6 6 5 1 7 6 7. That’s enough of that. If you haven’t met me before, my name is Lane Kawaoka.

I used to be an engineer, but currently all a little over 7,000 rental units, 50 projects you’ve worked on and a billion dollars plus of assets under ownership. At this point, I run the family office ohana mastermind, which at this point we’re getting closer to a hundred members. We had a bunch of people sign up these last few months.

So we are definitely hitting that scale. If you haven’t found your tribe of high net worth accredited investors and you’re tired of the same old local real estate club, which a bunch of broke guys flipping houses and paying a whole lot of ordinary income and just haven’t found that good ways to leverage their home equity.

And they believe in paying that debt off. You need to join our group again, go to simplepassivecashflow.com/journey. We talk all about all this stuff, but in much detail that we talked about on the podcast. So first thing. New IRS rule offers higher penalty, free withdrawals for early retirees. I’m not a big fan of retirement accounts.

You guys can take a look at my huge argument on this in summary, the reason why I don’t like them, cause you’re just delaying your taxes and this is what the government wants you to do with. Be taking all your income. Maybe 20, 30, 40 years from now, when the taxes brackets need to be higher while you’re making more money than, and it doesn’t allow you to get all these passive activity losses, which if you haven’t heard of this, I would go to simplepassivecashflow.com/tax. Read all about it.

Because this is what separates the wealthy from the high pay middle-class who pay a lot of tax. Especially if you’re able to implement real estate professional status. But hey, a lot of you guys have big retirement accounts because you guys were good little boys and girls out there and did everything that you were told to do.

Now there is supposedly a new rule that’s going through where the IRS is going to allow higher penalty, free withdrawals for early retirees. These are going to be known as 72 t’s. There may be a better option if you’re age 55 or older with the 401k permitting early withdrawals, that’s because of another 10% penalty exception.

So you can get away from that 10% penalty. But in our world, we don’t care about the 10% of the time. He is nothing. That’s in, normal financial world. Everybody freaks out about the 10%. Oh no, like 10%. If you are out of retail investments where you’re getting higher returns, you should be able to recoup that 10% penalty yet, half a year, years time.

But anyway, going back to this new rule, they call it the rule of 55, allowing you to skip early withdrawal fees from your current 401k or 403b without leaving a job at age 55 or after if you guys want more news on this CNBC, we have all the links to all these articles in our newsletter, which you guys can join and get access to.

We send out all the links to all these articles. You can read them yourself at simplepassivecashflow.com/club. Next article here, RE Business online reports don’t just accept your tax assessments. So this is something we do on our large apartment complex and something to think about if you’re a little landlord and a lot of the home values went up and a lot of municipalities and cities and counties are finding ways to extract all the money from their property taxes.

And one of those ways, really only other there’s only a few things they could do. And this is one of the biggest ones is being more aggressive increasing that market value and the tax assessment value to make those a little bit closer, what we do is we’ll try to employ different tax attorneys to fight these on our behalf.

When I own little rental properties, it’s small potatoes, you are lucky to get anything. You’ve got to submit evidence, there’s a lot of documentation out there. I’m sorry. I’m not super helpful on the single family home side that’s why I say don’t buy little rental properties because you’re screwed, but on the bigger stuff, you can hire larger professionals to do this on your behalf to fight this for.

I will say this is actually one of the problems is a good problem to have, but lately a lot of that, the property values that, we bought just last year, went up maybe 10, 20% and the bad thing is that it’s the taxes. One little line item in the whole underwriting is going up by a large portion because these tax assessed values are being pushed higher.

And so it’s taking a little bit of cashflow out on the long run. Yeah. You’ll recoup that. And it doesn’t really matter because the price of your property, which is the whole point while you’re buying. Even though this is simple passive cashflow, right? I made the names of a simple passive cashflow before I learned about force appreciation course. Greater Houston partnership reports, ExxonMobil to move headquarters to Houston.

From there Irving, Texas headquarters in December of 2020, Hewlett Packard said they would establish their global headquarters in Houston also. And May 2021, NRG energy said they were also consolidate there also. So that is some news on Houston.

 

 

ITR economics. It has a little commentary here on the whole Ukraine war and there’s already dis inflation in the U S prior to the Ukraine, or, in, as you guys know, inflation has been running rapid.

We’ll just go with their numbers here, which I think is a little conservative 7.6%. This is obviously unprecedented. Normally think the fed likes to run things at 3%. Now, prior to the Ukraine war all the anticipation was that the United States was going to start raising interest rates, which they do that because the economy is doing really well. Now, in the wake of ukraine war, which is typically bad news, right? Wars are typically bad news because mostly it’s uncertainty. One would think that the United States would pause on those interest rates. High is just for the time being, we don’t know what’s going to happen, the stock market reacted positively for the most part, although it’s been volatile.

I’ll be honest. I don’t really follow the stock market. And a lot of my investors, they try, they eventually pull out all that stuff at some point, get into real hard acids that don’t go up and down with all these, emotional swings. ITR is saying that the Germany Connie has a high dependency on brush for energy.

France may be impacted to a lesser degree because France has remained steadfast in its reliance on a nuclear power. So one of the things that you’re probably seeing at home is Russia has a lot of oil. They’re probably one of the top three oil producers. And with all the sanctions coming into play United States oil, needs, the supply went down on that side.

So that’s why you’re seeing the prices at the pipe. No, it’s not particularly because of Biden’s fault, even though people like to put those, blame it on stickers at the puck and not a proBiden , not against them. It seems like a nice guy, but it’s a little more complicated in that folks. Like it’s a, you can’t just blame it on one dude.

It’s like he has that much power as a prison anyway. Since then maybe I shouldn’t say that, cause I’ve contradicting myself Biden or we’ll say the leadership of the United States. Decided to release about a million barrels of oil outside of the reserves. And I did a little digging.

I was like a million barrels of oil. Oh, that seems like a lot. We’ll be without a reserves to fight a war if we have to at no time. But when I found out there several places, there’s a handful of places around the United States where these million barrels, oil plus each one having 200,000 barrels of oil.

And my next question, obviously, as an engineer was how much barrels oil did we use a day? It turns out we use about 20. So by throwing in a million barrels of oil, that’s about a surplus of 5%. So we’ve been seeing some of that price at the pump come down slightly, but we’re not blowing our load on our reserves.

And I thought it was interesting. It was really hard to tell how much million barrels of oil we have in reserves for obvious reasons, national security, but I was able to ascertain, or I was able to guessed that it was somewhere between the magnitude of a half a billion to a billion was my guess.

And I was interested because, this is a question that we have a lot in our family office group. And myself personally is how much liquidity do we have on hand at all times for an opportunity now was passive investors. Really a lot of you guys aren’t really going after distressed properties, right?

You don’t need half a million dollars to go buy a vacant piece of land that came up because it was amazing deal. Lot of you guys are into the market for the most part. And if you look at, what the $10 million plus families in tiger 21 are doing, they have very little cash. A lot of them just less than 10%.

They’re not hoarding cash. Like how a lot, I think a lot of unsophisticated investors. Or people trying to sell you on gold and silver type of stuff. But that was just a little bit of takeaway that, America, how does the America horde a precious commodity such as oil? It seems like they’ve got a lot of that, it just in case we’d never made any oil and we consumed 20 million barrels a day, that would probably go through that full stash.

Yeah. It’s months upon months. So that made me feel a little bit better that Biden wasn’t just, or I shouldn’t say that the American leadership wasn’t just putting in a million barrels or just to save us 50 cents at the Palm beach so that we don’t get all upset at that. Ideas or assumptions that, the Russian invasion is not spread past other countries, especially into the NATO, the side, the hope is that their weapons are not deployed.

We all should hope, probably a low chance of that happening. But yeah, it’s, it should bounce back to that at some point. Charlie Munger Warren Buffett’s right-hand man said that he says, crypto traders want to get rich quick without doing anything for the civilization. And this really, I applaud it very heavily because, that’s what it gets the in like people who buy things.

So high traders, or they buy crap on eBay selling on Amazon, or generally like the Bitcoin. People like, they’re buying things and they might be making money, but they’re not really adding value to society. Whereas, yeah. You have a business you’re obviously adding value into the system.

When somebody pays more for, which is you’re basically paying for your sweat equity. You’re rehabbing apartments, one unit at a time, that’s obviously adding value because the greater civilization has better rental stock. So I really like this, and I’m wanted to share with this because, and there’s a lot of people out there that just trying to get a buck, get to a million dollars, gets to $2 million net worth. But at the end of the day, I think a lot of, the higher net worth investors agree that it’s more about impact. And if you don’t have to make a huge impact, but at least put your dollars on something that’s going to do good on.

All you guys are, who cares? Where are we going to put our money? What’s the next article here? So Washington post says that investors bought a record share of homes in 2021. Here’s some of the the top markets Atlanta, Charlotte, Miami, Jacksonville, Phoenix, Orlando, Detroit, Las Vegas, Tampa, Nashville. You can see how them taking up.

Economic innovation group reports which metros have led the recovery so far, because, in 2020, there was a bit of a up all the sea with the pandemic. And now we’re seeing a bit of a, or a huge rebound actually large areas of the south performed very well including most of Florida, Texas.

Areas like Mississippi, Delta, Louisiana are far behind their pre pandemic numbers. And we’re actually looking to sell some of those Mississippi assets right now because of that. And that’s just one of those things that, you never know where you go in, you do your due diligence, but the nice thing is, you don’t lose money and I think that’s why you invested in.

Also in the report. Other metros that I mentioned, Austin, Salt Lake city, Dallas, Tampa, Phoenix, Jacksonville, Raleigh, Nashville, San Antonio. In 2018, Austin’s rapid growth sought overtakes, low growing, even Ohio in terms of total jobs to become the country’s 25th larger employer. Cleveland job growth flatline in 2020 and has made some small gains to 2021.

Here’s a little bit of I guess it’s not working, but it was this cool Jeff that we put together. And we put a lot of this on our social media. Or on pretty much all the channels, at least the team puts us on their Facebook, Instagram, YouTube, I guess if you’re a podcast listener, you don’t see this, but you’re basically seeing a gif file of all the little dots representing people moving out of California, or are they going where well, they’re going to the Sunbelt states of Phoenix, Texas, and to get out of the high pricing.

All right arbor, which is a direct Fannie Mae, Freddie Mac lender reports what’s driving the single family home pool. They’re saying that single-family tenant base continues to evolve and expand as family forming millennials seek more space. Other key demographics, such as aging, baby boomers, who are increasingly less likely to move retirement homes at gen Z years with a greater appreciation of suburban lifestyles are expected to view the growth of single-family home rentals for four.

And the reason why we’re talking about single time home rentals, it almost mimics that of apartments and other types of investments. This is basically just the display of demographics. This is why we invest in this type of stuff, because it’s not a plant rocket science, it’s just demographics. In 2021 urban Institute project found that 8.5 million new households will be formed in the United States between 2020 and 2023. Many of which will be increasingly costs and strain from home by as borrowing costs are set to rise along record high prices. So introductory interest rates and therefore affordability. So you could have a situation where home prices come down, but if interest rates this is they saying.

Affordability, which is a relationship between interest rates and what people can basically forward on their monthly mortgages, could still be going up. And what they’re saying is population is increasing. So you’re going to need more supply plus and minus, especially on this lower end.

Wealth management.com, also talking about the same thing, single family investors continue to gobble up available home. That’s you guys, hopefully you guys learn from my mistakes. Don’t go on by 11 single family, home turnkey rentals. Great way to get started, but definitely not scalable, especially when you really figure out that these tenants are going to trash your house eventually.

Go through four or five evictions. You’ll get one of them. That’s reasonable. And then that cap ex tidal wave, that definitely gets you at some point. They’re saying the share single family of homes bought by investors has been increasing since their first large portfolio of rental homes were assembled in the wake of the great financial prices.

Average cap rates and rental homes drop even the long-term interest rates like the benchmark yield on the 10 year treasury grew over the same period, but where else are you going to get? You’ll that’s as safe as what I say, rising incomes from rents, make investors eager to buy or build new rental houses despite rising prices and construction costs to that from wealth management thoughts.

Arbor reports, top bar markets for multi-family investment growth, the Midwest multifamily market experience under the radar success during 2021 with Detroit, Indianapolis and St. Louis all posting some of the strongest investment growth in the country. Some belt ventrals continued to be a hotbed of investments led by Las Vegas, Houston, and Miami and strong economic recovery and population growth support a residential demand.

Again, Sunbelt, of course, you guys are live podcasts, listeners, come and check out simple. Passive cashflow.com/investor letter. We’ve got the slides for all of this stuff on the website that Yardi matrix reports, gateway market rebound. Record-setting multifamily. So option. So what they mean by gateway markets?

These are all the primary markets that people like to typically to live in. Like the California is that type of new York’s. They’re saying that although doubts about perspectives of large urban sub-markets for me far from resolved data dates that demand for apartments. Cities reopened services and amenities in 2021.

So it, beginning of 20, 20, middle of 2020, everybody was raking off the San Francisco’s. I would probably one of these, but, I do very well that they’re coming back. You’ve got to take a place like New York that gets beat up because, they got, definitely got hit hard by that first wave of COVID, with all those unfortunate deaths that happened and the proximity of all the.

A lot of people got out of town, literally, especially without all the cool things that track you to the city. But now that things are opening back up, you’re seeing this rebound start to happen again. And this is a time when you should be buying, I think, right when something gets beat up, not, you don’t want to be somebody who’s been like this has been going on for the last eight to 12 years.

Now, the times they get in, that’s what the unsophisticated investor, the retail investor. Wealth management.com reports multi-family developers. Try to keep pace with demand. Many apartment developments that start construction today are less likely to be leasing units within a year or two. We’re just got built with a 230 UNX apartment complex that should probably open tail end of the summer.

We’re anticipating certainly the subs on that. And we started at about a year. Solid economic growth, continued strength and labor market high single family home prices and international migration will help up demand. Basically demand is outstripping supply. Therefore rents are rising quickly and there’s no, no signs of stopping in the future.

As what’s coming online in terms of permits and construction. It’s just not filling the pipeline, the need for the growing. Multi-housing news reports at Blackstone bunches, April housing Blackstone is the big, huge 900 pound gorilla. These guys go, they have huge amounts of cash and they typically make long-term smart pools, except when they get into like little landlord owning and they think that they can operate it pretty well, but they have so much cash.

It doesn’t matter anyway, but that’s one of the mistakes that these big guys made some mistake. So Blackstone real estate investment trusts. These are the one is very small part of their company. Buying up properties is called April housing, a new portfolio company that will focus on affordable housing across the United States.

Properties are in major markets around the country, including go figure Dallas, Houston, Austin, Denver, Miami Fort Lauderdale, Florida, Los Angeles. Answer. This is the fourth major tactical move made by Blackstone within the multifamily sector in the past two months. Okay. Blackstone multi-family portfolio, total 130, 3000 units as of September 20, 21, comprising 50% of its assets.

They’re a big company and there’s a bunch of ’em, That many units, when you really think about the whole entire world or country. So there’s still place for the little guy, commercial property, executive reports that how they used to market office is being reset. I just did a video where we walked through our Westheimer assets, which is right there next to the Galleria.

You guys should be seeing that come on the YouTube channel here shortly. Companies that individual relocating from west and east coast to Houston, the boom is a result of Texas and our city of Houston having no state income tax and a diverse employee pool and a business atmosphere.

Additionally, recently completed class a office properties with strong occupancies with long-term tenancy are anticipated to trade at near record and record pricing this year and into 2023. And in recently constructed building investors or see potential for long-term tenancy and garner premium rental rates.

The spread of values between value add and class eight categories will be significant in the Houston office market this year and into 2023 Adam mortgage reports, mortgage lending across us drops at fastest pace in almost three years during the fourth. This is down 10% from a third quarter 2021. So this basically meaning that people are starting to see the interest rates go up and there’s less of this scarcity model tactic to get people to eat better refinance now to capture those all time low rates,

one of the big way they were capturing the mortgage. Was he lots? They’re down a little bit too. Who knows? It could just go up from here. It could come back a little bit, and then the, the mortgage lenders get back on their marketing force, keep telling you to refinance again and again, all I got to say is don’t be that person who just get suckered by a lower interest rate and a lower payment.

Be careful what they’re doing sometimes. So spreading your mind, you might’ve been down to a 20 year out a 30 year amateurization. What they’re doing is they are maybe spreading you back over to a 30 year mortgage or bringing you from a 30 year down to 15. Of course the payment has been, people are at that point, these guys, they’re just like property agents and brokers, they’re just there to get the origination fee.

The answer is always, yes, let’s refund. Joint center for housing studies of Harper university says that millions of ventures fall short of a comfortable standard of living that love Harvard. They actually do some really good articles. The sons is this more of a, like a kind of like the one, but, we put it here and just want to really point it out, raising the minimum wage or offering a universal basic.

Good also help more families reach a basic, more comfortable setting of living is what they said. It won’t go there. Cause that’s the socialist view, but I guess I’m fortunate or it is what it is. Like the pandemic was basically a socialist system for the wealthy or the wealthy got all these kind of breaks and it was in the lower end.

The BC class renter got. Especially now because they’re unable to invest in assets that go up with the pace of inflation. And that might be even be you up. There has a lot of equity in your house and just sitting on cash. Inflation is Robin your money, maybe 7%, maybe in 15%, every year.

Multi-housing news, wind full tell to apartment conversions make sense. So you can also go both ways I’ve seen apart. Like you don’t find. Conversions go to hotels. Now that requires a heck of a lot of CapEx, this is the unit like a crappy old two-star one-star hotel. Like a, not, maybe not a comfort in, but like a days in, I think that’s a little worse.

It gets converted into a garden style apartment. Basically. It’s more some market, which what do you need in the area and what usually drives these things, which is hard for investors to determine. Are you really getting a good deal, right? Or the person that you’re buying the asset from the distress. So low interest rates have a lot for cheap financing and like oppression and cap rates.

As a result, housing rentals land values are at all-time highs, despite points of the pandemic fed and monetary policy has been nothing but a common date of during this time to start off in and recession while converting hotels is not a traditional development play, it does provide the opportunity. For innovative developers,

Redfin reports, the record share of us home buyers are looking to relocate as prices skyrocket. This kind of mentioned this in the other slide where a whole bunch of people, we gotta just, California, but they’re moving. Everybody’s moving around. Buyers are flocking to Miami, Phoenix, Tampa, and the basic these buyers are moving away from.

Markets, exactly what we said, what rising interest rates mean for apartment con cap rates. This is reported by a national multifamily housing council. So interest rates should be going up and cap rates are going down again. I’ve said this many times, but as investors, you’re making money based on the spread between what you’re borrowing at and what the cap rate is.

And they’re pretty much always be a Delta. Knock on wood, right? It’s just saying there’s always going to be gravity. And then you apply leverage and that’s how you make your healthy return there. If higher borrowing costs are offset by higher growth, rinse in rent and net operating cap rates should remain on change.

In other words, cap rates can be thought of as a real rate of return. Which are only affected by changes to their real interest rates as the article. I’ll summarize that. And basically what it comes down to is, people freak out the interest rates are going up. They’re going up because your government, your fed has deemed that the economy’s doing well.

So therefore they need to cool off the economy. And when the economy is doing well, rents are going up and you as an investor are leverage on the rents. Okay. Is the rent screw up your net operating improves. And then that is a huge leverage play to make more money on that ankle. And even if you have to pay a higher interest rate, right at that point, if interest rates go up, you probably shouldn’t be should sell.

Who cares about your interest rate at that point? But you’ve cashed in on those higher rents or in other words, higher net operating income, which takes. A little bit of a leg time, but it’s pretty quick stuff to see that cool. But that’s value add real estate for you now, if you are by hope and create a God that my property appreciates, like something like I was from 2009 to 2005, by 2015 buying little rental properties.

I didn’t do any value add to them. I just buy it and hope that the price went up and typically it does so not. But when you value add properties, you don’t really care what the interest rate is because you’re making so much money on the value add and increasing the value of the property. Whereas if you play around with the analyzer, cause you guys haven’t gotten my single family home analyze where those you guys still looking to buy local rental properties.

You guys will notice that the interest rate has a huge part of the. Impact on the rents. If you have a thousand dollars a month rental, I’m just guessing here, if your interest rates goes up by a half a point, now your cashflow might come down by $50, $75 a month. And if that’s the case, then yeah, that’s a huge part of your cashflow.

And most of these properties these days, they just don’t cash nearly as much. Gone are the days of find three or 400. So three or $400 a month. Cashflow, if you guys need to analyze your hair, you guys can download that@simplepassivecashflow.com slash analyzer, but it’s a paradigm shift when you’re in value, add real estate and you make, you see how much money you’re making.

If you take a little hundred unit property in your value, adding five units a month, and that increases the rents by a hundred, $200. You increase the value by $500,000 a month, times 12, you basically creating any divided by a cap rate of five. You’re basically creating like $200,000 of value every single month, every month.

And then after a year that’s a couple million bucks. And now you start to realize what Lane’s talking about. It gives a rip about that interest rate. At that point, we just created $2 million. That’s a lot of, and then you do the sensitivity analysis. Okay. We were paying for 4% and now we have the refinance that let’s just call it 7%.

Your debt service goes up. But when you look how much money you value at that property, it’s trumped by that number by.

Oh, Hey Sean. Thanks for shout out there.

Oh do you want to mention like New York city is increased simply because apartment prices were already on the decline in 2019. Before the us outbreak of COVID-19. That, that market and places like San Francisco and east bay and San Jose, these are called like the low cap markets. And now personally, I was like, yeah, why would you want to invest in low cap markets?

It’s stupid. But now I’m seeing the reason why you do that in a way magic. You add a whole lot of money, like 50, a hundred million dollars. At that point, you just want to store your cash somewhere in a stable. They had gone to pull down Waco, Texas, or Boise, Idaho. The reason why the caps are so high is because it is risky though.

And the banks don’t like to lend to those types of market, because they’re risky. They will give much better terms in these low cap type of environments like San Francisco, New York, because it is a lot more of.

Ari business online reports doing well by doing good transforming class B and C workforce housing. There’s an overwhelming demand for class VNC assets. Why a large portion of new development over the past decade has been classic luxury. That class a makes up only 20% of the total rental market. Most gets, I don’t understand why classy works.

I get why it works from like a syndicator standpoint because it looks really pretty and pictures and unsophisticated investors like pretty pictures. So their spouses think they’re stupid for investing in like a garden style, people, overalls color, or class B or C apartment, those in a normal recession, those are the ones that kind of get hit the hardest.

If you’re not in the ideal, the best areas. Continuing on the article investments in these types of properties can earn significant above average ROI. This is not through only through passive quarterly distributions, but also end of cycle returns upon the sale of property. Yeah. Are you business has the right idea?

But we are running up to the end here. If you guys have any question comes in, if not again, check out our family office. So mastermind or in our circle for our community. I probably one of the biggest communities out there, I don’t know any other community that has brought in over $140 million to their investors to buy over a billion dollars of assets.

Most people say have you heard of these guys, have you heard of these guys? And I’ve even bought over a $250 million of assets. No, that’s what the quarter, what we have, but whatever, I guess numbers aren’t super that important I guess just being sarcastic there by the way. But again, you get a free copy of my book.

 

 

And this is the section where I go into some personal stuff. W we model this on between Robbins six, B. Now the first one is growth. What are some things I’m working on? So the mentioned earlier that 230 unit in Huntsville, Alabama is almost complete.

We want to do like a little tour in the summer time is what I’m trying to make happen. And, oh, we had a question here. Isaac says taking a break into deals. Why is that? Send me an email. Isaac, we can have the team send you the webinar should be in the investor portal for you guys, but we did an hour long or 40 minute webinar on exactly that in short, a lot of the properties we bought just a year ago, went up like quite a bit, maybe 10%, at least none of that, you can’t really. Til, through refinance, it just doesn’t make sense to, pay the lending fees to pull out the equity. But the equity is there by pure market appreciation, a little bit of sweat equity, hard work. I say that I’m joking me there too. Do you think we work hard, but it’s just hard to pay pricing on new assets like that, because let’s say.

There are a lot of amateurs that have own less than a half, a billion dollars of assets just buying whatever these days. And it’s harder to make these deals work. Interest rates are going up, most of the deals today are value, add originals so that it isn’t matter, but it’s just getting harder and harder, with the success of some developments and those types of.

Seemingly higher risk, higher return type of deals. Still not like they’re not out of left field for sure. That’s why you’re invested the states. Nothing crazy, still, even the more exotic type of stuff or the chocolate deals, but we’re just taking a pause at this time, be evaluating things, but yeah, check out that webinar.

We did, shoot me an email or send us a, you my team at simple passive cashflow that. We’ll send you guys that webinar. And we also did a webinar since we are exiting a few assets. People are going to have a healthy amount of capital gains and depreciate your capture. What do you do?

So we got a webinar on that talking specifically about that deal. So I think first for some people, you would want to see it, a real example of the, understand it. If not, you just listen to a podcast talking to URI, which can help. But, I think when you talk real numbers on an exited deal, it really makes this stuff come to life.

And this stuff is really simple. Folks. You guys are all smart people out there because we’ve got a lot of engineers Isaac, you got that PB. You’re a smart guy, but until you get walked through at once, it’s hard to pick up and that’s why I do what I do. This is the contributions.

Man, these financial planners, they’re just guys selling you on securities. And I don’t like these guys, right? Like they’re just selling prod retail Baltics. And this is what’s all messed up with the financial world is that there’s all these like products where most of your returns are taking up and hidden fees carried interests.

And I would say. Majority of returns are taken by buddies, big wall street companies and the commission. So this, the agent, the financial planner find me a financial planner that actually made their money, not by sewing people, commission products. But some, how do I get some significance? We’re finally seeing that a lot of people pulling money out of us equity fund.

So we’re seeing slower inflows into that type of stuff as shown by this, visual capitalist infographic here. Andrew, I really like the fact that, a lot of these deals are finally cashing out. This one deal that we did in. We didn’t have cashflow for the whole time. This was actually in a pretty rough area.

I made a video maybe three years ago where I had like spooky Halloween music. We released it during Halloween and it was a joke. Some people actually got really afraid and that’s why I don’t do that anymore. Although there is going to be some videos coming out later, maybe next month, where we went through some of the Houston assets.

And, for those are the. In those don’t get super long. We’re just trying to make it fun. You had some really ugly turned apartments where we’d know the tenant got evicted, just left it in shambles. There’s like cockroaches and, it’s just made for YouTube guys. Like this is pretty common stuff in our business, turning these units.

But again, this is why we make the big books because we are rolling our seasonal. Putting value into properties and making the world a little bit better. Uncertainty, man, every time we do it, the highlight this was this was actually one of those deals. That’s exiting. People, came to my house. It’s hard to see, but you can see on the screen there, this is a deal at El Paso that also didn’t cash flow, but also at the end of. Exceeded performer by a long shot.

And I’m always like, man, I really like to work with people that kind of trust us and know that we also have skin in the game. That’s the way I tell people that diversify too. But I dunno, sometimes I get a little stressed out by this and to me that’s the on searching it. Like it really gets, until you go through a full cycle before you go.

See those K ones, it’s really not well. So I get it, but then that’s what the community is for. But I get a little search and T no, this is why you invest in those things. Even if it’s a development, which is seen as the more higher risks, at the end of the day, the lands for something and all the materials are worth something.

And until you buy the materials and put it into service you’re not making any. But the value is there. People wanted to buy our apartment for the apartment was even bill. That’s just how crazy this market is. And you can always find a point to sell these assets, whether it makes money or not apparently, but that’s funny why, like a lot of people are buying these class B assets for crazy prices.

That’s why we decided not to sell it. Not even built yet because people are willing to pay crazy prices, which I don’t really think buying this new class. They stuff really make sense, but it makes sense to sell to a lot of those guys. Whereas like crypto and NTFs, all this other stuff, to me, it goes up and down with emotion, just done with that.

I think today stock market went down 300 points know I stopped paying attention to all the headlines because most of the times it’s just something major trying to figure out justify what happened in the world. But yeah, real estate is a hedge against inflation because it’s a package commodity and it’s way better than gold and all this other stuff, because it also makes you income.

And if you can combine that with the fact that you can force appreciate the asset. What else can do it? You can’t value add. The close things out, what’s all without a love connection. Took my daughter to Aulani saw Mickey and Minnie for the first time, she didn’t know what the heck was going on.

She was nine months year old. She doesn’t know, but, I’ll be doing a feature video of this. So I found the way you can get really cheap. I’m going to call it Tertiary Disney vacation Timeshare Rentals. So you can buy it from a timeshare and that’s a rip off. You can also buy the timeshare from somebody else who realize that timeshares are stupid idea and they need to dump it.

You can buy it from one of these secondhand sites and even that’s a bad idea. I did another video in the rich uncle YouTube channel, which is separate from the simple passive cashflow channel that went down through the math of this. If say, if somebody bought, you can also rent out other people’s timeshares.

So if you have a timeshare and you don’t use the point, which is typically what happens, cause it’s real pain in the butt to use this and that nothing ever works. You can rent out your points to somebody and that’s usually will be my go-to recommendation is just go on one of these third-party sites and rent it from them.

What I did and how I got Aulani for $200 on a Wednesday night, Again, you gotta be, not have a day job to go on a Wednesday. What people will do is they’ll be sophisticated enough to rent the points from another timeshare owner, but something came up and they have to drop it.

And there I am the buyer out of their misery. So I like deals. I don’t like wholesalers who swindle people who don’t know how to read out of the only asset that they own their house to buy the 50 cents on the dollar to supposedly solve their problems and all that nonsense. But I guess, I dunno, maybe it bad buying a timeshare because typically the timeshare buyers aren’t super sophisticated, knowledgeable.

They typically get preyed on by the timeshare salesman, but maybe I feel just a little bit less guilty or the fact that it is a discretionary item to that. But anyway their loss is my gain in this situation. I don’t know. I just, I like to find deals, whether it’s apartment deal stay at Aulani or something really cool than New York city. A deal is a deal.

And I guess that’s what makes the world goes round or that’s what I enjoy, but I guess we’ll see you guys next month. Again, if you guys want to join the community, go to simplepassivecashflow.com/club and also you can get access to a lot of different courses we have on our members portal by signing up there and tell your friends about this group and start interacting. If you guys need anything, shoot the team an email at team@simple passivecashflow.com. And I’ll see you next month.