Hey everybody. This is the August, 2021 monthly market update. My name is lane Coca. I run civil passive cashflow.com owner of 6,000 units plus, and we are going to go and look at what’s been happening in the news lately. That’s going to be impacting investors. If you guys. Had a chance type of comment below, say hello.
And if we if you’ve got any questions, I’ll be trying to manage the comments and answer any questions you guys have, or if you guys have any fun comments, but you haven’t yet grabbed my remote investor e-course so this whole journey I’ve been on started in 2009. When I bought my first rental, then in 2012, I started to go invest remotely in Birmingham, Atlanta, and Indianapolis.
Created this e-course because everybody was asking how to do it. And it’s all the same questions over and over again. So I created this course and I want to give it away for free so you can pick it up by shooting me an email lane at civil, passive cashflow.com and put light in the subject line.
And I will get you access to that.
All right, here we go. What’s up, Jen hee. Hello, a numbness. Facebook. Yeah. How inflation impact you? It won’t, if you’re unaware of it, if not, it’ll just rub money in your sleep, right? Because if you own a million dollars, now that million dollars is probably going to be using fifth five to 10% of its value every year.
It’s ultimately your buying power. It doesn’t matter how much money you have. It’s matter how much the value that it buys. If you guys liked this you can check out the podcast that will passive cash. It’s all about real estate investing for passive real estate investors. And then it’s house flipping wholesaling burst stuff is more passive investing for folks with good jobs.
And it’s also on the YouTube channel for those of you guys are listening in the podcast, but here we go. We want to start off with a few teaching points that people have been asking the the last month and then we’ll get into the monthly market. Now, some people have been saying Hey, I found, some peoples pitching me this deal for 12 to 20% interest rate.
And if I’m lending money on a house flip and first question I asked is like, all right how much experience do these guys have? Because likely what you’re doing is like you’re buying crappy paper. If you guys are familiar with Moody’s S and P in. Credit ratings, they fail rate lenders, right?
And in the same way you could rate the the people you invest with or a house flipper. And a lot of times what’s happening is you’ve got super newbies who still work their day jobs and are doing this as a side gig who you could probably see as effort DP. And giving people really high rates, but, unsophisticated investor will just go rate chasing, but a smart investor will want a good rate, but more importantly, to be investing in a person who is experienced and good.
So maybe that’s an eight class paper in this respect where B paper. And, but that might be more of like a, five, 600. Interest rate that might come in. I got a lot of guys that I know in a mastermind used to be a part of that they can get 5% notes all day long from investors because they have a good long track record and a really reliable it’s the people who are brand new that have to pay 15, 20% plus and beyond the, where, there’s a lot of people that will like like white label and remark it a certificate.
To sell it to unsophisticated investors and create some kind of markup. So for example, what they’ll do is they’ll get some brand new house flipper who can’t get a loan because they don’t have any track record and nobody trusts them and then they’ll go and they’ll lend the money to them and they’ll flip it around and lend money to you.
And they’ll market it as like a B class type of, or B kind of a paper grade. And they. You’ll invest and get 12%, but then they’re charging the other guy 20% on the backend because it’s a really bad investment and they’re making that big spread. I think this is as an investor, you need to know who you’re investing with to make sure that this little don’t man thing put on, because at the end of the day, you’re investing with a complete newbie.
And that’s fine if that’s your investment strategy and you’re going after the, high-risk type of stuff. At least know what you’re investing with. And yeah, there’s a lot of these types of private money or capital groups doing this type of stuff. And this is all done in the household pig world, which I’m really a big fan of anyway, be on the lookout for that.
And then also, big thing that we do with a lot of clients are taxes, right? You can invest and that’s great. Maybe make 10, 20, 30% returns in real estate, which is backed by a heart attack. But for a lot of the high net worth clients, it’s really about, protecting your income make two, three, $500 million a year from your taxes.
If you guys want to check out my personal taxes, go to simple passive cashflow.com/tax, but it’s like the athletes they get really hammered here. Bron James target woods, Anthony Davis Floyd Mayweather. I hope they have, I don’t think they have good tax representation. But it’s the healthy guys who make a lot of income, but don’t pay too much tax.
Yeah. So beyond the smart, you may make under a hundred grand or you may make under $300,000, but hopefully you pay less than 10 or 20% tax
all right. So crypto investing here, if you guys don’t. I look, I watch a lot of Reddit blogs and stuff like that. And this guy is like this little lizard looking creatures called Anan. I think it’s supposed to be a representation of some random anonymous person, average Joe, it’s, this is very typical author to another thing to be on the lookout for is somebody who invests crypto.
And loses their a month of wages. And then now they considers itself a trader and an expert crypto. I don’t claim to know anything about crypto. I do think it’s a good thing, but I don’t know. I just stick to my own lane, which is investing in real, tangible assets. You guys can learn more about simple passive cash with.com/start.
Let’s get into the month. This was a cool graphic that I found it outlined the tax strategy or taxes that citizens paid on average in different countries. And the United States is sitting at 24.5%. By the way, if you guys pay more than that, you need to get on the passive investing Shane and get away from Borden income and find a way to do rep status is all I got to say.
But these other countries pay 30 to 40%. I guess the takeaway is the United States. We don’t pay too much taxes compared to other countries. Now, somebody in one of my groups said those other countries, they have a lot of entitlement programs. The United States is the only one in this group that doesn’t have.
Government subsidized healthcare or free healthcare, like how you having Canada, but maybe that’s probably coming at some point it’s right or wrong. I don’t care. It is what it is, but, I think that my takeaway is like, you’re not taxes probably going to go up. The rest of the world does it.
America could probably bump it up a little bit more and get away with it. It’s even more so to pay attention to your taxes. If you guys need to learn more about that, go to simple passive cashflow.com/tax. All right. So what’s happening in rents? Apartment lists came up with this graphic saying that, so we look at the dotted line was the NEC the national median rent pre pandemic trend, which is just a boring cyclical.
A trend that’s just going upward, with the whole pandemic, everybody got frozen and some rents pretty much just stayed statement. But now what you’re starting to see this first two quarters of this 2021 is rents are skyrocketing. Places in Texas are going up, high single digit.
In places like Phoenix, it used to be 6%, which is still pretty high for a year, but now it’s like getting over double digits there. Different news sources report differently, but rents are going up folks. If you haven’t, if you haven’t caught on to this, you’re two quarters behind the trend already.
And a part of it is pent up demand. But this is, I think it’s good to be alive. But to be a landlord.
John Burns consulting came up with this cool infographic talking the rise of sister cities. So what’s this, the cities are, is like the coma is to Seattle. Canton, Ohio is to Cleveland. Stockton is to the east bay like Oakland. Bakersville is to Los Angeles. Tucson is to Phoenix, Colorado Springs as the Denver Fort worth is today.
Port St. Lucy is the Palm beach. Greensboro is to Durham and Philadelphia is to New York. And there’s a, just to name a few, but I guess the takeaway from here is this is another trend that’s going on the rise of the great MSA. NSA’s where you have mega cities. So I’m not to the, quite the point where Portland and Seattle or combining all in one.
But, like in Seattle and Tacoma, sure. It’s separated by 20, 30 miles depending how you get the ruler out, but it’s becoming one giant MSA and, people are clumping together in these metropolitan areas. And I guess what just thinking from an investor perspective is, like typically you can’t cash flow.
In the private markets and you typically can’t cashflow in the main headliner city, but where you find cash flow is that sister city. And I’m not saying any of these sister cities are good, but it’s just a trend to be on the lookout for, especially if you live near one of these cities and you’re just unwilling to go outside your local area, or you don’t have enough money.
So there’s really not, no, no sense to diversify yet, most accredited investors, they. Wake up to the fact that you want to be a remote investor investing in the top five markets across the country, as opposed to just staying in your regional area or where you can drive to hello, real page reports that DFW Dallas Fort worth leads.
Sean Mitchell, the man performance now, including gateway markets too. So what that means is Dallas Fort worth. Needs quarter two apartment demand, which is net increase in occupied units. So I’m just going to read this from top to the bottom. From the most to the, the bottom of the top 10 lists are Dallas Fort worth Los Angeles, orange county, Houston, Chicago, south Florida, Washington DC bay area, New York, Seattle, Atlanta, Phoenix, and Austin, Texas.
What again, what this is a report of is strong Metro level demand performance now, including gateway markets too. So one, one important thing to note here, and these are larger markets. I guess Austin is small, but I don’t know if they’re including the tertiary markets, which are those smaller markets anywhere from a quarter million to a million population.
And, Los Angeles is number two on here, but I wouldn’t invest there. There’s no cash flow. So depends on what your investment strategy is. It’s
Joint center for housing studies of Harvard university. If you guys like graphs and data and you need to follow, what’s hard, we’re doing these days. They come up with great articles. Really thought provoking. In my opinion, they got a lot of like racial stuff on a bad way, but it’s just interesting to review what the stuff that they come up with.
And so in this article or this graphic, what they’re showing is the leading indicator, free modeling activity. Second quarter of 2021. What you’re seeing here is remodeling activity coming up from the beginning of the pandemic double. Where we are today, where we were, and this rate of change has been steady over time, which makes a lot of sense.
A lot of people are remodeling like second home, make the place that you are a little bit nicer, makes sense, Adam. These guys follow a lot of lender data and. Porting here’s us properties with foreclosure filings in the first six months of 2021 hit an all time low of 65,000. I guess this makes sense because the rent moratoriums, which just got extended, by the way, I think it’s went up to September, October, and just continuing to kick the can down the road, which I think they’ll probably kick the can maybe another month or two beyond that.
But what’s good for real estate investors. Is that it steady, right? They , just like how they said, oh, we’re going to raise rates. All right. It took them like three to six years to finally do it. And it was very slow and gradual at the time. And that’s, I think that’s good for long-term prudent investors.
Again, joint center for housing studies of hard review university reports on inventories for homes for sale fell to a record low in early 2020. I, I said the Harvard guys come up with really good surveys. I just happened to pick our really obvious one. Yes. Supply is at an all time low or at an all time low, but it’s really a low, which is why residential prices are hot and everywhere.
Constant crunchy is hot. If your market is not hot, your market has a huge problem going up more than likely, but, What makes up prices is not only supply, but demand. I don’t know where demand is. We know supply is low, but it’s a question mark on demand. So what I mean by that is, is demand higher or lower than what it was now.
People with money right now, you’re white colored folks have a lot of pent up savings, or are going good for a lot of people because they can’t smell. I guess they’re starting to spend it by going on vacations and that type of stuff. A lot of the data says a lot of families on the higher end middle class and above have a lot of money.
And which makes sense why they’re buying houses due to the also the low interest rates. But I don’t know, it’s hard to measure demand. Supply is easy to measure because that’s just, days on market and how many houses are on.
So this is a graph of existing supply of homes. Again, the supply which we showed on the previous graph is going down, but this is a graph of overlaid on top of it is year over year changes in crisis, which definitely shut up starting last year, right now they’re showing it over 12%.
Yeah, which is really crazy normal historical price increases, just goes up with the pace of inflation. And typically they teach you in grade school where you’re supposed to nod your head and just accept everything that’s in. The book is supposed to be 3%, but a lot of us that are listening right now and know that’s a bunch of nonsense and it’s probably a lot higher than that because a lot of the money that’s in the stock market or pumped into the system is finding their way into the stock market, which is why prices.
I think artificially inflated and why I don’t invest in stocks, but as Facebook user says here, how inflation will impact us? It’s just going to devalue the amount of money that you have, that people who have a lot of debt, especially good debt are going to be the beneficiaries of this and eat. They think this is why a big motivation of what I do is what I do is because so many people have this completely wrong, right?
They want to pay off their debt in their mortgage and have it all paid. Which I think is silly. Like if a lot of people have maybe a million dollars of equity in their house, by the time they reached the golden years, if they took that money and put it into something like HP making eight to 10% a year, they’d be able to pay for two or three kids.
Grandchildren’s college like that, a hundred thousand dollars passive income. But they choose to just keep it locked up in their house.
yeah. Apartment list.com slash research slash category. Headless cool infographic that I have up on the screen now, or essentially rents are rising quickly. Everybody signal captain obvious. Once again, that’s the second point for cap. Th the way that I invest is primarily on the big drivers, which is economic growth and population growth.
And here is the population growth of, from a state level, of course, you always wanted to dive in on the MSA and then dive in another layer of the sub-market, but, from a high level, state level, in the big movers, in terms of populations, Are a lot of it is Texas plus 16% Utah plus 18% Colorado plus 15% Nevada plus 15% Idaho, Washington, Oregon, all double digits, North Dakota.
I understood that out. Nobody wants to live in North Dakota and there was only like 10 people living there anyway. So that went up to 60%. So there’s 12 people there. Now that’s a joke, but. Like a lot of these places like Florida, Georgia, South Carolina, multiple double digit population growth, where a lot of these are have been like low single digits, especially up in the Northeast.
I don’t know what’s going on there. The places that have remained the same or no growth is Mississippi at 0% Illinois, 0%. I think everybody knows about the struggles that Illinois.
Y I was sorry, I just had a kid a couple of months ago. I thought that was Wyoming, but I knew that Wyoming wasn’t there. That is West Virginia actually went up 3% down there. Hawaii has gone up by seven. But yeah, this is just one way of looking at your investments, investing on the trends where the population is growing up, because that’s what drives housing values and the demand for rents.
If you guys liked this, check out our accredited investor group that found that office on a mastermind currently about 75 plus members. Credit only pure passive investors. Only if you’re broke, don’t join us. If you’re interested in learning more about syndication deals, who to invest with more important, who to stay away from taxes, legal and getting to know other people on a personal level, because a lot of us are on this move from a million to $10 million net worth.
So know getting the simple passive cashflow is easy that whole time. But it’s all about, who you take the journey with and getting the best practices for more of the soft skills and the soft tactics on how do you build your family system and, surround yourself with the right people.
If you guys are not accredit investors, but I would recommend checking out the incubator, simple, passive cashflow.com/incubator. Pick up your first remote rental. But now if we’re to the end, if you guys have any questions, please pop it into the show notes,
but I’m going to go into my personal side of the story where I just talk a little bit, what I’ve been doing personally themed through 20 Robins, six personal six human needs.
The first one is growth. This has been my life last month. I just changed a lot of diapers and I don’t get much sleep. Now I totally understand why only a third of the investors or under the age of say 30, right? These are the guys who make $150,000 straight from college in their engineering jobs.
And, or, they’re the max out your 401k guys, but most of the people are older than the age of 36, 40 years, old million million, and a half dollars a net. And they have kids that are maybe five to six years or greater people who have kids from zero to six. That is what I knew before is the Bermuda triangle for anything in terms of even passive investing level active investing.
Now I know why it’s. Sucks. Yeah, it’s rewarding too at the same time, but yeah, it definitely is a time suck and energy suck and it’s hard, definitely hard to spend the time to read anything., if you guys are, that are younger than the age of kids, get your passive income now and get that stuff set up.
I was lucky by getting this all set up because I don’t know how I could do it now.
And enjoy your time out.
The second thing is how does a contribution back to society and the community? There’s a lot of people out there and you guys follow the 40, 40, 40 plan, which has worked 40 hours per week. Do that 40 years retire on 40% of what you’re struggling. All of your life with, and that’s a, the job just over broke or juggling our bills or jail operating business in mild pain and your life doesn’t really start until you stop trading your time for dollars.
So put screen around putting your money to your passive investments so you can get out of that nine to five date. Sure you might like it, but probably would want to do it a lot less. So jump on the simple passive cashflow bandwagon, and let’s have some fun, a little bit of significance here. I’m actually wrote a book folks and this isn’t going to come out until a couple of months later, I think because the one thing that is slowing me down here is I have to read it right now.
I’m doing, I have it right here. I am reading it and I’m going through it very slowly because they don’t have very much time these days and making the audio book because all you guys are too busy to read anything. who reads things these days who actually has time, unless you’re on vacation or something like that, which rarely when does that happen?
But if you guys want to get a copy of my book electronically and you want to give me a, help me out with a referral. I’ll buy you guys a book when it does come out. But I appreciate that, she meant emailLane@simplepassivecashflow.com. You guys can read it with me before everybody else gets a chance.
Some things that, everybody needs a little uncertainty and they’re highly, if not all right now, I like this kind of searching. And then we do the same thing every day. Because I have an eight year old and I’m not allowed to leave my house. If not, I’ll catch COVID or some other element and killed my daughter and I don’t want that to happen.
I am very aware that uncertainty is the spice of life. And without it, you don’t need too much of it, but it helps counteract certainty in your life. So one of the ways I’ve gotten a little uncertainty is we had a fire on one of our developers. You can’t see it too much, but on the bottom left here, supposedly the story that we’re going with too is that there was a lightning strike and it started a fire and it burnt down that whole building.
Good thing. We have insurance and $2,500 deductible. We’ll get it wrapped up. We’re actually ahead of schedule. So it won’t be too big of a deal. That’s why you have insurance, but no, that’s. Got me a little excited on a Sunday afternoon, a little bit, but overall certainty, right?
Things are being built. The value is there. If you see on the upper left hand corner, that’s a big beat we’re competing against, you’re going to kick their butt in terms of schedule. They actually started, I think half a year earlier than us, and we’re already eating them right now in terms of construction.
But our product is a lot nicer to have. Anyway, deals are cash flowing for the most part and heads and beds. Occupancy is very stable. Rents are going up. Likes is pretty good, that’s why you live the simple passive cashflow life. Fortunately I can’t see all you guys. And I think a lot of you guys are, especially in the family office group or going around the country, meeting each other, having fun.
I feel definitely a little bit of FOMO. I feel like I’m missing out a lot, but I am planning the 2022 retreat. So this is going to take place January 14 to 17 and a walk. And one thing I did was I hired an event planner, cause I’m not going to be coordinating all the little excursions by myself anymore.
I didn’t go crazy doing it. I’m a pretty good wizard at the old Google document and like coordinating that type of stuff. But this year, if you guys haven’t been on the pre-survey, please go to simple, pass to casual.com/ 2022 retreat. And please fill that out because that’s going to help me plan it even better.
And that’s going to get you guys on the pre. You get, you’re gonna get access to buy your tickets a lot sooner than everybody else and probably at a cheaper price. That’s for sure. What I learned by doing that survey is a lot of you guys are pretty jazzed about coming to Hawaii, maybe because you guys are stuck at home for an entire year of 2020, and.
It’s going to be pretty big event. I’m thinking 80 to a hundred people at the very least. And I think we’re going to cap it at that number. It’s not going to be like a stupid conference with a bunch of speakers. I’m going to be teaching about, taking money out of your 401k investing in deals.
Other soft topics that I know a lot of you guys like in the family office group, but it’s going to be more predominantly put on building relationships with other peers. Accredited investors, because in my opinion, that’s the really, the only way to find your way in this world family office clients are going to get first access to it, but then it’s, at some point we’re going to be going up to the bigger, simple, passive cashflow community.
Obviously a credit investors are going to get force excess first. But hire an event planner. So that’s fun. And it got me really excited because apparently they know what they’re doing and a lot more, they know this and a lot more than I do go figure. And they do that for this, for a living. Some fun things I found were do dads.
I found Amazon deliver stuff from whole foods and I don’t have to pay a delivery fee. If you guys haven’t found this is the big tiny. I think the bad thing is you can’t get the sale items, but I don’t like the sales stuff to me that I don’t like the chicks in games about the sale items.
I don’t really care, but they see a huge convenience and off the pier convenient for your delivery fee. So if you haven’t checked it out, check that out and that’s it. Unless anybody has any questions.
We’ll see you guys next time. Bye.