Coaching Call w/ W2 & Business Franchise Owner

Hello, simple passive cashflow listeners. Today, we are going to be doing a coaching call with Ahmed. Who’s going to show us all about him building his portfolio, how you’ve been buying some rentals with some buddies of his and where he is going financially as he is right on the verge of financial independence.

But, thanks for joining us. Amen. Once you, give us a quick context on yourself. Thank you Elaine for having me. it’s a dream come true. I’ve been watching your podcast for a number of years now. my story is, I think it’s just a typical American story. I came here to go to school, an immigrant, now taking the next step of financial independence.

the funny thing is that, I, Came here in 89, graduated in 94, with accounting and moved away from accounting, from working in that industry for a year and a half. And ever since, I’m an it professional. met my wife, in Mankato, where I went to school, we just celebrated our 28 years of a partnership.

Being a father of a twin daughters. I spent my entire time, in Minnesota, I think as the saying goes, wherever the immigrant lens being, they tend to stick around. so the story that I like to tell is this to first and foremost, how I have embraced frugality, personal responsibilities in finance, as well as how I see real estate as an important vehicle to get to the next level.

Yeah, I definitely got a lot of first-generation wealth people listening to the podcast. what, first generation is, secondary industry generation. You’re born with it. but yeah, first-generation doesn’t necessarily mean immigrant, but it’s just the first generation where your net worth is over a million.

Yeah. I’m thinking, a lot of people, they get college degrees, but they’d never hit that threshold but, Yeah, a lot, very, financially minded frugal folks they pay for value. So you’re fitting right that moment. Like when did we first connect when a couple of years ago or something like that, I’ve done that, so I first bought my first rental property with a partner in 2015.

and I started listening to simple passive cashflow, About 2017 or so. And the reason you hit a chord with me is that because, I had some ideas, did not know what the concepts of fires and all of these things behind me, but at the same time though, just being a numbers guy, it never attached to me till you started, speaking about, passive income, what does that mean?

it’s not necessarily, that, I call self retirement too, that, you know what, just remove the dependency on paycheck. But at the same time though, it just does not happen. You have to work for it. And that’s something that I took up from your podcast and from your teaching.

Oh. So just to give people a quick rundown of the stats, you make a route 120 grand a year to day job, which is pretty typical for our listener base. Mostly six figures and above. let’s say accounting things. That’s a side hustle that I’m doing right now, late, and, not to digress, but, Graduating the County moved away.

my day job is it I’m a software quality assurance manager for a consultant company. I have had many different types of roles in it I’ve implemented large scale systems, mostly CRM set financials. And now I quote unquote, find bugs for a living.

But accounting is, when I started investing in real estate, one thing that I bring to my partnership is that, I say, for example, the bookkeeping, the accounting, skipping the numbers, dealing with the CPAs, stay ahead of that, the tax laws, and then, I started doing it a little bit commercially too, because, I was asked even know, so my business partner, who’s, one of my business partner, he’s a broker and he desperately needed some help with his books.

So now I do side hustles of some real estate bookkeeping, not to, limit myself, but not to stress myself also. Yeah, of course. You’d do a side hustle. That’s. I mean it’s either that or a what? Six grand a year buy a couple more rentals, At 3000 a piece, I’m sure you set to the nice thing about the side hustle is you can stuff different, deductions or expenses through there.

what kind of things do you buy and shelter under that thing? Mostly office expenses right now, so remember the chair that I’m sitting on needs to be replaced, mostly, the office expenses, I actually started out with, say for example, some of those, software programs that, I thought that, it’s going to help me grow.

and that’s what I started. And then I thought that, you know what, and then, the time that I spent for my partnerships to, because we pay for two of my partners, should we self-managed and we pay our partners to manage our properties. And that the same thing goes for me, I’m spending an inordinate amount of time, keeping the books, making sure that, our financials are up-to-date and our partners have at the true 360 degree view of it.

So I charged back to the partnership. But, the question that you’re asking me is that, what are the, some of the benefits right now? Mostly I will call it like, the, the soft expenses, which is in office supplies, softwares, conferences, by the way, just attended a real estate conferences or charging that on my side hustle.

We’ve got to get that to $6,000 a year down to zero. That’s the goal.

So the savings rate of 15%, I know this is coming from cause you’re coming. You’re like a refugee from the personal finance blogs, fear. They fixate on this 15%, which to me means nothing because I got guys making 600 grand a year, a million dollars a year fit a percentage. Isn’t that big. Tell me, how much money are you able to save either in stocks, mutual funds, real estate, anything every year, like what’s your net get is question.

You make a buck, 30 grand, you spend some money on vacation, some I-phones and some fun stuff. And then your daily expenses, how much do you have on a monthly basis or annual basis? Would you figure. if I look at the watermark, whether it changes or not. So say for example, that cash number that I’m showing you about 38,000, whether it’s staying static, because you have quote unquote, then that’s saving experience.

What you’re talking about is that, maybe, our savings doesn’t have to go into the cash. It’s always, should go back into investments. So yeah, include that. Include that. I got guys , still putting money in the 401k. I say, keep that, even though I say don’t do that. But just want to know what this is the question, what’s your velocity currently, right?

If are you able to save 30 grand a year or you have to save a hundred grand a year? I definitely can say that I’m saving between 25 to $30,000 a year. Okay. Okay. So where your income level is. I would have expected it to be a little bit higher. and I know you’re cheap.

I just know that about you.

Yeah. most of the guys is in my group or like at least 30 grand a year. And that includes some guys make it under, 80, 90,000 a year. Granted, there are single dudes, but you got a family, but. I would say people in your kind of, you’re more established. You’re not making big purchases.

They’re around 50 grand a year. you don’t have to answer it now, but maybe think there’s something that you’re spending your money on every year maybe private school education, or I dunno, there’s something going on, man. There’s a hole in your pocket. We’re at 10, 10 or 20 grand is going.

maybe your spouse is. Run it off to Nordstrom. You gonna send them the Macy’s but think, jot that one down as anything does the mine. And lane it’s a happy medium. if you remember, coming from the David and sees a piece of the world, which I’m going to cover a little bit later on too, I think that’s a phenomenal, kind of dementia , that I had embraced, but, being a free spirit and a nerd, obviously you can see, everybody can see that, being the nerd of the family and then the free spirit of, an artist wife, I think that’s a happy medium you’re right though.

my wife is. it’s weird, she is, financial frugal, what you call that wild spirit, so you’re right. Just being the families. We could do a lot better with the savings rate, but , it’s one of the inspiration that came from her is that, you know what, we can draw a happy medium.

We don’t go overboard on anything, but, quote unquote, let’s not go super cheap either, but it’s easy to say that, but. Yeah. My philosophy on the whole quality of life and spending is, get a few years, four to six years of years where you’re saving 30 to 50 grand in there.

But once you peak or that 50 grand, you have the ability to free spirit at that point and buy some nice stuff. And that’s what I’m cool with it at the end, but only if. The investments, the castles and investments is paying for crap like that. Got it. I feel like where you’re at maybe.

we’ll get going into that, but maybe it might happen. Tighten the belt for a couple years, get bumped that up, but then reap the rewards later. But, while you’re mentioning your spouse, what did they think of the whole? you’ve got a portfolio of over a dozen units.

What did they think of that stuff? What’s their overall. One of the conscious thing that I have tried to do, because this is real estate being, the saving grace for many families, but at the same time, the most litigation, industries. So I consciously, created a firewall for my families, not to be exposed to the real estate that much.

In fact, so remember I’m talking about, creating state, trust States and what have you trying to create those firewalls as much and not to have those decision-makings, the spouses might hear this complaint that, yeah, you guys are doing all of these things, but anytime, things go South.

we have to hear that, and that’s one of the complaint that my wife had to that, when things started going sour, then you start coming in and, the venting, they, my wife did not like the venting part, so I consciously, kept her away from this, we are all aligned on the end goals, but how we get there, she left it on me.

Does that make sense? I get it. just do it. I do. I never say any of the bad stuff that happens. Bring it upon yourself. If that, say that jokingly, maybe the problem is if they don’t see you putting in, you’re currently putting in 30 grand a year buying one unit a year, but what if they see.

You buying one and a half units or two units every year that saving an extra $30,000. So it gets you up to 50, 60,000 a year. What does that do to your bottom line that bumps your cashflow up 5,000, $6,000 a year, right? Do you think that they’re making that equation or that cost. Yeah, they’re not you’re right.

So keeping them encapsulated, of the problem. And the biggest thing that I started doing the financial piece of diversity a while back, and then I can move away from it is because, the conversation that should happen within a week, at least. with your spouse, especially having, stay at home, spouse that I have, because we have to, because of our daughters twins, we didn’t have any support structures around us.

So my wife actually had to stay at home, to raise our daughters, so that, but having that conversation, I think that tremendously helped once we got into a philosophy that, you know what, yeah, this is what we going to do and try to do a data verse, try to stay within our means, follow the envelope system and what have you.

Yeah. you’re driving the ship, but she got her in the bottom, like shoving coal into the furnace, just doing stuff. He doesn’t know. What does she care if you save an extra 15, 20 grand a year to buy a rental, I don’t see it, but that doesn’t mean that they need to be involved.

I just see it different. I see so many different arrangements of how people do things, but I don’t know if you want a different effect, right? You want to save a little bit more money to buy more rentals. You definitely have to do a different action. If not, you’re insane. It says Einstein.

One thing that I want to bring your attention to is that, based on, the circle that you, you associate with, that distribution number that I’m showing 8,400, that’s the first time I’ve taken a distribution this year, and my goal is, and I’ll cover that, that’s my financial goal is that, I want to see in a consistent distribution, out of all of my partnership on all of my assets.

What’s your thoughts on that? Yeah. I think that’s your problem. you segregate all this stuff and this distribution is where did you pull this? 8,400 bucks. It’s just what you felt comfortable with. No, it should be whatever that thing makes or doesn’t make.

That’s what comes into your personal life count every month, if you’re having this type of problem, right? You supposed to, I didn’t care do it however you want. But another framework I would recommend for you, and we’re not going to get too much into this, but. I would pick up the book profit first by Mike

He has this framework, about he has got these charts on here. Let me copy this over and I’ll put it into your thing right here. Do you have your mom on your podcast? Yeah, I think I did. But I just put it into the chart here. So it says okay, based on a certain revenue range, let’s just stick you in this column.

A this is how much you should be spending on profit owners, pay taxes, operations. what is your top line income about, let’s just say let’s backwards engineer it. So let’s say you’re making a hundred grand, right? You just save 15% for taxes, but the real estate is different.

You don’t pay taxes, but I always say do that first, but the whole premise is like the profit and owner’s pay. You need to be paying yourself these amounts and not just some random, Oh, I felt like paying myself 8,400 look, honey, we made 8,400. This is a way of forcing you. To take some profits off the table, because that’s the saddest thing in life.

These entrepreneurs, they build these businesses and put it, always put it back into research and development and operating expenses or marketing stuff. never take it out and their family just gets disenchanted by this whole thing, because this is black pit. So just take the look at these percentages and it’s not gospel, but

try and understand why the percentages are working that way. So owners pay that might be you putting into a bank account and eventually taking it out as 8,400 or whatever at the end of the year. But profit is something that’s consistent. Profit is something that they can see in their bank account and get on the team.

Who cares if you get another rental is what they say, who cares? What’s in it for me? you get 5%, right? Or imagine if you gave your kids one 10th of this right now, everybody’s on the team. Now. I’m not a big fan of this. Everybody, screaming up and seeing kumbaya, but this might work for you guys.

So just something I think about. but it might be another thing too, right? Like I know you went to Dave Ramsey, he brainwashed you guys with the whole debt stuff. How’s that going? you’ve got a lot of debt on these properties, as you can see, I documented that I actually moved away from his teaching.

Is that because, buying cash for property simply does not work, and so without that, and, say for example, leverage works. and I think he’s teaching, where I differed is that, quote unquote. let’s set aside, they ran this out. As soon as the origins of the world at the end of the day, don’t do stupid things.

I think that’s what they teach. But at the same time , in terms of, growing well, though, I feel like that, first teachers of how to be responsible and then, take on, leverage debt that makes sense, don’t buy, things that doesn’t, generate any income or they appreciate,

and I moved away from his teaching, but I still follow some of the principles, we still do, all the involved systems, trying to stay within. And the budgets, I try to make my disposable income as low as possible, and that’s something though. I know you have our strong feelings about it, and I’m seeing, the other way around too lane, just to digress, how moving money away from financial markets to, other avenues real estate is definitely one. So I have seen my network, switching from financial markets to real estate.

I think I have for the first time, but I think this year I went below 50% of my net worth. That’s more into real estate than, financial market. Yeah. And that was something else I caught on here. you’ve got a lot of money in the 401k and on these paper assets, that’s the trend, right?

Like you’re moving the needle more to real assets, which just happens over time. It took me a long time too, but that’s natural. but like your spouse, , it seems like they’re not entirely on board, but how did that whole discussion about that come around?

debt. Oh, concept. She was absolutely on board with me. In fact, my spouse was , wasn’t very happy when I, put that primary house for a mortgage, so I have a line of credit, hilar that I use it as a, to find that some of my investments, and then I thought that he didn’t want, why not, just lock the rate, because the rates are so low now, lock the rate, take a lower rates and let you know, but still, aggressively pay that off.

so she wasn’t, at all happy about that. the dad Evers lifestyle, she enjoys it. She doesn’t mind that at all because it does provide that financial peace. Okay. Cool. And then, as I said, I have consciously encapsulated her because if you see the numbers that you’re showing, lane for the real estate, over $4 million off, a real estate under ownership, the number that I’m not showing is the debt.

It’s about three plus millions, that we have, I think 2.8 is probably what the debt that we have. So as I am as a, as an investor, I’m personally guaranteeing that loan by the way, but we know that it’s coming, against the real estate.

So that’s one of the other reasons too, that, I am not preaching, that, In order for that, you should not, take on debts. if you don’t have to, I still say that, but I do see that, that could be utilized, judiciously, as long as you build that skill.

I agree. I agree. I get frustrated sometimes like that Dave Ramsey they affiliate really closely with the whole Jesus Christ and Bible stuff. Yeah. So they don’t follow it themselves. I have to tell you that, lane, at the end of the day, you have you own properties in the Southern part of the, the state.

it’s a lot better than I do. But, I live in the twin cities of Minnesota, you cannot buy a property cash. That’s just simply does not happen. It does not happen. And you don’t have to be real sick about it. I think one of the biggest, newer points is did these days is inflation is going to be coming.

not like in the next few years, but it’s coming without a doubt. The pale for Ella stimulus. this is the way to. So to lock in this great debt and just wait this out, because in the end, savers are going to be the people who get killed. People who put money under their bed or not doing anything with it right now and playing the waiting game.

They’re the ones who are going to be losing. but yeah, you got this nice little portfolio peer. I have the spreadsheet. and if you guys check these out on the YouTube channel, it’s, you kids can actually see the numbers, but. Talk us through how you started acquiring these properties up in Minnesota and North Carolina.

Because I think when we first chatted your artists set on buying properties near your local area, but how did this all come about, help the new guy getting started. Take us back to 2015, 16 when you picked up these first few. That’s perfect. I am the perfect story for why people should invest into real estate because I am that person in 2011 at the heart of the downturn, we have sold our property for a loss because I did not want to be a landlord, from that person, to in 2015 buying my first rental, property.

And the reason, I made that switch is because first and foremost, Lane. I think, I believe in , not believe people blindly, build a relationship. relationship has its ups and downs, so my business partner, then from that point onwards, my realtor, who had helped us, the property that we live in right now, It’s a rainbow that we rehabbed.

and we moved here because of the school district, and that, from that point onwards, he has almost become like a family members, but at the same time, he helped me acquire a property. We own it together for, that was the first property I bought.

And that’s the message that I wanted to get across that, what. all of us, we think that, if you don’t think that you have a shortcoming, you’re misjudging yourself, but at the same time, I also feel like that, we always undersell ourselves in terms of our skills, but I know what I’m capable of, what my strengths are.

So I have started equating relationship to partnership. So this entire, portfolio that you’re seeing, it’s built out of three partnerships. the first one is a real estate broker that, I had known for many years, he acquires the properties, she’s helped manage the properties, and the partnership pays for that.

and then I bring in different sets of skills. I keep the numbers and then, with this partnership, we are doing something very interesting, lane, being a realtor, as most of the time, the realtor’s mindset is that, keep that property and exit tree.

so we have spent a lot of money, as you said, put the money back into the business , to keep access, all of our properties, have , all of those things, are done. So it’s almost like owner’s exit ready. so the trend line for me is that, 2015 one property is 2016 two, but on average I’ve been acquiring two properties, every single year, even during the COVID I think we have, three acquisitions this year.

So on this first partnership, maybe walk us through each partnership. Do you guys put up the money separately? Who does the sweat equity? And then how did, how do you guys split the payouts is a the cap half, or how does, how do you work these deals? So what had happened is that, for the partnership based in Minnesota, and then I will also answer the question that, why did I end up, spread out, but for the partnership in Minnesota, what happens is that, yeah, it’s 50 50 partnership, but, I would say higher percentage of investment came from myself and my partner,

yeah, he does the sweat equity. and what happens is that, we can pull in a loan payback to me, we decide what’s a fair, loan paid back to me and we are carrying that. And then, we are working towards that, so essentially what happens is that even if we end up selling a property, which we have done, and we are converting from, single families to, we can moving into a town home, for us, less maintainers, but that’s a different story.

And we also can running our commercial loans to 30 or, papers to, that’s how the story. But, with this partnership, the way we build this up is that, majority of the, investment is coming from myself, my partner also put up cash, wherever it needed to, in fact, he floats all of our invoices for Tampax.

So what we ended up doing is that, we look at the cash contributions of each property, and then if you’re selling it first, what we do we take out is that, let’s pay back that capital off each partners. And then we split the appreciation. Okay. And so who’s putting in the debts. So like on the second property, actually, let me first mention this.

I like what you did than the first one. Like you just bought it yourself, Because you don’t know what you don’t know. So before you start jumping into bed with people you don’t know, or you sorta know it’s good to just do it at yourself. So you know that, Oh, the cap ex floating, that’s a pain in the butt or not a big deal.

And you know how much it’s worth. So I think that was a good move on your part. but yeah, so the first school around in the partnership, with the realtor who supposedly, I think he does more of the sweat equity, operation, and especially on the deal finding side on the large syndication deals, the way we break it down is like, One third is who brought the money.

One third is who found the deal. One third is operation, there’s all these small intangibles like on this deal whose debt this is a Fannie Mae, Freddie Mac loan. And who’s that name is it’s actually, all of these are LC back loans, so both the partners are liable for the loans.

Okay. why did you not go with putting all the loans in your name and getting a little bit better interest rate as a Fannie Mae Freddie Mac? What was the, you had to do that late when we first started, because, we did not have that, this, the story of, LCC and not having an income.

We had to do that. I think out of this portfolio, there are two loans that are our personal names. We actually have now started doing that. What you just said, which is that you’re putting the properties, taking out of the commercial loans for the 20 year amortization. Getting out of that and putting it into the cheaper money we started doing that.

That’s what I would do. And, just compensate yourself a little bit, admit that might be like worth five or 10% of the general partnership here. You’re saying that you are a hundred percent, So out of this entire portfolio. especially the ones in Minnesota, I think there are two properties still under the commercial loan, interest rate is decent, but as you said, with the 20 year MBA is just killing yourself.

Yeah, but you don’t really sucks about that commercial loan. what’s the term length, what’s the term on the loan? five years. Five years. Yeah. Yeah, dude, that sucks. get out of that. that’s a dangerous loan go. No less than seven years. Yeah, we are. You are right though. We are right on the cusp of, twos.

That’s going to probably readjust, but, we will, as I said, this year we are doing two things, at least on the properties in Minnesota, we are getting away from single families. We are looking at a little bit higher value, added, townhomes where the rents are actually higher, lane.

So we are converting our single families to townhomes and a second part, even with the HOA. By the way, with the HOA. And the second part is that we are taking the 20 year notes to a 30 year notes. Okay. I would say get those commercial notes down to get the term lengths up, just do Fannie Mae, Freddie Mac, and put it in one of your guys’ names and work it out.

Maybe you get one, maybe he gets one, you split it that way. So you’re not splitting hairs and 55% here, 45% to that guy, right? yeah, I get all those commercial loans. and whatever you don’t talk to Lenny brokers. Those guys are. Stupid. they’re gonna want you to do it all in one loan or like cross-collateralized and put multiple of these in one.

Don’t do that. that’s what they love that because it’s a large loan and they can pick up their origination fees. But the problem with that is , if you wanted to get rid of one of the properties, you can’t, you block the whole loan. So you’re right. Chris driving crazy. You’re trolling all over the place and Facebook groups and whatnot.

Don’t mind. I want to take this chance to answer one of your questions that you had asked me earlier, which is that, Y move away from the local market to outside markets, lane. So for me, the biggest, driving force was entry points. What I was noticing is that, how much more can my money buy?

And that’s what I was seeing, especially with small multiplexes. I remember I went through the life cycles of, I think you probably have talked about at knowledge, see about, the real estate investors starting out visiting your family’s portfolios and get into small multiplexes and then, midsize multiplexes and then, obviously larger multi-plex.

So I’m on that small multiplexes right now. Multi-families. And what I saw is that, my money was not buying enough in the twin cities market. So that’s why he started branching now. Yeah. So I would probably not recommend doing what you’re doing. I think you’re okay.

Cause you know how to do this, but most people do not have the ability to do what you’re doing. Correct. I would not recommend if you’re listening, doing this, because now when you’re going over five units, you’re getting crappy commercial loans. You’re not getting Fannie Mae Freddie Mac it’d be course debt.

would you have to go to million dollar loan sizes or more? You’re not getting the economies of scales that you are with a hundred unit where you get a property manager who sits at your building and a guy driving around in a golf cart, fixing out work orders. All this stuff is still third party.

Really super expensive repairs. and then the biggest issue is now you’re going to different places, you got different partners and you just a Russian roulette in a way which of those guys are going to screw you over. this stuff works when it works. I would say whatever you do either got to stay safe, small with the four units and under, or just go LP syndication and go big.

But you’re obviously picking this road, you’re the bunker, right? Which I think it’s fine. you’re an outlier again. If you guys want to read more into this, go to simple passive, which is this indication guide and , it’s a huge article, go command F or whatever, and search for mom and pop investor.

And there’s a myriad of reasons why you don’t want to do it. Almond is doing right here. But, but yeah, what’s next? where are you going? Are you going to keep doing this or is this worth it like the reason I need to, See this thing through a little bit longer is, this model, because, by the way, I’m also investing into syndication, I was just going to amplify what they, you said, the learning curve to get this thing to manage and then, develop this partnerships across state lines, it’s not for everyone. In fact, 90% of the investors probably should not be doing that. It’s only because I think, either you or somebody else said that. It’s all about, even if it’s indication, it’s all about relationship, you should know the syndicator that you’re trusting with.

And then, most of the time I think there are, people, repeatedly invest with the same set of indicators because they believe they build that relationship. one thing that I wanted to point out is that, lane, just to answer your questions is I’m just using a very simple formula that, each of my units needs to provide me at least a hundred dollars a month.

so if my, goal is to reach that $5,500, how do I get there fast? So now I’m super concentrating on that North Carolina partnership because we are buying, smaller multi-families, but you are right though. You pointed out a few things, which is that, just by doing this, Kind of a small scale.

We are never getting the economics of scale. I think that’s so important. And that’s one of the areas that I’m looking into that, what are the things that we can do at that small volume? We probably would never be able to do that, but it’s one of five points that you brought up that, as a mom and pop investors, if we think small like this, we would never get the small, economic social scale.

And then also. let me dig a little bit and get people confused a little bit. So how did you find that North Carolina operator, the person that worked what was your due diligence process and why did you work with them? family members, , so this is a partnership that I built in each of the trial areas.

So it’s been a family member, who’s a partner and then, he brought in two other people that I did not know a single thing about them. You’re right. Yeah. it’s, again, it’s a crapshoot, right? It’s almost like a throwing a dirt, obviously worked out because now, second years of existence, we went from one to 10 units and it’s working out and in terms of, everything, we match, but it was pure luck though.

You’re a hundred percent. I think the way he did it was good. that’s better than going on bigger pockets or working with a fortune builder partner education and another, an expert. Next question here. How did you guys structure it? Did you guys have some kind of partnership document written out, outline few things that could go wrong and how you would remediate that?

And is it within an LLC or something it’s with an LLC is an operating document. But I think what you pointed out it’s something that our sec lawyer has been asking for as well, what is the succession plan? we don’t have that and we need to work on that.

no, it’s fine. I think it’s fine. Here’s my thought process. Like you don’t really need, even if you have really good documents, it doesn’t matter if people aren’t on the up and up. Yeah. You could. As long as the people they act in good faith and they’re good business people, if you don’t really need any documents, technically in my opinion.

But, another reason why, I don’t like doing this stuff is, I don’t know, like working with people who have a net worth of under 2 million, because, what’s, these properties worth 40, 50, a hundred grand. if a $10,000 repair goes around and somebody has a tough time, they can just steal 10 grand.

Cause that’s a lot of money to them. But if a guy is worth $2 million net worth. They’re not gonna screw people over 10 grand, not even a question. Yeah. It wouldn’t have been on my register. but I don’t know that may not be a good, ask your partner how much your net worth is because you never know, but that’s just a thought process I have.

That’s why I’ll never do a private money lending to a house flipper who drives around a truck. I’m not saying that’s bad, but Hey, not with my money. Look, I’m going to be very discriminatory with my money and kind of create rules around certain things like that. It’s my money. I’m the investor. I call the shots.

But, okay. I think you have fun with us, and that’s why I think. Keep doing it personally for you. So you weren’t able to scale up I’m hoping to pick your brain on a few of the topics, lane. I never did what you did, right? Like I never went to the five to 50 unit.

I saw the issues and complications at. But I never went to the depth you did. I never really did it. It was all intellectual and thought process for me. Oh, I don’t want to do that. I’m just going to go to the bigger stuff. No, but you are right though, because you constantly have talked about your turnkeys, in, in Birmingham.

And you said that, one camp X will wipe off all of the games I’ve seen that, and one of the things that I put down on my observations that most of the real estate investors do not understand that they are not making money. Yeah. I’m with you on that one, that, lane, the biggest challenge for most of the real estate investors is that, they are so much into the weeds because, they have to be in the weeds because, they are trying to sell of the properties, the market is not there.

They did not buy the property smart. So I taught you, people should take a big long at heart. real estate is a fantastic, vehicle to get you to a promise land, if you do not pay attention, if you’re not aware, it’s very easy to get derailed.

And this is where I open arms, welcome you to syndications because now, the ups and downs and real estate. And. And you’re totally encapsulated. Yeah. Yeah. can’t tell you how many accredited investors who don’t have a freaking clue. I never owned a rectal ask. why did distributions get delayed?

it’s we had a pandemic grow, people weren’t moving out people because this claimant as much as you want to, but still people will have that certain expectations. Yeah. I dunno part of it is education part of it. people’s true colors. When it come out.

And we’re a relationship business, and that’s how use 50 get yourself removed from the investor list, but you get it right. I think that’s why it’s nice working with folks like yourself because you want a reasonable excuse or justification for things and everything is reasonable.

we’re not making this stuff up. And you understand it. You understand how it feels. And what was the bottom line every month? That’s what I look at. What was the bottom line? Oh, we only made $15,000 this month. Normally we should be around 30 to 40, okay, bad month.

Let’s try the next month. And you as a rental property owner know that shoot HVAC might not five grand. Now I’m down for that. Is this.

I deal with numbers late. What you’re saying is the music into my ears is exactly right. That majority of the times I looked at the curve at the end of the five-year Mark in my partnerships in Minneapolis, I looked at, how much money we have made. Versus how much money we actually had to put back, it’s not easy.

so the question that I have for you was that, laying, you are probably, you made that journey, remember now, you have moved away from your full-time job, but do you have an accountability partner? I have used them in the past, but it’s far to find people who is willing to.

Kind of jump on a call with you on a routine basis. the mere fact that you’re asking this question is probably telling me that you’re the, probably the one who, gets ghosted by us accountability partner. That’s the hardest thing. And I think the, also we used to do this in the investor club where I would connect people with accountability partners.

I don’t know if you remember this, but these guys, we do it in January and we’ll probably do it again at this next mastermind coming up the bubble one. we’ll sign accountability partners for those who are willing. But then one mistake I saw was like, people are like, Oh, we’re gonna, we’re in.

Do a call every two weeks. dude, man, that’s just going to blow up in your face and that’s not sustainable. Maybe make it on like once every quarter, every three months, like that’s just my recommendation from best practices. but I pay for. A coach. they not really, not too much about business.

They’re just an accountability partner. that’s something I’ve heard from a lot of people in my sphere. It’s yeah, man, I just pay a few thousand dollars to have somebody call me up. It might be us. Right when I’m just sitting here in my chair, not really making any progress. I’m just talking about doing the things and then the accountability partner or not the partner, they’re not partners.

They’re our accountability coach that you paid money to. They’re the ones being like, Hey Ahmed, you’ve been doing the same thing, but less six times we’ve talked. I try to talk to them two to three weeks. Try not make it too. I got one for my wife too. But I think her coaches taking for a ride there, they’re like doing a call every week.

I’m like, I guess got to pay for it, but the way I see it, it might be a waste of money, but I don’t know. It’s well worth it. I think, a few thousand dollars for a year for that type of stuff. I think that’s nothing. I looked at your investment sense. You always talk about that, the investment that has, before, that allows you actually to get to the next level, that how much you have spent on your education and mentorship.

I think that’s an eye-opener for me, especially. Yeah, the money, I think, if you just want accountability, just go get a coach. That’s cheap. That’s like under five grand for the year. Okay. But you pay the money for the connections that you would not have otherwise.

one of the common questions that you always ask on your podcast is that, you know what, of any guesses that, where are the ad in terms of how much passive income they’re generating. So this BNC is together lane. I just wanted your thoughts how do I make sure that, I can retire.

I have a soft goal of doing this at age 55, which is three and a half years from now. How can I make sure that, I’m on a solid path, my friendship, final salary that I am, but I just don’t feel it. And the second part is that, you are living that life now that, you do not have a W2 jobs.

what are some of the thoughts that you had? how to handle that? Yeah. that’s you got this nice spreadsheets, but the one thing that doesn’t tell me is the bottom line. The goal is cashflow. How much are these things freaking making, man, like you get all this other stuff for now numbers.

I haven’t, right now it’s at 3,500 3,500. Yeah. And you’ve got about when I calculated your equity based on your partnership share you have six, a little 610,000. So if you’re telling me you make 3,500 a month. So let’s just call it 40 grand a year 40 grand divided by 605 equity is 6.6%, bro.

Yeah, it’s not that great. I’m thing, and you can put your money in stable coin and get 8%. that’s just kicking it. But yeah. Granted, you don’t get the tax benefits, but you’re spending a lot of time and energy on this stuff and that’s correct.

That’s exactly correct. You’re not putting , an amount of time and energy and then, the depression lets you go. Yeah. So here’s I think where you have to think, you have to like, do the mat, add that other extra line on your spreadsheet with return on equity percentage and your equity and how much you’re making.

And then also, going back to your original, your side gig, right? Like at the end of the day, you have to ask yourself, what is your highest and best use, Maybe it’s, I don’t know. I get the feeling that you’re at a dead end job already. And you’re like, whatever, but maybe you can expand this thing, right?

Maybe you can five X that in the next couple of years, do your accounting side gig and that’s likely where your highest and best use instead of screwing around with these little North Carolina properties and just go passive. I think that’s, I don’t know your situation entirely, but I’m guessing that’s probably the highest and best use for your time.

Just like a dentist or doctors, just going back to work. Sorry, buddy. You may not like it, but that’s just, it’s Tom Brady to skull spin the football. That’s all. You’re good at man. Just keep doing that while you still can. You’re echoing my, one of my business partners to comments, the same conversation that I had with him.

Yeah. He actually said the same thing that, when you have to look at, what’s the highest ROI in terms of your time. Yeah. And I know what, which way this direction is going. I would start to put these. Properties on Roofstock if you want to my guy, I can connect, give you a warm connection, but I would play some on Roofstock while they have of tenants in place.

So you don’t ruin the income stream. And I would say start the conversation with your partners on being like, all right. Let’s force straight a little bit. Maybe you would like to own these properties outright. Perfect. You get to hone down and this is where you can be strategic and be like, all right, maybe you can dump the capital gain on them where they own it.

And they just give you cash. Now. I don’t know if that’s kosher tax-wise but. we’ve been doing a part a little bit of that already, because you know that, the partnership in twin cities, we have, we used to have 10 units. We are down to eight. We are going to get down to seven.

The way we did it we each took one property, remember it comes with all the other things, the County gizmos, the property distributions and what have you. But yeah, we are doing a little bit part of that, lane. and you said that, that conversation was only forced because, my partner, he was overstretched.

And he said that, he wanted his, kind of portfolio to be a lot more. So it’s almost, the same conversation gets held by multiple people. Yeah, most people want these properties paid off and most people want properties that are, they can feel it, touch it in a local area. So I’m sure you can find another sucker to take these off your hands or maybe bring them in as a partner first and then giving them the taxable gain.

But at the same time though, what you’re saying is that you want, Le B blot lens, the OSHA B, is that a lot more, less hands-on and that look at more, through the passive, syndication opportunities, right? Yeah. And this is going to take a long time, right? Like I had 11 rental properties and I sold.

it’s seven of them in 2018, two of them in 2019. And it got still two of these things that I’ve been trying to sell for over a year. that’s, it just takes a while, your destiny is shaped in your decisions, but I think you’ve made the decision. I don’t know if you made the decision. I know you definitely made the decision that to sell some of these, but overall, I think you need to make that decision.

Are you going to go all in on this accounting thing? are you, maybe we’ll get to this last question. Are you there? Are you at escape velocity? How can I tell that? I asked you your net worth, right? Yeah. I think you we figured it was somewhere around 1.4, 1.5.

Correct. which shouldn’t be the case. She should know that’s the score and we should know what the score is at all times. I think the problem is you got all this like money. That’s like not doing anything right now. It’s in stocks, checkbook, IRA, all this type of stuff. self-managed texts.

this is all I don’t like these checkbook IRA or self-directed Roth IRA is at all. you want the tax benefits today? Get it out of that stuff. Invested cash. Especially if you’re younger, which you are, I think that’s classic limiting belief, right? Oh, I’m too old. That’s playing that’s for old people.

what are you like? 41. Kidding me, man. not old. Yeah. I think what is retirement age? 65 or something? It is. I think only if you’re ordering 65, then the self-managed tax event accounts makes sense Roth and all that stuff. Or you make a whole boat load of money. You don’t know where to put it, but every situation is different, but, yeah, you gotta pull the Goldie man.

You gotta get the stuff working, either buy more rentals or syndications, or this is the problem. You’re fighting with one arm tied behind your back. You got 500 K of equity working, but you got another 500 K just sitting here doing nothing.

So now let’s see, I like to use is you’re trying to fight a war here. You get half of your soldiers back at the barracks, smoking weed and taking naps.

you got half on the million dollars fighting on the front lines and freaking Minnesota, North Carolina, Nebraska. Doing kamikaze runs for you. You got Bobby A. Little bit more than a half? Not doing Jack, not doing anything. So I’m not saying that these guys need to go on the front lines, buying some properties and winsome Salem’s James toddler, but get ’em get on making something.

Not saying you have to put it in a syndication, but like maybe, I dunno, throw him an HB or throw them in like infinite banking, get them going, get five or 10% of this stuff. That’s, what’s hurting you, but once you get, let’s say you only have half a million dollars in the game right now.

And even at best half a million dollars at 10% cash flow. That’s. 50 grand a year. That’s nothing. You got to get these guys in the game. So at 10% you can be at a hundred grand a year. And at that point you’re at zero gravity, you’ve got that escape philosophy and you’re at critical mass. So you’re there.

I think you just have to move things around , but then it comes down to your goals. At your current spend level, is this what you want that you, I think you narrowed my problems. They’ve been very well because that’s what it is that my current spend level can I achieve? what I’m saying that I should be achieving in 55.

Yeah. And this is where your means might expand to you have to go at this harder or at their current. Are you going to be able to send your kids to college or is that a thing with you guys or. Do you have a thing with us? we have, which account is applied 29 plans, but, I stopped investing into it.

our goal is, to make sure that, they have enough money for the first two weeks. Yeah. Okay. Are you on track to hit those goals? Yeah. Okay. cool. yeah, if you’re at your current spend level, you’ve got that passive passively. But you don’t, you got to get the other stuff working a little bit, but you’re there essentially.

the reason I asked that question is have you have the, for some people listening, they may like, Oh shoot, I don’t have that money as fat save. okay buddy, you’re going to have to go with some North Carolina, whatever, like I have to do more stuff. But it seems like you’re there.

If that’s truly the case, of course you should probably sit and ponder or how you’re going to piece this together, but for you at a million dollars in passive stuff, making 10%, and maybe it grows a little bit better than that. Yeah. You’re there. You just have to, I think your problem is you got to pull the GoLean and get these guys work in a little bit harder.

Not harder. Yeah. Yeah. You said you had a five 29. how much you got in that part of that testing advantage? So I have about right now, 58 between two daughters. Yeah. Get rid of that stuff, man. That’s five 20 nines are like college savings pants for the clueless investor cash. You’re better. You can run it a hundred percent and the person, because there’s no guarantee that my daughters, even though we want them to go to colleges, that they would do that.

Yeah. put it into if in a banking and invested for them.

yeah, that’s, I think a longer topics, I have to follow up on what you’re teaching about infinite banking. I have looked at the numbers, so I need to look at that a little bit more closely. Yeah, but it’s eat, you pay a lot in fees in the beginning, but you got money, not doing anything right here.

This is not doing anything. And that’s the thing. They take you to a breakeven and the infinite banking, because what, when I calculated it, I saw them that the breakeven is about five years. Yeah, we’re on there right now. But like it’s for people in your shoes for the better kind of hemming and hawing.

And for a few years, with over half a million dollars, not doing anything.

the inefficient liquidity people that you are. Inefficient you’re right. but, I did some of the stuff that you have been, preaching on, lane and thank you for opening my eyes, because this is the first year I’ve taken that Kobe distribution, so started pulling money out of, that I thought that was never, untouchable or not, but you’re right.

You just have to. be intentional about it, So did COVID distributions, moving, money from, 401k loans, they remember that they, Ramsey principles, you never do that, but I’ve done that and it’s working out fairly well for me, So those things, have opened up, you were able to help me open my eyes up. I’m just giving, entertainment here. you get it. Take these ideas, but I guess my goal is to dispel all the dogma and what people normally do because when people normally do get you what they get, but to put you in a group of other people that are doing the same thing, that are taking their 401ks out, at least makes you make a logical decision, Without prejudices in there. Okay, let me ask him this. And he’s been inspecting your time. I wanted to ask this question that I did not document here, but, I know the answer, but I’m hoping that, just by use, answering it, other people would learn, which is that, what do you recommend for, how do you choose, which vindication group you want to invest with?

What are the things that you decide before you invest with the syndication group? I’m a little bit, I can underwrite the deals so I can decode the code. So I just pull the rack rolls and P and L’s, and I run it through my analyzer and I see what it would pencil out as a, what I’m trying to look for is what kind of assumptions are these guys use?

Are they using like a zero? what is the reversion cap rate it, is it the same as their insurance? Cause that’s, I think that’s irresponsible. what is their rent increase per years at 3%? Like you said, that’s way too high. most newbie investors are looking at silly things like what is the GPLP split or where the acquisition fees.

That’s not the way to look at it guys. but assuming that most people don’t know how to do that. That’s again, where you look at, it’s good to invest in good areas path to progress in case the syndicator falls down that at least the, it was in a good area. but then again, it’s mostly just investing with, via proxy that you have people that you trust that are pure passive investors, that they can vouch that they invest with somebody and you might as well try it out yourself.

It’s like the whole, like you’re at an intersection, this car is making a left turn. I don’t look, I just make my right turn if they’re going right. If they get T-boned well, at least I won’t get the brunt of it, but I’m assuming that they’re checking. So if I have a built a relationship with another pure passive investor, not just, I had one beer with him, or I talked to him on the phone for 10, 20 minutes, but you build rapport over time.

You have a reciprocal relationship. And now you share what deals you’re going into, they’re going into what deals aren’t working, what deal is, and you can build that type of relationship where if they’re going to make that left turn, you’re going to follow them in a way that takes a long time to develop.

I never had that when I first started, but that’s really the gold standard. Just like how I asked you. Going back to, Oh, how did you find that guy in, Minnesota, right? The agent? I was listening for that, so I was like you said, I knew this guy for a couple of years, right? Like you had built up that relationship and rapport and you guys, you knew this wasn’t just a one guy dropped into the local Rio or put a few posts in bigger pockets or something random like that.

this guy was there. maybe you probably check for social proof on other people who’ve worked with him in the past. you did your due diligence, not like a bone head and most people. Do you do this, that really wrong way. And I think that’s shown why you’re able to navigate the successes really.

and the other part is being accountable to have accountability plan, accountability partners, but most people are not able to do that. Most people are unable to build relationships with people. the next generation, the gen Z or whatever, they’re going to be horrible right at this stuff.

Absolutely horrible. I tell you I’m losing the battle. , I do not see any interest on my daughters. I keep on trying to put them to just menial tasks or attack these, they’ll understand that it’s not, I don’t want them to grow up to be a trust fund babies, but they are pretty much growing up to be like that.

Yeah. that’s something I’ve tried to build on the curriculum. I don’t have kids, but I know on the upcoming mastermind, I asked people. Do they have older kids, younger kids, they don’t have kids. And then we’re going to split up people in different breakout rooms based on that topic and give them speaking sheets.

So you can speak to people that have younger kids like yourself. But my only take on that from my perspective is if you’re getting them menial tasks, that sucks. Why would I want to do menial tasks? give me. Show me the rewards, right? Just like the profit first thing, show me the, give me the, my 5%, even if it’s super small, I want some, give me some skin in the game.

Just like your spouse, middle skin in the game, you take some arbitrary, random $8,400 distribution. That means nothing to them. So you gotta figure out a way to get skin in the game or, but I don’t know how it works. some people swear by the game cashflow for kids. That might be a good one and then bribe them to play, whoever wins gets 10 bucks.

I don’t know.

Yeah. any last things or you think you’re good for now? I’m going for an hour. the other things that I’m going to follow up on the website I think you have talked about this a little bit, that, as you have moved into syndications and how you have learn how to operationalize, designate, how does the asset management work, but those are a lot deeper conversations that I just need to really read up on the materials that you have on your website.

Yeah. So by the time this goes out, I’m sure we’ll have the syndication eCourse done. Okay. let me check that out. Simple Pasa it’s done and it’s pretty good. Good. but yeah. thanks for doing this. And people will want to, you guys want to volunteer and put yourself out there.

Ahmed was like, yeah. Transparency. Put yourself up there. let me know, and we can do one of these for you, but hopefully, it was helpful for everybody. And thanks it for volunteering. You’re more than welcome. Thank you for having me on.

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