Coaching Call: High Income + 500k Net Worth

What’s up folks. Now, you guys are in for another treat here. It’s another one of those coaching calls, in which you guys get to spy on somebody and secretly critique them on your way to work. Or maybe you pull this up on your iPad as you’re driving and looking at their personal financial sheet. You can do that on YouTube.

We’ve also put this on YouTube, so you can see the spreadsheet and the numbers, how much they’re making this particular person. We’re talking about a net worth of half a million. They make a pretty good salary, $20,000 of income. And all the other specifics you can see on the YouTube channel.

If you guys like. And you guys don’t want to join our exclusive family office ohana mastermind group, which I don’t know why you wouldn’t. If you’re investing more than a quarter million, half a million dollars. I think it’s a no brainer. I think it’s freaking insurance for going out there and walking off the beaten path of getting out of traditional investments into alternative investments with.

Okay some of you guys invest with random strangers out there crazy that just have a good website. But if you guys like these types of coaching calls you guys can volunteer, send us an email at team@simplepassivecashflow.com. We’ll get you guys set up with them. We can change your name.

We can even create a. But a face on you, apparently zoom can put faces on people and hide your identity pretty well. We also put all these coaching calls in the members portal, which you guys can get access to by signing up at simplepassivecasual.com/club. If you sign up there, you get access to the member’s portal and we have a page where we arrange home.

It must be like over a few dozen of these coaching calls, all nicely arranged by net worth. You can go by your net worth and find. Start listening to this stuff and see your financial life unfold, because as I’ve learned, people think they’re special snowflakes, but in terms of money, it’s the two big ones, what’s your net worth and where’s your monthly income coming in and what’s your net, everybody’s on the same path and journey to financial freedom and it’s nothing special getting there. To me, I’ve figured out the quickest and the safest way to get there. It’s a way of smartly using it that some people are a little spooked out about using. Check out my article at Forbes, I wrote about debt, I think simplepassivecashflow.com/forbes.

I have all my articles in there too. Enjoy the show folks. Check out all these other coaching calls at simplepassivecashflow.com/club, and then you’ll get access to that. Reach out if you guys want to do one of these on your own.

Hey, simple passive cashflow listeners. Today, we are going to do a free coaching call for our buddy Nate here, who is also a pipeline club member. And probably in the next 30 minutes, we’re going to go through his personal financial sheet and get them on a good action plan. And maybe this might be a good model for you to follow.

Maybe it won’t, but hopefully it helps one person along the way. So thanks for jumping on Nate. No problem. Give us a little overview . So I’m a dev ops engineer, which is essentially a system engineer and I work on website Make, with my bonus and make 150,000, my wife has a good job as well. So two of us make pretty decent money for the bay area, and then we have, we had two houses in California. One was our primary residence. So we sold that last year and the other one was our old primary residence, which we are about to sell. I don’t know what else you need to know. Some people are watching this on the YouTube channel, which I would recommend, but for the podcast folks, we just tell them how generally, how old you are.

That’s it. So where you’re at in life. And, let’s see, I’ve been married. I have a three-year-old son. We live in Berkeley, California. Basically I’ve been doing what I do for computers for about 10 years. I worked in biotech after that, before that for about seven years. Pretty simple.

And actually people don’t know what parts of this are fake. They were trying to protect the identity of the real person, if your real name is Nate, but if we just made that up, this is a very typical sample of a bay area investor. So I think this will help out a lot of people.

Moving forward. So right now I have displayed on the screen, the personal financial sheet summary, a good overview, a lot of the other tabs feed into this one, a good overview of what’s happening. Where are you at right now? Because different strategies work for different folks. No part of the simple passive cash flow is, it’s very simple.

If you’re hiring high net worth high paid professionals start with some turnkeys and go on to syndications, but there’s all a lot of little different nuances along the way, a lot of different wealth hacks. And hopefully, you can, we can get a good conversation going, but let’s just figure out where you’re at right now.

So the upper left corner here is the. So you’ve got some, you’ve got some, a little bit of cash savings, hundred, a little over a hundred grand. And you got some real estate holding $600,000 properties that the primary residence or we rent. So that’s our current rental that we have. Okay. Good for you.

I definitely recommend people rent and primary markets. Yeah, we took that advice from you. Yeah. You guys want to read that article that I paid someone 500 bucks to write from its simplepassivecashflow.com/home. Cause I really need to get that message out. We like it. We actually have a, it’s a nicer house that we live in now and yeah.

I don’t know if I told you to do that, usually. And here’s the issue with buying a big primary residence. You’re taking that in the a hundred and maybe in $200,000, a down payment, you could have bought five to 10 rental properties, each cash flow and a couple hundred bucks at least. A lot of spouses don’t care about that.

They’re like they wanna own their home, but then when you show them our market would have been 3000. Let me up the ante and let me, let’s go around and place that’s four or $5,000. Because financially, that makes more sense when you look at the numbers. So that, that usually gets them. My wife’s completely on board.

She’s pretty savvy with this. Or at least more subtle than I have to, you will be successful in life. I, so here, liabilities, and it stacks up with that. The 600,000 rental with it’s always paired mostly. This a $312,000 mortgage, I’m assuming that’s connected. So you’re about 50% loan to value on that.

Then you have a HELOC on that thing. Are you tapping at equity or? I know, so that’s some low hanging fruit and we can talk about that. Sources of cash. Here’s like your cash flow what’s happening on a monthly basis. So you got about 20 grand coming in every month. Which a lot of people would save is very high, but for the area that’s pretty much average.

It’s crazy. Yeah. It’s crazy. And I’m just curious. How much you’re paying for rent? Rent is 4,000. Okay. Okay. Not the nine. How are you getting the 9,000 in there? That is also schooling for my son okay. Okay. So between those two, it’s about 65 or about 6,000. Okay. So this, the private school is what like 30 grand a year, 40 grand a year.

Let’s see. It’s about 2 18 52. We changed it. So it’s a little less than 2000 a month. So that’s 25,000. Yeah. Yeah. I know. That’s a lot of people in Hawaii. You have to do that because public schools are not the greatest. Here in Hawaii, but, yeah, but yeah, you add it right on there.

I was like, whoa, man, you really live in, imagine there, but it looks like that, but that makes total sense. And that’s a decision you guys make and it’s not a bad one. Yeah. So you’re running what I asked a lot of people a lot of time. I don’t want to care how much you make. It’s more, this, the cell. Q 53, that Delta between how much money you’re making and how much money you’re spending. And this is a very healthy number here. You say that you’re able to save about 50 grand a year from average people. You’re like the top  1%. But I would say that from most of my investors.

That’s probably what most people have to say, but I’d say like the 50% of people who got their stuff going the right way. They’re upwards to that. It’s very good, and I would say when you’re above the $50,000 level, depending how much net worth you already have. And if you’ve already been doing this a little bit, you’re likely to be financially free in three to five years. So that’s a great win right there. That’s what we’re shooting for.

But you got, you had some vacations here. Is that kind of taken out of that? And big expenses, I think that’s it. That’s what gets me personally. I don’t have a budget. We don’t go on vacation, so we, yeah. Yeah. We actually like our house. That’s one of this, why we spend money on houses because we like to be home, yeah. Yeah. Okay. Okay. What about other big ticket stuff that might sneak in and knock that five 50 grand down to 35? That’s pretty conservative. I think that’s like we’re not really doing much. I just came home. Cook, eat, enjoy, have friends over.

So it’s nothing really cars paid for. I walk everywhere kind of big ticket items. Are you thinking that maybe I’m missing something so well, sometimes, a lot of times for this is, I’m just speaking for myself. My own personal thing is I have a big net cash flow, like how you do, but sometimes, big expenses can come in.

Especially if I go pay for something like a mastermind or something like that. And at the end of the year, I’m like I should have had a lot more than this. Like the animals are cash flowing and everything, but I didn’t even end up with how much I thought I would. There’s holes in my pocket, but I just, I don’t budget.

I don’t like that stuff. Okay. I think we kind of budget, but it’s just I think the biggest savings we have right now is we went from a nanny to putting our son in school. Probably 15,000 right there. Cool. So let’s dig in here a little bit. You’ve got a hundred thousand dollars in cash, so that would probably be the low-hanging fruit there, but I know you probably want to keep some of that in liquid cash, maybe about 20 to 40 grand.

Yeah. Yeah. We’re thinking of 40, but yeah. Yeah, but there’s definitely 50 and here that should be going out to something right away. Wholly, see, here’s your, here’s a rental property. And here is also some low-hanging for, you’ve got about 50% LTV. Have you looked into doing a HELOC on this thing and tapping the equity and the, so we could certainly do a HELOC on this, but we were thinking of selling it. That’s actually a conversation.

You’re interested in that because I don’t know. I feel like selling it at this point is probably the best idea, but yeah, this is like a war zone property. The $600,000 property in Oakland. It’s in the foothills of Oakland. So it actually has a nice property. You could see the San Francisco golden gate bridge. That’s pretty nice. It’s just a, it’s in a transitional area. It’s not a dangerous area. And how much rental income is it bringing in every asset? That’s the point because we rent it out to somebody we know, so we just have them cover the mortgage originally. And that was a big mistake on my part.

And I don’t want to use it right now because I like the guy, but. We’ve talked to him about it a bit. And at first he was like I’ll just, I’ll pay more in rent because the rent prices are ridiculous and he’s getting a good deal. But then we thought about selling it and he’s interested in buying it.

So we’re having that conversation right now. So yeah, they always say that. Okay. Let’s see, I’ll go. But here’s what I. Right now it’s like April or May you probably want to be selling this on the market in the summertime. That’s when you’re going to get a peak price. California, it’s like Hawaii.

There’s not really a season, but you definitely don’t want to, summertime when everyone’s transit kids are transitioning. I would, especially when you want to be political about this and get your friend out in a cordial way. The conversations just started yesterday. We started this conversation a little already about a month ago.

So yeah, I would just, I know, just from a manners perspective, third party, I would say Hey man, go look for it. Just start looking for a place I’m going to check in two weeks, what you’ve been seeing and we need to make a transition plan. I need you out in 45 days or whatever.

Okay. Yeah. Cause it. You can tap this. And I know the Oakland, the California market is getting a little soft right last year. The mistake I think most people would make is you mentioned it. This is you’re probably buying on the line where you’re in a transitional area and people say it’s going to go up.

We can do the numbers later. And I don’t think we’re going to do it today. But if you were to take that $300,000. And go put it on something else. You’re going to five X that whatever. And even if they build something cool, right next door. Yeah. I’m not planning on appreciating this anymore.

I think it has gone up a lot since we got it. So we’re comfortable and happy with where it’s at. Yeah. So you guys always had this as a rental. I guess you don’t have to say. Like deducting the depreciation, all that stuff. So this is actually our original primary residence. And then we lived there, so I made a mistake when I sold it.

I didn’t realize this. I made a mistake when I sold them. I should’ve sold them in a different order and waited about a year. Cause I think we could have done Mr. Capital gains tax, but when did you move out? We moved out about 2016. He bought it in 2012. You lived there for four years? Yeah. I think the rule is, as long as you live in it for the last three to five years.

You can qualify, but talk to a CPA. I think the problem is that you can’t take capital gains tax two years in a row. And I took you on last year when we sold the other house. I don’t know if you can take another capital gains tax and you have to wait. I think you have to wait every other year, but it could be wrong.

Not following. Maybe I’ll know what I’m talking about, but we paid, we instead of paying capital gains on the last house we did or that we, I don’t know what the term is, but we didn’t have to pay capital gains last year when we start our primary residence, the old house, we just moved out. And then if we were selling this house now, Even if we, because we lived there, I don’t know if we could do that twice in a row, pick up the weight every other year.

Oh, I don’t think it matters. Okay. That’s good. That’s great to know, but I’m actually unsure about this cause I own the property and I rent it out for a couple of years. Okay. And I think I made a mistake there. I should have moved in for a year and they wouldn’t have to pay taxes on the gain or I don’t know if you would have appropriated it.

If that were the case. Okay. Yeah. I was trying to read about this too. Was one of the questions I was going to ask you about, but yeah, just talk to, just talk to a CPA who does this all the time. Okay. You don’t talk to a 1031 guy, they’re just necessarily on a tender one. That’s what they did to me. I’m not interested in that either, so yeah. Yeah. It might be. I’m not suggesting that I don’t call this tax evasion, but if you’re renting out to a family friend, in a way you’re living there. I don’t know. This might be a little borderline. Maybe we shouldn’t talk about this.

You know what I mean? Technically you’re living there, especially if you’re doing this as a charity and it’s a friend, maybe just you guys move in for a year. If they hit this three out of five, Your role? What did you buy this thing for? See the original purchase price. I probably should have. I probably should have started there. See, I took 10. Yeah. See, there’s a lot of capital gains there. You have $400,000 of capital gains. Have you guys been depreciating it every year on taxes? I don’t know for sure. To be honest with you, her mom does Texas, oh it sounds like if you had a new CPA, that’s the difference?

I think that if you’re depreciating it you’re definitely doing it the, on the up and up way. And I don’t think you can play these games where you have a family friend there and you’re technically still living there. But I would like to be on the up and up for sure. Yeah. Yeah.

And this is a, but this is a big gain, right? 400 grand, 50%. I don’t think 1031 is your answer. I don’t like those at all. Okay. But it’s not big enough to do like a delayed sale trust thing on it that you just might have to take it on the chin and just pay the taxes, but spend the hour talking to the right person about this strategy and Hey, can I move in one to hit this one year to get this three out of five year rule?

Could you’re really close to being. When did you say you moved out? 2016. Yeah. Yeah. There might be something there. So look into that. Maybe shoot me an email later. I can connect you with my guy and he can ask him straight up. So I’m saying you have 50 grand from your liquidity and then potentially another after commission. You’re going to have maybe another 200 there comfortably. So two 50 at very least you have to deploy.

And then this is the same one, right? Yeah. See, it’s just an auto fallback. So that’s your war chest. But. I think where you’re at Eden, do you have any experience with any kind of out-of-state rentals or anything like that? No. That’s one of the reasons why I was originally looking for one-on-one coaching and the mastermind group. Yes. So I think you’re looking at your net worth and yeah, I think actually, David looks at your net worth, but now that it makes sense.

You’re in this limbo land. I don’t know if, eventually your guys’ salary is high enough and your, private places are going to be yours, and you’re obviously very busy, but I would, I think your next pass would be to pick up a turnkey rental and just get some experience under your belt. Okay. That’s what I was thinking. Yeah. I was gonna talk to you about that. Yeah. Yeah. So let’s talk about that. We’ve got some bullets and now we need to figure out how we’re going to go fire these things and go acquire some properties. So what is, what have some things you’ve done so far, and then what’s your tentative action.

What about us so far has joined the mastermind group. I’ve been reading different things with your website? Yeah, there’s a, I’m at a point where I need some guidance. I don’t, I’m not exactly sure where to start, so that’s why I’m here. That’s why I’m talking to you right now. Okay. Okay. No, that makes total sense.

Because most times people they’ll come into the mastermind after. They’ll listen to the podcast for sure. But then they’ll, there’ll be con there’ll be doing some books and podcasts for about a few months to six months. And they’ve already got a formulated plan in their head.

They’re gonna learn about turnkey rentals. They are, they, and they already have that realization. I am sure you have already done this where you live in the bay area. You’re not going to find anything in the state. That’s going to cash flow. That’s not a D class. For sure. Yeah.

So the next logical step is all right, where do we buy? Are there any markets in your head that you’re eyeing? So I know the markets that people say to they’re interesting, or you should look at, but I don’t know how those decisions are made. That’s one of the ones, one of the main questions I was trying to figure out right off the bat was like, how are people finding markets?

And. What markets do. And why are they finding the why? Why is that a particular market? Like Kansas city, Indianapolis? I know I’ve read some of the stuff that people say, but I wouldn’t know. If you give me a map, like where do I begin looking at it? And then finding a good parking spot? Yeah the simplistic way I put it is you’re trying to find properties and secondary markets with robust economies.

So secondary markets or, places like Kansas city, Memphis, Indianapolis, Atlanta. You can categorize it by population size. Do you know? Not like the mega cities, but like at least a hundred thousand people good size. And then of course pair that with the robust economy. So Detroit’s the secondary market, but it’s not a very robust economy.

So that part I understand. How would you find how to prove yourself that this economy is robust? Like, for instance, Kansas city. Indianapolis. What are you looking at to prove to yourself? Oh, this is a real positive. I know why you would probably say to choose not. Oh you just look at one thing I look at is like fortune 500 companies in that area.

What kind of industries is it like? Las Vegas is not very economically diverse. City, it’s a lot different from tourism. There was a cool try. I had in the last investor quarter letter, video and site civil, passive cashflow.com/investor. Quarterly. I can display that real quick. Is that the one from last night or? Yeah. One from last night, but I don’t have, I don’t have a list for you, but.

But my thing is There’s already a list out there, it’s on a spoken list that people are like, oh, we just like to stay in these types of areas. Yeah. And the nice thing about that is that there’s already, if you follow the footsteps with other people have done. You don’t really have to recreate the wheel. There’s already property managers, brokers. And that was one of them. That’s one of the questions I had too, is if you’re investing out of state, how are you finding contractors? And this is through your network. Here’s that, that image. The green ones are supposedly more diversified job markets. The red ones are not, I don’t really agree with salt lake being a diversified market.

And I also don’t agree with Atlanta. Atlanta has got it all. It’s got like class C. Worker blue collar workers working in industries, manufacturing, like the Mercedes plants and stuff like that. And it’s got a lot of white collar workers to a very diversified market, that’s why you think Bloomberg made this thing.

I just took a lot of data points and we see the same things popping up again and again. But then you’re also looking for tertiary markets too, because even the secondary markets, everybody’s flocking to now. So Chris, on this one, for instance, they say Buffalo is a good bar, to provide market, but then isn’t that the one where the population went from 500,000 down to 250,000 for the last 15, 20 years or something like that, you might be right, but already am not even looking at it because it’s a primary market.

Brilliant. Okay. And in Baltimore is DC, right? Buffalo. Yeah, primary market. Okay. That’s not to say you can’t, it’s not going to be appreciated, but that’s just not the game I play or what I recommend. Yeah. I’ll just stick it out, looking at this map that stuck out to me when I saw it the first time. Yeah, so that’s my recommendation. And then, just taking this map, right? Kentucky, Memphis, Oklahoma city, New Orleans, Atlanta, Jacksonville. What you’re trying to do is you’re trying to narrow it down to a couple or at least one that you’re going to go in there and build relationships with brokers, property managers, you can’t do multiple, you can’t do three or more.

I don’t have time for that yet. So you’re being a typical engineer and this is what I do. You’re like, all right, I’m going to start with this big funnel. I’m going to start with 30 markets. And I’m going to pick the best, like that’s gonna surely take you a long time and you’re likely to arrive at the same answer where you’re like you know what, screw it.

Everybody talks about these five. I’m going to pick from those five and just whittle it down to one or two. Okay. I think that’s the better approach. Okay. But engineers, we like to get all this data and, in the, who we share drivers, all kinds of data from way back when you can, kinds of power rankings and whatnot. But I don’t know why I even put that in there. Just confuses you guys even more. Okay. But that the time and energy should be spent on connecting with brokers and property managers. Okay. How do you find, let’s say in Kansas city or something like that, how would you go ahead and find a broker and property insurance and to throw your network against yeah. People, referrals and this is why I always say the most important thing is to network with other passive investors. People like you and me. Because those are the people who are gonna, have the past pay for you. But here, the problem is you can’t just hand these guys, like there’s a, we have that free Facebook group.

As you pay for what you get for something, some of these guys, they just asked for what brokers you are working with? Man, I’m not going to help you out. You’re just like a taker, but it’s hard in the beginning because you don’t know very much. So you need to get educated. You need to put in some work. See there’s an even value exchange. So you can go to a little bit more of a student investor who potentially has a big vendor list. And become friends and how do you do that? There’s no tricks to it. You just become, build a relationship, a genuine relationship, go freaking figure.

Makes sense. Yeah, there’s a lot of tricks and hacks to get this from people or get it on your own, but I don’t think it’s sustainable because what you want to do is you want to try and build a mini micro tribe of a few. All investing. For me, it was like Birmingham. There were like a few people that were all messing around in Birmingham. We all knew who the property managers were. And then if something went wrong, someone wasn’t performing, we’d all move like a mini flock to a different one, or we didn’t know who to tell. So that’s the more sustainable model. And hopefully when these guys get tired of turnkey rentals and go to bigger stuff, you’ve had.

That’s a solid relationship to move forward with them. Okay. But any other tangible, more granular stuff I left out there. I know that’s a high level, right? That’s more esoteric. Yeah. I don’t know. I just like the process of just getting started, it’s to start looking at some of these properties that they have called them up, yeah, I guess that’s the process. That’s what I’m asking is, find someone there in the network and NASA like maybe, Hey, who do I contact in Kansas city per se or Indianapolis, and then discount. Started to talk. There’s people who are more than happy, I’m sure to sell it.

But what I understand is that these things go pretty quick. That’s what I’m seeing on the mastermind, like their properties come up and then they go for it. So you have to know what you’re looking for and, in a mastermind I’ll help you out for sure. I’ve got my vendor list. I keep it close to the chest. And people like, I like talking with people and doing those free intro calls just to get to know people. But I don’t know, like lately I’ve been a little worried of just alright, I, use these guys in Birmingham, use these guys and, wherever.

Because these are my relationships. I don’t want to be a jerk over who just is going to call up eight different Turkey providers and waste them. Guys time. Yeah. So that’s what I’m thinking, you’re the mastermind, I’ll help you out. I’m always working to build new relationships. I’m actually working on a new one in Pennsylvania, rural Pennsylvania. So where do you have your first one? Yeah. I think you had a property in Pennsylvania. Yeah. So that’s where that relation came from. We worked on some deals out there and then they’re pretty helpful. So I trust them and that’s what’s more.

Yeah. And if I can build like a long-term relationship where they know that a lot of you guys will come back, then that’s a good, solid relationship that, it’s more of a long-term thing, but I don’t, I want you guys to struggle a little bit, because this is how you learn how to do it, but. I also want you guys to hit success, right? So there’s a balance between how much I help you guys. If you want me to do everything, yeah, I can do, I guess I can do everything, but maybe that might change in the near future as my bandwidth fills up. But, the more you struggle, the more you learn and the more you learn, the more you progress 5, 10, 15, 20 years from now.

But I think what I try to do is so I’ll set you up with some good reputable people. So you don’t have to go through the whole list of turnkey providers. At least, you’re working with people who are decent, right? They’re honest people. Men, what I suggest is like you just get their inventory lists and then you just see where the water line is.

All right. Cause when I was buying, I was, $90,000 properties they’re renting for nine 50. I knew I had it all on a scatter chart and I knew 1.1 rent evaluation. That’s my number. I don’t know where that is today. And I know where it is. Cause he sees where, I have you guys do the spreadsheet. And this is where the water line is, what a good deal is. You’re not going to find an amazing deal. It’s tricky rentals, but you don’t want to get a sucker deal. So when a good deal comes up, you’ve got to act pretty quickly, which may be in a matter of a few hours or a few days, depending on what kind of relationships you build with them again.

And then you pull the trigger. But I think No more times than not a newer investor thinks that they need to close on the property. But for me, it’s more there’s a good chance. Maybe 30% chance. You probably there’s something that comes up and due diligence that you can’t work, negotiate your way through. So I’m probably a lot quicker to put a contract under. I’m more certain I’m more. All right, lock it up. Let’s put in going to contract and let’s get that inspector in there and let’s see what’s under the hood so I can act quickly. And that’s how you should be able to get. Okay, fair enough.

It’s dating, right? Like it’s been awhile. The strategy goes, you don’t get married after the, before asking them on a date, on a lot of dates, same thought here. I gotcha. Just cause you go on a date and ask doesn’t mean you’re going to get married for sure. Any other questions on just picking prop properties up in that kind of way? Yeah. So I think the other question I had was if you’re, the recommendation is always to get from you is to get a turnkey to start, but then like a high level, what do you, what’s the progression there? So you get a Twinkie, you get, get comfortable working out of state.

And then I don’t want to keep buying turnkeys as they’re applied at the. Yeah, like we’re talking about right there. Not that they’re not the best, right? Yeah. Yeah. And, but the beauty of this is once you get one turnkey and you get it going. Yeah. Sometimes they don’t work out. I would say like one out of three times you might buy a dud. It just gives you some problems, but overall you’re hitting that nice returns on average. Okay. Definitely way better than the stock market. That’s what. You’re talking. But then here’s the path. And a lot of the investors that I started working alongside when I started there’s this path of you do the whole burst strategy by rent rehab refinance, which I’m not a fan of at all for high net worth individuals to be buying like 50,000 pieces of junk because the exit strategy isn’t there.

Like you can have a portfolio of 40 properties of 600 or $60,000 each, but that’s cash flowing, but there’s a cap ex, that’s going to hit you on this stuff somewhere between year five and 15, and now you’re going to pay back all these returns. It’s just not a sustainable way of investing, but it’s a way of doing it. And I guess nothing is wrong with you. If you can prove me wrong with the numbers, but you’re going to go down this path of burning and creating value that way, because maybe you like doing that. And this is where you’re starting to do it and you start to figure out if you like it. And if you’re good at it, me personally, I don’t like it.

And because I don’t like it, I don’t spend the time doing it and I never got really good at it. Okay. So that’s why I went to be more passive in a bigger deal. And that’s the progression. But we don’t know until you do this prerequisite, this is the pre-calc to ease and calculus. So I’m not, so I’m not going to let you go by Hey lane, they want to sell me. And I have a quarter million dollars. That means I can buy 1, 2, 3, 4, 8. I can buy 12 rentals for probably 1200. Pretty solid ones tomorrow. I would probably be like, no, don’t do that.

At most maybe by four and let’s pause and think, and let’s come back and talk six months to a year from now where you w where do you want to go? What’s your thoughts and feelings and how things are progressing. Okay. So that’s, you know what that said? I don’t think you’re going to be able to invest that quarter million dollars in the next six months.

Maybe, probably even a year. Okay. So what’s a good recommendation for parking, nothing instead of just having sit and savings like AHP is a good one, simple, passive cashflow.com/hp. They don’t sponsor me anymore, unfortunately, but, yeah, I still think it’s a good place to store some cash.

For you, I wouldn’t stick more than a hundred grand in there. Okay. I think let’s just say, let’s just assume now I’m getting more high-level strategy where the money comes from. I would take the money out from your liquidity and invest as soon as possible. What is that?

The 80 grand. And in the back of your head, you can pull a HELOC Okay. You need from that rental property, right? Yeah. So I would totally be fine with you running your liquidity for me. Your cash reserves are pretty low, maybe even 10 grand. You see what I’m saying? Yeah, for sure. It was still saving a decent month or month and the house sale, maybe you delay that a little bit to next year. I know that one’s a tough one. It’s not like I see a lot of guys with big 401ks and you don’t have that. Where is that? But she’s still at the employer, right? That’s she’s out of that one. Oh, okay. Where did that one go? If you go to the summary. A little bit right there it’s like 24. So she has left her employer, whatever you don’t roll it over into a new TSP or 403 B or 401k. Yeah, she’s just sitting there. I would take that out. If you had more than 150, $200,000, I’ll be very strategic on how you take that out. Like tickets slowly, you have to look at your whole taxes.

There’s brackets, right? They’re like full brackets. You’re probably in the second to highest one. Now. I don’t know how they exactly fall. Yeah. I don’t know. I think, yeah, probably close. Yeah. So if you take this thing out this year, you’re probably going to the highest one or maybe even the second highest one. We want to keep you just from going to the next one. So see what I’m saying. You got to be strategic on how much you take out of that thing this year. So say I don’t know what AGI is. Are they changed all the time? And I don’t know what it is for married couples. It’s AGI adjusted gross income.

So let’s just say the highest one starts at two 50 and right now you’re at 200. Okay. As your AGI, I would maybe take this 91,000. I would take 50 grand. So you just stayed below that. And then the next, the plan for next year is to take the other 40. So you’re always slip it under the radar that the red, so we’re over two 50.

So why don’t, I don’t know. You got to look at the tax. A CPA should be able to help you out with. Okay, but they’re not, CPAs are not strategy guys. That’s where you got me, but I don’t know the exact brackets, but you get the gist of what you’re talking about.

You’re smart. You can figure it out. So that would be a way to play that, to take it out slowly. ‘ cause you’re looking, you’re not going to, we’re already halfway through the year. You’re not going to be able to deploy something. You’re not going to be able to deploy it. You’re not going to, I don’t see you buying more than three houses in the next six months. So this is probably a 2020 plan. Okay. But then also remember you also have to have been thinking about this in the back of your head. Like I do think you should sell that house right away. Yeah. So that 300,000 or $200,000 of gains comes right on your income. So if you’re going to do that, it’s going to blow up your AGI. Yeah.

So I wouldn’t touch, I wouldn’t take out that 4 0 3 B money. You know what I’m saying? Yeah, for sure. Unfortunately, with that house sale, you can’t be strategic. And how you take it out, you got to take all that. Yeah, that was a, I think I could’ve done that differently, but that’s how you pay to learn, yeah. Yeah. Am I clear here? You get the fundamentals right when I’m trying to, yeah. I guess the question on the 4 0 3 B is, do you get penalized when you pull it out? I don’t know how that works. Yeah. Number one, you finally get to assess the taxable income, right?

Because this is all post tax. You don’t pay taxes on the loan. But yeah, there is a 10% penalty, but I wouldn’t call it a penalty. We’ve had this conversation with my wife and I have had it before. So yeah, it is a very emotional conversation because people think it’s like a sin to take money out and they call it a penalty.

Now I’m not allowed to do that, but the numbers don’t lie. If you can make money, if you can make 20 to 30% in a Turkey rental, Who cares about the 10%. You’ll make that back in 12 months and the rest is all gravy. Yeah. Good point. So follow up, do the numbers yourself, the numbers tell you what to do.

But if you’re going to be selling the house, maybe I would hold off on it because you don’t need that money anyway. So right away, for sure. Yeah. Yeah. I would, you have a lot of liquidity and you don’t that you’re not going to be able to allocate. I don’t know. So for folks like yourself, I would look into doing infinite banking.

Yeah. Looking forward to that part of the we’ll get there. I think your net worth isn’t. It’s there, but the fact that you have a hundred grand or more ready to go, but you’re not going to be able to allocate it right away. I don’t see you allocating more. 50 grand this year.

I don’t, you’re not going to buy more than two houses. Okay. I think we can both agree to that. 2020. I don’t really see you allocating more than 150. Okay. See what I’m saying? So if we plan 2019 and 2020, that you’re going to go on with a quarter million dollars, you’re going to have some excess. What I’m recommending is taking a look at that excess and putting a fraction of that into life insurance where this stuff, where you have to put it in one out of six years. You have to commit, right? So I’m not a life insurance originator. You’re like, but I know the strategy. Yeah. Listen to that podcast you had. I think there was a podcast on that. Listen to you. Not too. I think he, maybe he didn’t do it, but yeah, this is a bit, if I just want to communicate like the strategy, they’re like, you’re not going to be using this liquidity right away.

You’re not even going to tap it in 2020. So you got to do something with it. AHP is an option, but the nice thing about the light, the infinite banking is super awesome in the once you have it set up three to six years in the future, but it really sucks cause there’s, it’s really fee heavy in the beginning. If you put in a hundred grand, you might have to pay 30 grand in fees. I see, but for like lower net worth guys who have to look under their couch for coins to pick up that first rental at $25,000 down payment, that obviously doesn’t make any sense for them, but you’re inefficient here.

And so you might buy players that take the inefficiencies and the extra five grand, actually 20 grand or whatever, into licensed. Pronounced to build it up. I see, don’t go bonkers with it. But, it is, I always say, start with a smaller one and you understand how it works. And yeah, because in theory is always different than in practical use and seeing the statements coming in oh, I get this now. And I can tell now I can take a loan for myself. Oh, this is why they call it infinite banking. I get it. Finally get it like a year later. Yeah. Okay. All right. But yeah, I think that’s from a high level, that’s kind of the one, two year strategy right there. Okay. So now I’m just gonna work on getting two, two houses this year.

That’s the immediate goal, but that’s your kind of your, one to your. Okay, fair enough. But yeah. Any other questions you had off the top of your head or? The questions I have pointed on. Interesting. On the podcast, those are one-on-one coaching stuff. Yeah. It’s more, I think, after this more granular, but you have, there’s a path there’s definitely a path for, I think after the two years, I see you getting maybe like three, four houses and then also maybe the middle of 2020.

Maybe play around with a deal, to a syndication and just seeing how that is. And then now you can like, be like, whoa, I like this a lot better. I’m pretty sure you’re gonna think this indication is better. It’s just better than direct operating. I don’t know the returns a little less, but it’s just not worth the time for an exchange.

Okay. So you’ll just go into more and more deals. I would say probably like three, four years from now. Because you’re especially saving 50 grand a year. I’m sure that’s going to go up. You’re like, you’re going to get into this rhythm of going into a deal every, maybe two or three deals a year and obviously that’s going to take a while, to build up like a war chest of a dozen two dozen deals, a $50,000 position in each deal. That’s, it’s a sustainable model and not all the deals are going to go well, not all of them. But I think on the average, you’re, what’s your goal here?

And I guess we didn’t talk about, you mean, why what’s my goal as far as passive income, or as far as why I’m here trying to learn this stuff, passive income, I guess it would be something around 10 K so that my living expenses are covered basically. So I could live the life I have right now and not have to worry about it going to work.

I can go to work. I probably will, but I don’t want to. Yeah, so if I press the Fed, like the infinity time still on, and I could just fast forward right now with the liquidity you have in hand and the equity you haven’t had, you could probably be, if I just take your assets and times 10%, you could probably be 500.

You could probably be halfway there today. So there’s a little bit of work to do. I took $500,000 of deployable equity. It’s what I figure times 0.1. So you’re halfway there. So it’s just a matter of deploying into another half, an half, a million dollars. And that’s just going to take you, if you keep saving $50,000 a year, that’s going to take another 10 year, but it’s not going to take you that.

Yeah. It’s going to take you like less than half. So I will probably see it in five years. Okay. That’d be great. I’d be completely happy with that. In the next couple of years you, it’s not going to be like, you just quit cold Turkey. It would probably be like a transition of maybe you start working last or spouse stop or the last or whatever. She likes her job. Good for her. We’re all happy for her. Okay we can get you out of your job. Any kind of last parting thoughts or questions? No, I just really just want to say thank you, man. I’ve been listening to podcasts for probably about two years and I’ve been busy cause I have a three-year-old now he’s in school, so I have more time. So I appreciate being able to join the mastermind and doing this call.

Yeah, just ex yeah. Yeah. I would give you props there. Like most people in the, Matt, a mastermind, but the investor club in general, they’re either younger than 30 or older than 40. It’s those, like when you guys have those young kids, I don’t have kids. So I don’t know. I’m just speculating to see how you get these data points. But when you guys have kids there’s you guys just disappear off the face of the earth. You guys don’t do anything other than focus on that, which makes sense. But it is. I think that if you were to take that perspective, you’re doing it the hardest time nobody does what you’re doing now.

That’s where I’ll take that. But the whole thing is if you do the right things, it’s very simple. It’s like swimming. I don’t swim very well. So I look like I’m drowning. I can get from point a to pretty quickly, but I’m going to get tired. But if you look at the most effective swimmers, it doesn’t even look like they’re working. They’re so efficient. So it’s the idea to get you to like that, like a graceful dolphin, but investing it’s nice. Yeah. All right, man. Yeah, if you guys like this shoot me an email. Let me know if we haven’t had a chat book, a call and join HUI pipeline club and check out the mastermind club at simplepassivecashflow.com/journey. I will talk to you guys next t