The Journey to Simple Passive Cashflow

Investor Quarterly Letter #3 & My Journey to SPC

2019 Q1 @ FI! Quit Job 4/5/2019!


Questions from the HUI!

I summarized my feelings of investing in a living article here.

We are witnessing history in the making with the longest bull market since WW2. (Source)


I don’t know what the Black-Swan Event will finally make the economy tip…

This is NOT the time to be aggressive in your deal underwriting (lowering reversion cap rates, vacancy rates, and increasing annual rent increases over 2.5%). And its NOT the time to get short term loans (5 years or less).
We have an inverted yield curve which academics call an indicator of a recession…and also the Fed – after raising rates in September and again in December announced it envisions no rate hikes in 2019. This trend is usually a good predictor of upcoming recession as shown in the past history of US financial performance.

And on March 22. 2019 CNBC announces that the ‘Yield Curve’ inverts as 3-month yield tops 10-year rate.

This means that the 3 months yield curve is more attractive than 10 year.  This is what we call a “yield curve inversion “.
No regular guy on the street feels this but it impacts the banks greatly. The banks make money by paying retail to CD savings paying ~1% using short term interest rates like 3  months or 2-year yield to the regular guy who walks into the bank for a loan or gives us a 4-5% commercial real estate loan to do a syndication.  That arbitrage is how the bank makes money.  If short term yield is higher than the 10-year treasury yield, then the banks can’t really make money by arbitrage. The Banks will stop lending.  When then banks stop lending,  no one can get any loans which leads to a slowdown in economic activities leading to recession. Companies start shipping less and ordering more raw goods and everyone freaks themselves out into being gun shy.

China’s debt bubble from overbuilding coming to pay the piper? The Wall? Government shutdowns? At least we don’t have to worry about missiles hitting Hawaii anymore.

Here are some more scenarios from our online tribe:

“Total corporate debt has increased by over $2.5 trillion or 40 percent since its previous record high in 2008, to about $9 trillion, dwarfing commercial real estate debt, which is about $2.8 trillion. (By way of comparison, residential mortgages have decreased from $11.3 trillion to $10.7 trillion over the same time span.)” – CPE – 19.03.6

How likely are these events?

But I’m beginning to search for something other than MFH Apartments. Email me for a sneak peek 😉

Look at the uptick in Retail vs MFH H2-2016


[Investors are chasing for decreasing yield these days] – – 19.03.4

[Sophisticated Investors know interest rates and caps go up and down together and their money is made in the delta between the two] – – 19.03.4

MFH is great but you need to be aware of new Class A apartments being built to put downward pressure on pricing – Source MHN

Something I am watching lately is the jobless claim stats which seems to be a more of a direct indicator that the manipulated unemployment stats. To use a medical analogy, the jobless claim is like your blood sugar level where the unemployment stats is your longer term A1C number.

Jobless Claims are:

  1. Complete data – not sampled.  Most official data is a partial sample.  Jobless Claims are conducted across all parts of the US.
  2. Not modeled.  Most official data gets modeled and extrapolated.  That means inflection points and disruptions get missed until the model is ‘corrected’.  Jobless Claims are pure
  3. Actual data, not opinion.  A lot of data points are actually just opinions and soft surveys.  (Q: How do you feel about prices?  A: I dunno.  ok?)   Conversely, each Jobless Claim required an individual to raise their hand and say they were just fired.
  4. Frequent and Real time.  Jobless Claims are published each week within days of filing.

But enough of this doom and gloom because most gurus out there call recession everyday just so they can have Tweetable content.

I saw the new Group Coaching program and wondering if you are still investing your money on the LP side of deals or if you are moving more towards selling courses and education?

Here is the deal… I am seeing more and more random people get into this business syndicating and deals (its just more noise as an LP to go through to see which are underwritten the right way). I see where things are going 2020+. I also see deals floating around out there for months and then being re-syndicated which I believe because the original sponsors are desperate not to pay hard money costs and its easier to give someone an arm and a leg to raise the money for them. That said those deals suck to begin with and if they were such a good deal that it would get funded in the first month. ‘ unfortunate what people do to for money and something I personally struggle with as I don’t want to be in deals that are sucky in a couple of deals cause the numbers did not make sense in the first place.
I started with a goal of getting FI which I feel I’m pretty much there. Now the goal is to build even more meaningful relationships with people and it seems I am blessed to get on bi weekly calls with people who are really motivated and gracious on what I do. Nothing is better than that. It’s truly an honor and energizing.
I’m trying to stay in a sweet spot where I’m not charging people who can’t afford $20,000 mentorships and working with the non-CEF crowd. Where CEF stands for cheap, easy, free. Don’t get me wrong… I’m all for free content and much of what I gathered 2009-2015 was on my own but then again I wasted a lot of time and made a few mistakes. One thing I notice in the CEF or “freebie-joe” crowd is that you have a lot of scarcity-minded people who just want to get un-broke and not really her for relationships and sport. Its sort of like me at my day job… I work my 40 hours do my job but that’s it… no extra credit stuff not much fun too. The theory is that when you start charging a dollar (or go to a nicer venue with $7 dollar beers) at the door you start getting maybe not higher quality people but higher quality mindsets.
Site visits per month on => more people I get to pick and choose who I associate with


  1. Episode 147 – Economic Predications with MoneyBall Trader

    Vice Index
    Watch the China Trade
    Economic indicators
  2. Episode 146 – Investing in Musicals w/ Matt “Broadway” Picheny

    Matt, and I met a few years back when we were starting to invest in apartments. Having the right network is critical and its important to grow with people. Make no mistake this type of investing is high risk high reward but it’s a whole lot of fun. When I build my base of cashflowing Class B and C apartments I will look to trophy assets like these.
  3. IRS notice 2019-07  (

    ​​Section 199A was enacted on December 22, 2017, and was amended on March 23, 2018, retroactively to January 1, 2018, by the Consolidated Appropriations Act, 2018, Pub. L. No. 115-141.
    The Treasury Department and the IRS wanted to clarify the rules and prepared a document* to explain the Section 199A deductions.  

    BELOW IS JUST AN INTERPRETATION AND YOU ARE ENCOURAGED TO FIND YOUR OWN LEGAL AND TAX PROFESSIONAL *IRS notice 2019-07  ( explains the administrative rules and defines a safe harbor for real estate investors as is defined in Section 199A of the Code.
    Safe harbor for the purposes of section 199A, a rental real estate enterprise will be treated as a trade or business if the following requirements are satisfied during the taxable year with respect to the rental real estate enterprise:
    1. Solely for purposes of this safe harbor, a rental real estate enterprise is defined as an interest in real property held to produce rents and may consist of an interest in multiple properties.
    2. The individual or relevant pass through entity (RPE) relying on this revenue procedure must hold the interest directly or through an entity disregarded (such as an LLC) as an entity separate from its owner under § 301.7701-3.
    3. Taxpayers must either treat each property held, for the production of rents, as a separate enterprise or treat all similar properties held for the production of rents as a single enterprise (i.e. owned by the same LLC).
    4. Commercial and residential real estate may not be part of the same enterprise. (There is a question regarding the treatment of mixed-use buildings under this ruling, that has not been resolved yet)
    5. Note: Taxpayers may not vary this treatment from year-to-year unless there has been a significant change in facts and circumstances.
    6. This includes a deduction of up to 20 percent of aggregate real estate investment trust (REIT) dividends and qualified publicly traded partnership income.
    Additional Safe Harbor Requirements (A) Separate books and records are maintained to reflect income and expenses for each rental real estate enterprise; (B) For taxable years beginning prior to January 1, 2023, 250 or more hours of rental services must be performed (as described in this revenue procedure) per year, with respect to the rental enterprise. For taxable years beginning after December 31, 2022, if in any three of the five consecutive taxable years that end with the taxable year 250 or more hours of rental services are performed (as described in this revenue procedure) per year with respect to the rental real estate enterprise; and
    The taxpayer maintains a record of the following:
    1. Hours of all services performed.
    2. Description of all services performed.
    3. Dates on which such services were performed.
    4. Who performed the services.
    Rental activities allowed in the 250 hours for the purpose of this revenue procedure include:
    1. Advertising to rent or lease the real estate.
    2. Negotiating and executing leases.
    3. Verifying information contained in prospective tenant applications.
    4. Collection of rent.
    5. Daily operation, maintenance, and repair of the property.
    6. Management of the real estate.
    7. Purchase of materials.
    8. Supervision of employees and independent contractors.
    9. Rental services may be performed by owners or by employees, agents, and/or independent contractors of the owners.
    The following tasks are excluded and not allowed to be counted as part of the 250-hour Safe Harbor:
    1. Financial or investment management activities, such as arranging financing.
    2. Procuring real estate.
    3. Studying and reviewing financial statements or reports.
    4. Planning, managing, or constructing long-term capital improvements.
    5. Hours spent traveling to and from the property.
    [In order words you seem like you need to do actual work]
    Clearly Excluded from Safe Harbor:
    1. Real estate used by the taxpayer including an owner or beneficiary of an RPE (relevant passthrough entity), as a residence, for any part of the year.
    2. Real estate rented or leased under a triple net lease for purposes of this revenue procedure, a triple net lease includes a lease agreement that requires the tenant or lessee to pay (at least a portion of) rent, utilities, maintenance, taxes, fees, and insurance
    3. LLC’s where commercial and residential real estate are part of the same enterprise, such as an apartment complex and industrial building in the same LLC.
    These rules place the burden of keeping time spent records of the rental services, on the Taxpayer. The work can be performed by a combination of owners, agents, and contractors. The key will be that all those involved in an investment will need to keep time records starting January 1, 2019, and will need to consolidate them for the next tax year.
    The goal, of course, is to obtain 250 Hours of Services to qualify for the Safe Harbor and the tax savings.
    You should talk with the managing partner of the pass-through entities you own and make sure these requirements are being meet starting January 1, 2019.
    Don’t have 250 hours?
    Should you not be able to reach the 250 Hour threshold to shelter your income, you can instead focus on reducing income instead to reduce tax expenditures.
    To reduce income, property owners may want to consider cost segregation studies to increase/accelerate depreciation.
    Also, under the new law, improvements to the interior of a building may qualify for bonus depreciation.  Unfortunately, there seems to be a wording error in the legislation, which will need to be fixed by Congress. 

    The error in the legislation is technical, so property owners will want to consult their tax advisors to determine what position they want to take on the error.
    The Treasury Department and the IRS have clarified their understanding of Section 199A of the revenue code.   In this case the changes relate to businesses and additional savings that can be garnered with an additional deduction of up to 20% of the taxpayers qualified business income for non-corporate taxpayers including businesses operated through partnerships, S corporations or sole proprietorships.
    Your goal as a real estate investor is to reach the 250-hour safe harbor mark so you can take these deductions.  This will not be easy. If you are excluded from the safe harbor, look for ways you can accelerate depreciation so you can save on taxes instead.   This tax change is significant and very complicated. If you need a referral to my CPA let me know.

  4. FORBES – Is All Debt Bad Debt? – By Lane Kawaoka – 19.03.29
  5. Our Book Club Webinars – Tax-Free Wealth – Learn how I am able to write off these types of items in my business (and fight of mosquitos).
  6. Update to SPC Ultimate Guide to Taxes – 
    Capital Improvements vs. Repairs & Maintenance Expenses
    Once your property is in service, you’ll need to determine whether each repair and maintenance expense you incur should be classified as a regular expense or a capital improvement. Capital improvements must be capitalized and depreciated which sucks because you can’t take the tax deduction right away. Most rental property owners will prefer to have as many of these costs as possible classified as regular repair and maintenance expenses in order to maximize current year deductions and minimize depreciation recapture.
    There are three safe harbors that help move some expenses that would otherwise be classified as capital, into the regular expenses bucket:
    • Safe Harbor for Small Taxpayers
    • Routine Maintenance Safe Harbor
    • De Minimis Safe Harbor
    Here are some examples of maintenance (Not Capital improvements)
    • an existing AC unit
    • a faucet or toilet
    • a few shingles on a roof
    • a cabinet door
    • a few planks or tiles on a floor
    • a broken pipe
    Costs incurred to:
    • inspect, or clean part of the building structure and/or building system
    • replace broken or worn out parts with comparable parts
    Here are some examples of Capital improvements (Boooo you have to capitalize)
    Additions (e.g. additional room, deck, pool, etc.)
    • Renovating an entire room (e.g. kitchen)
    • Installing central air conditioning, new plumbing system, etc.
    • Replacing 30% or more of a building component (i.e. roof, windows, floors, electrical system, HVAC, etc.)
    Passive Activity Limits
    In 2017, I was able to bring $25,000 of passive losses to deduct off my W2 income to ultimately pay 14% effective taxes for the year.
    Under the passive activity limits, you can deduct up to $25,000 in passive losses against your ordinary income (e.g. W-2 wages) if your modified adjusted gross income (MAGI) is $100,000 or less. This deduction phases out $1 for every $2 of MAGI above $100,000 until $150,000 when it is completely phased out. Note: these limits apply to both those filing single or married filing joint.
    In addition, in order to take losses against your ordinary income, you must materially participate in the activity by meeting one of the following seven tests:
    1. You participated in the activity for more than 500 hours.
    2. Your participation was substantially all the participation in the activity of all individuals for the tax year, including the participation of individuals who didn’t own any interest in the activity.
    3. You participated in the activity for more than 100 hours during the tax year, and you participated at least as much as any other individual (including individuals who didn’t own any interest in the activity) for the year.
    4. The activity is a significant participation activity, and you participated in all significant participation activities for more than 500 hours. A significant participation activity is any trade or business activity in which you participated for more than 100 hours during the year and in which you didn’t materially participate under any of the material participation tests, other than this test.
    5. You materially participated in the activity (other than by meeting this fifth test) for any 5 (whether or not consecutive) of the 10 immediately preceding tax years.
    6. The activity is a personal service activity in which you materially participated for any 3 (whether or not consecutive) preceding tax years. An activity is a personal service activity if it involves the performance of personal services in the fields of health (including veterinary services), law, engineering, architecture, accounting, actuarial science, performing arts, consulting, or any other trade or business in which capital isn’t a material income-producing factor.
    7. Based on all the facts and circumstances, you participated in the activity on a regular, continuous, and substantial basis during the year.

    High Paid W2 Earner & “Real Estate Professional” the perfect “Kobe & Shaq” Combo

    The “real estate professional status” allows real estate investors to take unlimited rental losses against their ordinary income – strategically you want to get out of the highest two tax brackets at least. This has now been limited to $250,000 in losses if single (and $500,000 if married) under the excess business loss limits introduced by the Tax Cuts & Jobs Act.

    In order to qualify as a real estate professional you must spend at least 750 hours in a real estate trade or business and more than half your total working hours must be in a real estate trade or business.

    Due to these requirements, many investors who work a full-time job or full-time in another business that is not real estate-related will have a hard time qualifying as a real estate professional.

    Meeting the above requirements will not necessarily allow you to deduct your rental losses against your ordinary income. You must also materially participate in the rental activity using the same tests mentioned above, but is most commonly done by electing to aggregate all your rental properties as one activity and then working 500 or more hours in this single activity per year.

    Note that if one spouse qualifies for the 750 hour test, both spouse’s time on the rental properties count towards material participation, and losses can then be taken against either spouse’s income.

    This is a great strategy for couples where one spouse works in a real estate trade or business, works only part-time, or not at all outside of your investment activities.

    Note: In any year you elect to be treated as a real estate professional for tax purposes, you’ll need to keep a log of all hours worked within a real estate trade or business

    More homeowner advice:

    Join the movement of high-income earners who are renters cause they did the math and did what made sense.

    Learn more about renting in primary markets here.

  1. ALN – Market Stats April 2019 – Link
  2. Senior Housing Business – 19.04.3 – Seniors Housing Developers Pressured from Multiple Sides
  3. Get Ready: Recession-Proofing An Apartment Portfolio – [Bottom line is buy cashflowing assets in good locations, good lending terms] – National Apartment Association 19.03.7
  4. Landlords are now limited to increases once per year that cannot exceed 7 percent plus the change in the consumer price index, which is used to calculate inflation. [Most investors see rent control as mostly the Government being stupid but I think 7% rent increases is a nice little control. We underwrite 2-2.5% increase in rents as high] – Source 19.03.6 
  6. Between 2010 and 2017, population growth averaged 5.5% for the US as a whole. Delaware boasted the highest growth rate, 15.3%, over these years. A state with a relatively small population, however, needs fewer new residents to achieve such a high growth rate. The double-digit rates recorded by Texas (up 12.6%) and Florida (up 11.6%), both high-population states, are therefore that much more impressive. There were three states that posted population decline between 2010 and 2017: West Virginia (down 2.0%), Vermont (down 0.3%), and Illinois (down 0.2%). – ITR – 19.02.28 
  7. How affordable is rent really? – “During the same span, median effective rent nationally has risen by about 26%. That rent appreciation pushed the median monthly rent nationally to around $1,220 per unit to end 2018. With the US median household income being just over $62,000, this rent accounts for 24% of monthly income. Using the typical benchmark of monthly rent being 30% of monthly household income for affordability, a margin remains for renters.” – [If you stick to using 2% and under rent growths and stay away from Tier I or Primary markets you should be fine] – ALN 19.02.24
  8. Apartment Report – [More people really are moving in with mom and dad] – Greenstreet – 19.02.20 (Sample report with Atlanta)
  9. 4Q 2018 Report NKF – 19.02.20
  10. Salt Lake City Tops U.S. in Diversity of Jobs; Las Vegas Is Last – [Economic diversity is important] – 19.02.20 – Bloomberg
  11. 19.02.14 – RE BusinessOnline: Google to Invest $13B in 2019 on New Data Centers, Offices Across the United States – [I see institutions taking a bigger and bigger share of the market squeezing us the mom and pop investor]
  12. 19.02.13 RE Business Online – Fading Tailwinds Will Limit U.S. Economic Growth in 2019, Says MBA’s Chief Economist – [Nice recap of what has been going on lately, although no one knows when the end is. Media is always trying to guess the drop so they can play the “I told you so” game]
  13. Yardi Report 19.02.7  – [Stats on rent increases etc]
  14. Yardi 19.02.7  – January Self Storage Report
  15. Co-star 19.02.7  – Past performance is no indicator of future success. Many operators in Dallas 2012-2014 were able to double investors money in just a year or two – come to find out they only implemented 20% of the rehab. It was mostly market appreciation which is out of our control and can bail out a bad operator.

    Dallas Growth 2010-2018 +projections

  16. Freddie Mac MFH Presentation 2-7-19 – [Good perspective on where we are in the cycle and not to underwrite for growth over 3%]
  17. RE Business Online 2-6-19 – KeyBank Provides $142.1M Acquisition Loan for 15-Property Skilled Nursing Portfolio – [A one-off deal but shows that institutions are getting into the assisted living arena]
  18. MFE 2-6-19  – 2018’s Record Deal Volume Suggests Positive Trajectory for 2019 – “driven in large part by increased interest in the student housing sector, which accounted for 17% of all deal activity in the third quarter, compared with a consistent 4% over the past 13 years” – [I don’t like student housing as I am seeing an education bubble with all the lending. It’s crazy how dorms get renovated every few years]
  19. MFE 2-6-19 -Freddie Mac Sets Multifamily Production Record – “$78 billion in total production bests the company’s prior record of $73.2 billion set in 2017. Overall, the company financed more than 860,000 rental units, more than 90% of which are considered affordable to low- and moderate-income families making 120% of area median income (AMI) and below.” – [More more more!!!]
  20. 1-28-19 – Great annual report with breakdowns with each major MSA – Link – [MM is a MFH broker so expect it to be a bit bullish on the market]
  21. 1/23/2019 – In December 2018, I started the see the signs that the economy was turning and therefore I needed to pivot.The US stock market flirted with bear-market territory (typically defined as a 20-percent drop from a prior peak) before a meek rally closed the month, reeling it back from the edge. (Source – ITR):
    • The S&P 500 finished December 2018 down 6.2% from the December 2017 level, the harshest month-over-month drop since early 2016.
    • The S&P 500 monthly data trend ended 2018 lower than it opened, posting the worst calendar-year decline for the US stock market since 2008.
    • The just-recorded month-to-month drop of 9.2% was the second-sharpest November-to-December decline on record. The sharpest? 1931 – not good historical company to keep.
  22. 1/23/2019 – (Pro-investing/broker) publications mention “Healthy 2019 Projected for Multifamily Investment: Investors should be keen on apartment assets due to strong fundamentals, opportunities for both buyers and sellers, and an abundance of capital. ” That abundance of capital is what is concerning me because its the dumb money rushing into accessible asset classes such as apartments and residential real estate… especially when the same publication releases this article on the same day – “US REITs to Continue Solid Performance in 2019, But Growth is Slowing.”
  23. Bloomberg – 1/17/2019 – [Sam] Zell reveals what he’s doing right now and why – Video link – [You are not Sam Zell… if you are under 1M-2M net worth you should still be investing proactively]
  24. MHN 1/19/2019 – “Apple, Facebook and Google are branching out from Silicon Valley, while J.P. Morgan, Charles Schwab and Alliance Bernstein are moving some operations out of New York City and San Francisco. Favored destinations are locations like Austin, Denver, Dallas, Nashville and Raleigh” – [This might explain the softness in the Bay Area but it explains the emergence of secondary Tech markets.
  25. CPE 1/19/2019 – “As the U.S. enters its 10th year of this unhurried expansion, economists are not ruling out the possibility that a slowdown will finally arrive in late 2019 or early 2020” – [We are already seeing less action than in 2017 and 2018]
  26. ALN 1/5/2019 – “At a national level in 2018, the multifamily industry added about 300,000 new conventional units. That is an increase from the roughly 280,000 units from 2017. Fortunately, net absorption outpaced this new supply by an even greater margin than the previous year. There were about 340,000 newly rented units in 2018, beating the 2017 mark by a full 100,000 units. As a result, average occupancy managed a slight uptick of 0.5% despite the new supply and ended the year at around 92%.” Full Data – [Remember these guys are trying to sell MFH]
  27. Yardi Winter Report – 1/5/2019 – “The economy is showing signs of strain and stock market volatility demonstrates heightened concern about the economy among investors, but job growth and consumer spending are likely to remain healthy. GDP might not approach 3% again, but neither do we see it slowing below 2%.” – [Remember that this includes all data including Class A which skews rent increases]
  28. 1/10/19 – “2018 proved to be a solid year for the multifamily sector, and 3.2% rent growth slightly exceeded going-in expectations. Despite the recent volatility in the financial markets, we foresee more of the same in 2019, with strong demand producing rent growth just shy of 3% nationally.” – Yardi – [Remember that a lot of this data includes primary markets like Bay Area and Vegas, 2.5% might be a better input for rent increases]
  29. Check the latest U-Haul report (Do it yourself/blue collar moves) – The “Van-Line” Report is more for white collar job movement.


I made some revisions with new happiness study data.

If you are like me and lost when it comes to the softer side of being a human you need a book like this to tell you what to do.


We went to Tony Robbins as a group in March and it was a great time of transformation. Here is the Tony Robbins Priming video to use at home. I ripped the mp3 here if you want to download and store on your phone for quick reference. If you propeller hats out there want to add it to Alexa/Siri’s quick play as your morning ritual good for you!

Here are some takeways I had:

Less urgency with more systems

Barriers- peers around to do the same things, 

What needs to shift what actions… Deciding how to do this

Why will you live in a beautiful state everyday no matter why?

Life is too short
It is a slippery slope backwards
In the end a beautiful state is what we are after anyway not money, house, job or relationships. 
I have control over this… Potential => Actions => results => belief/concerns

Flavors of reaction: 

Three things that cause suffering the fear of 1) loss 2) less 3) never have something

Suffering => appreciation => joy

You will make more money if you are in a better state.

Two things that I did to start investing to go bigger – 1) started something that could be better and connect with others and build a platform to have larger impact. I made small changes and found models and copied and got around the right people and slowly built 2) started paying to learn

Trying to make a cost-effective program that combats predatory real estate companies:

“A couple of years ago I was scrolling my Facebook feed and saw an ad from a notable author that said “make a bunch of money with zero money wholesaling and flipping houses”

And I said wow that’s amazing.

I’m going to be an entrepreneur!

I showed up at this seminar by the end of the day I paid $40,000

(of course on my credit card), hehe.

First, off I should have not even been doing those active real estate activities cause I was a busy professional.”


Hopefully my addition to Forbes can prevent someone from investing in a hotel –

Hotels are a speculative asset class. Class B and C apartments perform in tough times because everyone needs a place to live. Vacations are a discretionary item on most people’s budget. In good times it outperforms many asset classes because of dynamic pricing, where the prices surge due to demand. Hotel investments have a place in a portfolio after more recession-proof assets are acquired first. – Lane Kawaoka


Just Closed 101-Units (not puppies)!!!

Class C Apartment in a Tertiary market due to port expansion. Not underwritten for more than 2.5% annual rent increases but built more for cashflow as we get ready for the coming recession…
5.3% for 30-year amortization (Hybrid note: fixed for 7-years, Floating rate 13-years, Loan Term 20-years)
The coolest thing is how we got 7 first-time investors (Wall Street refugees) on this project!
Learn more about how to get started here:
And out Hui just closed on The Trails At Rancho Vista, a 309-unit apartment complex in El Paso, Texas!


How to make Coffee: Pour Over with a Chemex – “when you have time to have a cup of coffee while you are waiting for your cup of coffee”

I went to got to a free Transcendental mediation info session. It was in a historical home and it felt like Scientology. Nah Nah its not a religious cult or anything but a specific and structured for of mediation for two 20-minute periods a day. Part of the structured part is due because it’s a highly branded and franchise system. It was under $1,000 dollars for a handful of instructor-led sessions but I opted to try this “HeartMath Inner Balance Lightning” out for now. Stay tuned!



Nothing like units finally getting rehabbed after the seasonal slow and cold weather up in Des Moines… The market is coming back!

My business partner… Chase Keller always willing to pick up the paintbrush or help with customer service.


What would you do socially, if you weren’t at your day job?

I would say at home, possibly eat junk food, and not get a lot of inspiration from seeing the struggles of W2 people around me. Where else would I get an insiders perspective of the humor of the hampster wheel if I were not in it myself?

We have all heard the “5 people you hang out with most rule… yada yada” perhaps a new circle with a mindset more supportive of your goals?

I am trying to build that here but its a lot harder in Hawaii. The entrepreneurial spirit is poor here perhaps with a smaller population pool or just island complacency.

Local client meetings, realtors, travel, interviews, exercise, gym, hobbies?

At this point, there is nothing that I cannot do with having to fulfill the requirements of my day job. Granted it could shut off the computer at 10PM instead of midnight but I see that as a small price to pay temporality for the “easy money”. I talked with another friend who broke it down to hourly rate. I think he said $75 dollars and hour as a consultant, which is why he refuses to take on low ROI tasks like property management.

For now (in this season) it is good but I agree. And at the least you will get a commitment that I will not be here for more than 4 years. I think the security trigger is having my syndications start to cash out after the repositions take place.

One bad decision can cost you significant money. A lot of my investing peers are doing passive investing have pretty boring. Yea I don’t think I have failed much (other than this one) not for lack of doing my due diligence but for the most I have taken very small risks from turnkey rentals to 90%+ stabilized non-recourse apartment investments today.

When you are in a position of weakness financially you tend to get attracted for the magic pill and that Jeepers Creepers guys whispering to you about “hey do you want to hear about passive cashflow.” When you start of a high paid professional you sort of have a leg up on a lot of people and can transcend a lot of these growing pains.

Guess what? There is nothing passive about getting cashflow.. If it were that easy to get then it would be easy for the next kid who lives in their mothers basement to take it away.

When you are in a position of scarcity/weakness, all future decisions you make are made out of necessity – to solve some immediate short-term immediate need, which is usually a financial one.

By covering your bases and having a stable day job that puts food on the table you minimize the chances of a bad decision from the following reasons:

Out of desperation, you fail to do your due diligence (homework) before making an investment;
Out of desperation, you partner with someone whose background you really don’t know enough about;
Out of desperation, you ignore facts or details that a non-desperate person would never ignore.
Never make a major decision when you are in a position of scarcity/weakness. Only make major decisions from a position of abundance/strength.

This allows me to store cash in a very secure (Certain) place

Additions to the Ultimate Guide to Infinite Banking – Flex paid off rider:

In whole life policies, you have this add-on where you are allowed to add paid up additions (purchasing larger death payout and cash value). In my policy, I need to put in at least 70% of $35,000 once every three years. Note – there are other types of these riders where the requirement is to put a more consistent amount every year but personally prefer the 1 out of three-year arrangement because my business income fluctuates so much. 

Without penalty, I can go over 120% or $42,000 every year as my max. If I want to put in more I would have to make a new policy and get another physical. This limits the risk for the insurance company if you are putting away infinite amounts of cash after deciding to pick up the hobby of skydiving while smoking 2 packs of cancer sticks a day.


One of the reasons I moved on from Turnkey rentals is because on bigger deals you can pay for a cost segregation to write off almost 30% of the asset in year one!

Not have to wait for 27 years!

And if your CPA isn’t understanding or proactive in communicating this to you… you need one. (I can let you know who I use)

Numbers don’t lie look at the year one depreciation I am getting on these deals:

That’s $62,452 that I can use to take off my income! If you are in the highest tax bracket that’s like $30,000 tax savings!

As a full time real estate profession (I quit my day job) I am able to take all of those deductions. For those of you with day jobs you are capped depending on your income level however those deductions carry forward to that magical day when you fire the boss.


Thanks for you folks who gave testimonials it make me feel swell 😁





The previous seller let the property drop 10% occupancy during a long closing period… oh well let’s make do and get after it!


I’m so tired of watching deal pitches and people using the phrase “I’m so excited”… I don’t care if you are excited… show me the numbers…

Why people fail/Blind Spots

After over 1000 strategy calls with investors and coaching clients over the past couple of years here are some of the most common excuses/pitfalls people fall victim to:

  1. Health problems/take care of family getting in the way
  2. Ask-hole – there are givers and takers, takers only take and operate with a scarcity mentality operating system. What is worse is these guys are always seeking and not doing. Before you seek out the wisdom of a $1000/hour person and was their time go do the thing that the 5 dollar book said to do or what you said you were going to do.
  3. Never launcher – These guys use perfectionism as their excuse never to launch a product, website, or idea. Subconsciously they are either a coward to put themselves out there or have an inability to get things done.
  4. Debbie Downer/Negative Ned – No one likes yourself. Take a cell phone out and do some camera work to see how unfriendly you come across. You may not want to even interact with yourself.
  5. Worrying about how much the shovel costs when the project is to dig a big home
  6. Misplaced energy – This is the guy who reads all the books, has a vision board, but when you check his facebook it’s all about snowboarding trips every weekend to take advantage of the season.



Complete #LaneHack list

  1. The Law of Avoidance by Mark Manson – How to not give a Fuck – audio

  1. Look fo

Get in as a [Founding] Group Coaching student!

The group coaching is something that I have been trying to put together a couple years now after I accumulated a lot of content and got a feel for coaching students these past few years in a one-on-one setting – see

I’m code naming this project, “The Journey to Simple Passive Cashflow” and it will consist of:

1) 27 weeks of curated content with concepts building on top of each other

2) Participants go through those modules together and are able to interact on the Bi-Weekly Call and the Private Facebook group in a “group study” environment

3) Bi-Weekly hour power calls switch between the topics of a) Acquiring you direct investment and b) more high-level wealth building concepts and syndication education

It’s going to be a really cool format where people take the journey together. Think like a Fraternity/Sorority without the weird stuff. When I was going through programs it was most beneficial to connect and climb the ladder with quality people. Who knows someone of your Cohorts might do a deal together or become lifelong friends or accountability partners.

Still working on the website but here is a survey to get on the waiting list.


What’s in the Pipeline?


% Chance of happening – Details – Timing:

1) Currently open for investors – 101-Unit Class C in Gulfport MS

2) 30% – MFH Apartment

3) 90% – Finally a Non-MFH fund syndication (where I do the admin/accounting) to lower costs and get higher prefs and lower minimal investments. Q2 2019


Unlock additional info by joining the Hui –



January 17-19 – Online – Use code “LANE” for a discount at

February 16 – Honolulu, Hawaii – Use code “SPC” for a discount at

March 1-2 – Scottsdale, AZ – Titans of Multi-Family Real Estate –

March 14-17 – Los Angeles –

Current investors in past deals let’s meet up when you are in Hawaii.  Non-investors you can still kick it with Lane


The Hui Deal Pipeline Club is a free investor club where I filter investments and underwrite the numbers and partners myself. Unlike other investor lists and groups, my investors have personal access to me and know that I personally have skin in the game investing alongside with my investors.


We have acquired over $155 Million dollars of real estate acquired by syndicating over $13 Million Dollars of private equity since 2016.


Track Record of success:

15 Apartments Buildings Purchased, 2 Manufactured Home developments, and an Assisted-Living Facility

2,100+ total units

10 US Markets – AL, GA, IN, OK, LA, IA, TX, WA, PA, MO

Started investing in 2009 – 9 years of experience

Countless Mastermind and Mentorships in the Live & Virtual clubs through the education platform at

2,600 investors and 100 new Kool-Aid drinkers every month!


Investor Quarterly Letter #2 & My Journey to SPC

2018 Q4 @$5,600/Mo

Executive Summary: The market has been steady and hot. Certain key indicators have turned red like the 10 and 2-year treasury index and unemployment at near low levels of 3-3.5%. It’s still a time to invest but only if it meets sound underwriting principals. Q4 was a huge quarter for the Hui Deal Pipeline Club with several acquisitions. Many of which developed from the early summer time.

The internet has a lot of junk out there. I originally was going to write a monthly post like this however I got too ambitious with all the deals that came in at the end of the year. In fact, I am even contemplating going down to a bi-weekly podcast to concentrate on being a better partner and to lose some weight. Let me know your thoughts on this?

This long document is my investor letter and contains a lot of the articles that I have been reading over the past quarter that has influenced my outlook and investing behavior.

Check out the latest homework on all the asset classes I have been learning about lately to get outside of the apartment investing world.

We had out Sonoma Mastermind. I recorded some of the testimonials there. We had a lot of wine and great relationships were formed!

The next live Mastermind will be in LA to see Tony Robbins. As well as our mini-book club in January which will be a great example of my new group coaching format.

I am finalizing a program for investors to systematically go through the past three years of content without going crazy. As opposed to being a lame old $997 web course… it will likely be a little cheaper (if you let me know you want to be in the beta release) and more importantly, it will have bi-weekly calls! Yup group coaching! I have always been against programs that charge people $5,000 (who can’t afford it) to do simple stuff on the internet. I wanted to make a program that was less of a scam and where I could give a high level of personal involvement (which was the mission in the first place). Apply here.

I want to wish everyone a happy, healthy (as I focus to getting more in shape in 2019), and prosperous New Year. 2018 was a huge year for me and where I reached a milestone in terms of getting to Accredited status and starting to adopt more of a capital preservation mindset. And a little charity – let me know if you have any ideas in 2019. As the new motto suggests “Ohana means family, and no one invests alone. ” Our investor club has grown to over 2,600 and invested over $13 million dollars to acquire over $255 million dollars worth of real estate. Please send me referrals for new opportunities so I can use my network to vet and so I can run their numbers through my analyzer. You never know who is that next up and coming operator.

How do you see the current market?

I summarized my feelings of investing in a living article here.

As for my own portfolio (different situation than everyone else) I feel like I am in a tough place. See my current portfolio here. I know MFH the best and know all the underwriting tricks and can underwrite and verify the numbers myself. However, I am very heavy in MFH (over 80%) of everything I have which also includes my SFH assets too. I want asset class diversity but as I move out of my comfort zone (non-MFH) I cannot verify the numbers and have to relight on my network, peers, and mentors more. As a numbers guy, it makes me a little uncomfortable.

I am trying to stick to boring Class C/B deals that are stabilized today and have non-recourse and long-term debt. Although I have gone into a couple deals lately that are Class A and development I consider them unique deals with excellent risk-adjusted returns and I have mentally allocated a portion of my portfolio to higher risk higher return ventures. But we are not talking Bitcoin or start-ups!

In all deals I take a look at I try to assume 10-15% drop in rents and 10-15% increase in vacancies (assume a rocky 3-6 months as A/B class comes down to C/B class).

But again since some people only read some of my content and hear me beating the (Cashflow and Class B/C) Drum… I feel like I have a need to explain myself.

This deal north of Dallas, Texas was Class A, 2018 build which is going to cashflow sooner than a normal class B/C. Normally, I would not go into a class A deal because they don’t do as well in a recession (but I think this one is underwritten to work with 2% rent increases) and there were 13 acres of developable land not included in the pro forma. 

The only reason I’m sort of going against my principles in because of the Land play and how it’s in Dallas growth. I think it’s a really good risk-adjusted return which is why I went in with <5% of my net worth. But it’s more of a higher risk higher return still on the realm of non-recourse fixed long term debt, stabilized, non Development deal. So its nothing too crazy.

The other “non-conforming” deal was an Assisted living deal development which I feel comfortable because the asset class is emerging.

Development of fancy flip homes but amateur hour flippers (who are not W2 engineer/project managers) I will not…

I don’t know what the perfect mix of asset classes but as long as you are in non-retail investments (non-Wall Street) with good people you should be fine.
Join me in the next deal and tell me what deals you are doing – here.
Random sampling of one of our deals:
  • Proforma Avg $734/mo
  • Current Avg $744/mo
  • New units Avg $830/mo

What is a normal IRR?

I am seeing IRRs of 13-15%. When I see deals with 16% plus that are not heavy value add (8K per unit of upgrades) I share my head. I don’t have to look at the numbers to know that they are moving cashflow early to manipulate the IRR calculations. Or smoking something or assuming something like 4% rent increases per year or not assuming a softer market with a small cap rate reversion delta.
2011-2014 was the “golden era of MFH.” LPs need to get off the idea of doubling your money in 5 years as a given… when many of those deals were done without implementing the full business plan of rehabbing most of the units and instead just getting lucky off-market appreciation.
Right now with everyone rushing into the space. Grant Cardone and others are telling people with no job, no track record, with nothing to lose to syndication large apartment building and everyone (myself including), is building up their door counts. I feel like I got into this syndication game in 2015-2016 and started learning about it the right way by actually trying to be an apartment operator myself so I see the whole game played inside and out. I try to stick to the fundamentals (sound assumptions).

  1. After getting into a car accident gives me the opportunity to make some changes – Downgrading Transportation –
  2. 118 – Interview with Nick Loper – Side Hustle Nation –
  3. 119 – Dissecting my Recent Insurance Claims with Ed Babtkis –
  4. Buying or renting? The biggest inhibitor to financial freedom? – WIth Spreadsheet to backup the numbers – *I spent $300 dollars for an editor to get the grammar and spelling right on this article. I am sick and tired of seeing young families make this mistake
  5. 121 – Investing in Coffee Farms with David Sewell –
  6. Networking tips page –
  7. 7/17/2018 – Ask Buck Joffrey with Lane Kawaoka
  8. 6/29/2018 – Cashflow Guys Podcast – Raising Money For Apartments
  9. 122 – Apartment Investing with Michael Blank –
  10. Great podcast by Ray Dalio and Tony Robbins discussing the binary economy, relationships, and some ideas I am having to build my investor team – Link
  11. 123 – Why to break-up with your Financial Planner – Interview with Brent Sutherland –
  12. Mr Money Mustache the guy who wrote the most famous financial independence blog on this podcast talking a little bit able how he structures his day. Note – I don’t really like these living cheap lifestyles cause often its a little selfish not to pay it forward and to do that you need to go big. I like nice things but I’m pretty frugal.
  13. 124 – Brian Hamrick from the Rental Property Owners Association –
  14. 125 – Living the FI dream abroad with Jeremy Jacobson from Go Curry Cracker –
  15. QRPs (Qualified Retirement Plans) with Damion Lupo –
  16. 126 – Gino Barbaro talks Apartment Investing –
  17. 127 – Estate Planning and Asset Protection with Lawyer Andrew Howell –
  18. Going from “Active-Passive” Investor to an LP in Syndications and Private Placements –
  19. 128 – QRPs, Solo401k the Self Directed IRA Killer with Damion Lupo –
  20. Tips for LPs Webinar – email me for link – only for Hui Deal Pipeline Club members
  21. 129 – Matt Theriault – Changing strategies in this market –
  22. 131 – Takeaways from FinCon18 and Side Hustle stories –
  23. A cool tool to find the primary ethic group in an area –
  24. My notes of the new tax breaks on Opportunity Fund Zones –
  25. Fort Worth, Texas – 168-Unit Class C MFH (Oct 2018) – Pre-Acquisition Video
  26. Huntsville, AL – 112-Unit Class C MFH (May 2018) – Pre-Acquisition Video
  27. Huntsville, AL – Drive by of a few Quadplexes on my last trip (Oct 2018) –
  28. Atlanta, GA – 114-Unit Class-C MFH  – Deal update –
  29. Birmingham, AL – Mid Rehab before selling retail –
  30. Birmingham, AL – Tour of potential apartment purchase –
  31. Birmingham, AL – Driving turnkeys and apartments –
  32. Atlanta. GA – Tour of my rental pre-rehab –
  33. SPC133 –  Veteran’s VA Loans & Other Financial Wisdom –
  34. SPC134 –  Investing in Diamonds –
  35. List of SDIRAs –
  36. Paying down your mortgage faster –
  37. Hacking your HSA / FSA / Flex Spending accounts –
  38. Cost Segregation & Bonus Depreciation –
  39. Testimonials –
  40. Banking from Yourself webinar
  41. 135 – Interview – Financial Advice from a Broke Millenial with Erin Lowry –
  42. PITA –
  43. 136 – Changes in the Residential Lending World with Graham Parham –
  44. A resource to dig up dirt on potential vendors/partners –
  45. I am going to be planning a wedding 1st half of 2019 so I apologize if I might seem like I am busy some of the time –
  46. 138 – Fundamentals – Crypto Currency Basics with Andy Lapointe –
  47. SPC Charity –
  48. 139 – Optimize liquidity with Your Opportunity Fund –

  1. MFH rents are up $2 in August to $1,412, up 3.1% year-over-year and 10 basis points from July. A record high for seven months in a row – Yardi Report – [How long can this increase? Not forever but it is steady expansion. New supply is coming online (300,000) new units this year. Be careful when you read these national reports cause you need to dig into the submarkets]
  2. Renter By Necessity (3.5%) continues to outperform Lifestyle (2.4%) as new supply hinders rent growth of luxury units. [This is why you are seeing Class A rents dip in places like San Fran, Seattle, Chicago]
  3. Economic Expansion: More Room to Run? – “At 3.9 percent, the August 2018 unemployment rate is at an 18-year low. However, it took the jobless rate, which peaked at 10 percent in October 2009, more than seven years to reach the trough of the previous cycle
  4. Deals Pick Up the Pace in Q2 – CPA Executive – [Graph of deal volumes]
  5. Article on Opportunity Fund Zones – Yardi – [Could smart money dumping gains to go into Opportunity Zone Funds causing the sell-off?]
  6. Yardi Report for September 2018 
  7. Freddie Mac Launches Workforce And Targeted Affordable Mezzanine Loans To Strengthen Housing Preservation – BizNow“Strong candidates for the mezzanine programs have experience with affordable housing and a history of transactions with a GSE like Freddie Mac. Mezzanine borrowers are required to pledge a first-priority lien for 100% of equity interests in the senior borrower. Borrowers must also keep at least 80% of the units — including the 50% that are affordable to households making 100% area median income — over the life of the mezzanine loan. Borrowers can’t pay off the mezzanine loan to get out of affordability restrictions.”[Interesting new program which shows how the government is trying to help out the little guy] Additional article.
  8. Apartment Market Has Bright Future at 2018’s Midpoint – MFH Housing News – Delayed marriages, an aging population looking to move out of single-family homes and increasing international immigration are some of the reasons a study from the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC) predicts soaring demand for apartments over the next decade-plus. According to the study, 4.6 million new apartment homes will need to be built by 2030 just to meet the demand, the report says.[More and more people are being forced into apartment lifestyles]
  9. MBA: Commercial/Multifamily Originations Up in Second Quarter, on Pace With Year Ago – MBA – “Second-quarter commercial and multifamily mortgage loan originations came in 4 percent higher from a year ago and 32 percent higher than the first quarter, the Mortgage Bankers Association reported this morning.” – [Despite some volatility growth is steady]
  10.  Inside the scandal that could explode multifamily real estate – Housing Wire[I have heard of sellers falsifying docs which is why you check rent rolls and follow up with on-site checks. In this case, it was the new buyers. I suspect this is mortgage fraud in order to get the non-recourse debt]
  11.  In this stage of the market cycle, the search is on in Tertiary markets – Forbes – [I’m seeing secondary markets as too hot at this point in the national market cycle]
  12.  Where is the growth going? – ULI – [Very insightful source from a non-biases real estate publication]
  13.  Surviving the Retail Revolution – CP Executive – [Everyone thinks Amazon is going to kill retail (I think mid-range retail like Macy’s is going away) but when everyone thinks one thing that may mean the opposite is true]
  14. My friends in Seattle tell me all the time that the Class A rents are coming down 10-15%…
  15. Looks like the Hedge funds are playing in the Mobile home park space – Bloomberg – [The smart money is starting to flow into MHP space]
  16. Clear Skies for Multifamily Investors – MFH Housing NewsWhile these increases are starting to cause upward pressure on cap rates, apartment values have held relatively steady since tighter occupancy levels are simultaneously causing upward pressure on rental rates. “interest rates ticked up another 25 basis points in June, marking the second time this year that the Fed has raised its fed fund rate. There will likely be two more rate hikes this year, and at least two anticipated in 2019.” 
  17. Self Storage Shakeout Ahead? – CP Executive – [I have been trying to learn different asset classes and so close to jumping into a guru educational program or feeder conference just to get into the group. It’s hard to tell what is the real story but for now, I will just absorb info like a sponge]
  18.  Rising Interest Rates: The Calm Before the Storm? – MFH Housing News – The Federal Open Market Committee announced the second short-term interest rate hike this year, prompting industry professionals to give their take on the possible effects this might have on the lending process. – “There has been talk about the Fed raising rates every three months. The Fed has penciled in two more rate hikes this year—we should expect one more for sure in my opinion.” However, despite rising rates, the yield curve has flattened” [An older article but you can see the clues of what is coming ahead here]
  19. Commercial Property Executive mid-year 2018 – [I have been reading this material (example page 24) and trying to learn about different sectors. Shopping retail is notoriously beat down by Amazon but is that the whole story??? Sounds like opportunity if you know what to look for, also look at pg 66 for self-storage]
  20. July MFH Yardi Report – link
  21. It is no secret that cap rate compression is upon us. But “Rents grew 2.6 percent during the first half. “Those numbers compare favorably to most years except the peak years of the cycle in 2015 and 2016,” –
  22. Economists predict the economy will recede by 2020 – Property Management Insider – [Who knows these are headlines just to sell articles]
  23. Discussion on absorption in ABCD classes –
  24. Latest market data –
  25. This is why we use 1.5-2.0% increases in my of our underwriting models – 
  26. An eye on vacancy as we test rents higher
  27. Texas, North Carolina Dominate Fastest-Growing Apartment Markets List – Real Page – [I think these articles are misinterpreted as Dallas is not where smart investors are looking anymore because it is overplayed]
  28. At what point can we put the average consumer? – Arbor – [Rule of thumb is 33% in the previous decade]
  29. June 2018 Yardi Report – [Hints of oversupply in next couple years]
  30. Huntsville brings on Facebook – $750M investment is expected to yield only 100 jobs – Join us on the next deal
  31. Has Our Government Spent $21 Trillion Of Our Money Without Telling Us? – Forbes article
  32. Pools of SFH becoming a real asset class – Arbor Lending Cheatsheet
  33. NY Times – Tax collections would be sufficient to pay about three-fourths of promised Social Security benefits for 75 years.
  34. Looks like the money runs out in 2030
  35. Trade Wars!
    • Tariffs imposed on EU, Mexico, & Canada
    • EU is retaliating with tariffs on US steel, agricultural, and other products
    • Mexico is retaliating with a tariff on US steel and farm products
    • Canada is retaliating with tariffs on US steel, aluminum, and other
    • 6/22, US threatening 20% tariff on European cars
    • 25% Steel, 10% Aluminum, effect will either lead to hoarding of material or less production (loss jobs in USA) Article

    Trump administration adds to China trade pressure with higher tariff plan Reuters

    China Vows It Won’t Back Down After Trump’s Latest Tariff Threat Bloomberg,

    China Says It’s Ready to Retaliate on Latest U.S. Tariff ThreatBloomberg

  36. Dallas and Fort Worth Rents Diverge – BizNow – [The Dumb money has really started to flow into Dallas]
  37. I don’t think rates will really rise much in 2019 – Fox News [But then again it’s a FOX source]
  38. REBusinessOnline: “The commercial real estate industry shouldn’t be worried about rate hikes, which are happening in baby steps,” says Dhawan. “If the cash flows on your properties are there, who cares about the rate hikes? The real thing to worry about is what happens in the interest rate market as a result of trade developments.”
  39. Crowdfunding sites are dropping like flies because I see so many broken links on my directory.
  40. Some of the top 30 U.S. metros over the next five years might be at risk of oversupply – MFH Housing News –  [I keep my eye to units coming online and how it is affecting rent increases]
  41. Time to Step Up the Value-Add Game – MFH News – [Just have to focus on forced appreciation and not just walk into value by just bumping the rents with the market]
  42. Banks still love multifamily deals, but with pricing and rental rates hitting records numbers, they are being more selective – Source –  [Where 1.25 Dept Service Coverage Ration was the standard, no longer is DSCR of 1.20 being accepted] 
  43. The similarities to the years leading up to the “Apartment Recession” of 1972 are eerie – Crowdfunder – [Although coming from a crowdfunding guy and not an operator himself – these guys don’t know the people or the operation]
  44. Life sciences trends report [I don’t know how this relates to picking markets or deals but its really interesting]
  45. 180911 Yardi-Matrix-Monthly-Aug-2018
  46. “Economists report that workers are starting to act like millennials on Tinder: They’re ditching jobs with nary a text” – Seattle Times – [A sign of the times. I can remember when it was 2009 sitting in my work truck at 2am in the morning but being so lucky I had a good job]
  47. 12/11/2018 Forbes – The Yield Curve Just Inverted–Sort Of–And That Is A Sell Signal For Stocks – “the spread between the 2-year and 5-year Treasury notes went negative yesterday, the first inversion of the yield curve since 2007.  Why wasn’t this the top headline in the financial media? Because the 2-year/5-year spread is much less widely followed than the 2-year/10-year spread. The 10-year U.S. Treasury note is the most liquid of the Treasuries and one of the most liquid securities in all of global markets and thus it the true benchmark for interest rate traders.  The 5-year Treasury lies in what is known as the “belly” of the yield curve and attracts far fewer investor dollars than the 10-year.”
  48. [I do believe that real estate will go down because of consumer instability. But if you have stocks you should sell those before even thinking of lumping it into cashflow type rental real estate.]
  49. ITR Experts Say: Actionable Advice for the 2019 Economic Slowdown – ITR“Be judicious with your capital; conduct a cash-flow assessment plan for proper allocation during the upcoming period of slowing business expansion and weaker topline growth. Continue to focus on talent development but include some redundancy and cross-training initiatives to protect your company in the event that the slowdown becomes a full-blown recession.” [Don’t underwrite any MFH over 2.5% rent increases per year and be prepared to just cashflow a property long term]
  50. The National Association of Home Builders Housing Market Index monthly reading, an effective measure of home-builder sentiment, was down 13.0% in November 2018 from the November 2017 level, the sharpest year-over-year drop since 2011. – ITR
  51. New US Home Sales, at 42.0 thousand in October, were down 14.3% from the October 2017 level, again the sharpest year-over-year contraction in monthly data since 2011.- ITR
  52. US Existing Home Sales are in recession, down 1.8% during the last 12 months, on average. Existing Sales in October alone, at 5.2 million units, were down 5.1% from October 2017 – ITR – [Look it’s not getting any easier but you definitely can’t sit on the sidelines, get into solid cashflow deals]
  53. US Single Family Housing Permits, which have a short lead time to Starts, are sharply decelerating as well, suggesting that Starts are unlikely to reverse course in the near term.- ITR
  54. Commercial sales weakness – ITR
  55. The first big rollback of Dodd Frank [I don’t really know what huge impact this makes yet]
  56. Apartment construction starts not yet slowing [I am watching for deceleration – seems we are in steady velocity state]
  57. Homeownership very slightly goes up to 64% due to younger people [finally moving out of Mom/Dad’s]
  58. Syndication cartoon video (for those visual learners) –
  59. Syndications comparisons –
  60. Syndication chart –
  61. May Yardi Report – LinkU.S. multifamily rents rose $4 to $1,381 in May. This represents a 2% year-over-year increase but a 50-basis-point decline from April, as new deliveries took a toll on occupancy rates and growth.
  62. Traders Can Obsess Over Treasury Yields Once Again: Taking Stock – Bloomberg – [A lot of people geek out over divergences and intersection of keystone graphs but I don’t really understand them yet]


I made some revisions with new happiness study data.

One of my goals was to do a raise over $1.0M dollars. A lot of people have a few friends and family but to get over the $250-500k mark is difficult.

This past month I did it with the Atlanta Deal ($1.3M raise) and Huntsville deal ($1.3M). Super excited… I think my investor list is large enough so I’m going to focus on getting to know everyone as opposed to getting bigger. My vision is a boutique syndication business where I know everyone. A few of you call me to thanks for saving them from banging their head against the wall as a direct operator and that is really cool to hear the feedback.

Grant Cardone like him or hate him says some pretty spot on stuff. It frustrating that all these SEC rules make it tough for the non-wealthy to get into private placements and therefore people are left with crap. It’s the non-accredited investor that needs into these deals the most and this is what I try to do to contribute back via my mission!

Check out this 42 minute video – might be a little too long for the Bathroom Break. PS. I have a Hawaii custom license plate “10X”. Best twenty bucks I spent all year.


Too often passive cashflow is associated with scammy multi-level marketing ploys to get people who don’t have the money in the first place to buy into expensive education systems.

“Hey man… let me tell you about passive cashflow and how you can get rich with little to no effort… do you feel that.. its called entropy man!”

As mentioned before SPC-1.0 is getting into the rental property game, SPC-2.0 is turning into more of a passive investors as I have traded my single family home rentals to more scalable limit partnership positions in syndications, and now after I have cashflow (food on the table) I can take some risks and go after SPC-3.0 which is Simple Passion Income.

Being a working W2 professional I have a soft spot for those in my position. It makes no sense for a computer engineer who has a family and working 50 hours a week at a $200K W2 job to do what is required to become an operational lead on an apartment deal. Doing such would require 12-18 months of relentless work without monetary gain and little success to build relationships with brokers, travel to the markets. and put up hard money to close the deal. I have tried to make a team atmosphere where talented professionals can dip their toes in to “scratch their entrepreneur itch” yet keep their regular salaries.

If I had the time I would make another podcast called “Rescuing the Entrepreneur from the W2.”

All to often the entrepreneurs out there reaching success are not those who possess the skillsets but they just went after it and got lucky. Don’t get me wrong they deserve it because of all the sacrifices but imagine if you combines that grit with talent?

Ikigai is the alignment of doing something that is 1) you passion, 2) makes money, 3) you are good at and 4) good for the world. When you get this its like arranging the Infinity Stones on the gauntlet and a higher level of achievement and happiness.

SPC followers are typically younger than 30 or older than 35. My observation is that when people have kids, that takes all precedence.

It has been really cool traveling and meeting a lot of you.

Interviewing thought leaders and people who write real books!

And being interviewed for the famous Halloween Horror stories with Bob Helms of the Real Estate Guys Radio show. I talked about my fail how I lost $40,000 in my first limited partner deal.

As well as being asked to speak at a few conferences this year.

Another reason my high school was wrong about not letting me take AP English – Forbes: Today’s Best Resources For Finding Renters And Deals by Lane Kawaoka


I tried these things this past quarter:

Aerial yoga,

Getting rid of my car

Another reason not to believe the mainstream news. This hurricane never happened. I had two days off work and there was just a little wind and clouds.

Thanks for all the best wishes about the volcano too. I live 500 miles away in Honolulu. But here are some cool photos from the interwebs.



Although we are a couple months behind on the Ankeny Iowa deal we are making progress with over 50,000 SF of LVT flooring being offloaded for the project – Video

Going to Korea for a week for fun. And the many Mastermind groups meetings!

Pics from our Sonoma Mastermind.

One of the biggest #firstworldProblems I have has been waking up to a billion emails. It’s tough living in HST or Hawaii Standard Time.

I’m serious! Not like when I’m complaining when its a chilly 69 degrees in the morning here… that I’m being sarcastic.

I was always good at having auto filters in Gmail to clear out my inbox each day and move things to such labels like “At home”, “deep thing workshop time”. I recently decided to make a “Calls & Coffee” to auto filter all the useful newsletters (Like Daily Stoic) I read but not get bombarded with in the morning when I have the least patience to absorb. I don’t know if the timing is everything but it is helping me here.

If you are struggling with stress maybe this wil help:

You have a choice…
to be mad or happy
To be irritated or happy
To act with resistance or move forward and embrace the challenge
Its a choice but what is not a choice is that it must get done. The day must get done. The tasks must get done. But in that time the state in which you act (happy sad irritated tired) is your choice

Consciously decide. Get out of autopilot and choose how you want to embrace things.
Only then will you not be a victim

At the end of the day, happiness is a conscious choice. We choose what things mean to us. We assign meanings and labels to the events and circumstances of our lives.

  1. Cap Rate manipulation – How to change a 65% ROI in 5-year deal to 100%
  2. It’s the Lazy-man style for looking at “negative slack” in Microsoft Project Gantt charts
  3. Classic marketing in Syndication portals with fake progress bars to create scarcity
  4. Tired of hearing “I was coming back from church and saw this great 3 bed/2.5 bath”
  5. Recently decided to remove a few videos I had with a previous guess. I feel sorry for the guy because I don’t think he did it intentionally just did not vet the operator.
  6. The pursuit of an entrepreneur dream is not for everyone – It requires an investment in time and money. And whenever you make an investment, you take on risk. In this case its taking time and energy away from a day job that already makes a lot of money.

    In order to get enough critical mass behind an idea to turn into a thriving business, you must devote time, often many years. There are no guarantees that your efforts will be rewarded a lot of time luck is required. This Time Risk is that all of your time will be for nothing.

    The saying “good is the enemy of great” comes to mind here. For many high paid working professional, you make enough money to be happy but part of what we are going for is not the extra wealth but “passion income.” Feeding that entrepreneur itch or as Buck Joffrey says that primal to our core instincts.

Costco has so much cool stuff for sale. And that return policy!

Minimalist Barefoot Sock Shoes

FlightBoard (With geting rid of my car I have more money and need to buy things like this) Although I’m still debating what I should get.


Complete #LaneHack list

  1. I did not realize how powerful passive losses as I was able to bring $25,000 to offset my W2 income. 2018 should be very exciting with all the bonus depreciation due to the cost segregations. I paid about 12-16% effective tax rate 😁
  2. Ex-NBA All-Star (Jalen Rose) gives advice on how to handle the financial and social pressures of celebrity and wealth.He explains on his voicemail how he wanted people to identify themselves as 1) Addition 2) Subtractor 3) Divider 4) Multiplier. Some of us are unconsciously subtractors and dividers.
  3. 4 takeaways from my travels in Korea1) Competition – Pretty much everyone goes to not only school but upper education too (university). If you think your neighborhood poly-sci major, Starbucks barista is a little too qualified for the job then in Korea it’s a lot worse. Kids go to school which ends at 3pm and then go to school again which ends at 10-11pm all to get into the best university they can. Talk about highly competitive! Suicide (something I think is going to be a hot topic soon) is high and pressure increases once you land a job… No wonder people go so crazy partying so much when they are finally in college (ages 18-22). Personally I never really thrived much in a competitive environment which is why I’m proud of my 3.1 GPA in engineering school. I think it’s important for us to take account of our situation and identify when we are in a bad situation and do something about it whether it’s where we live, our job, or what we invest in. What I like about investing in private placements is that no one really does it and it has all the benefits of investing but its not quite the hustle and bustle of single family home investing which I think is a lot of noise. People call this the zig zag theory by observing where the most people are going and go in the opposite direction. This is what it did when everyone around me was buying rentals in Seattle where the Rent-to-Value Ratio (More info – did not make sense and I went off the beaten path to buy 100k homes in the midwest. You might simply adopt this in a different way such as working away from where most people commute to save yourself hours in traffic or moving away from the SF bay area and the $14 cold pressed juice that still tastes like Minute Maid ;p If you are starting out investing I would consider not going into apartment investment because every Tom, Dick, Jane, Harry does that… consider self storage, assisted living, or mobile home parks. Ray Dalio discussing the binary economy – Link2) Korea is a Democracy but it’s pretty much a Socialism society where big brother (cameras everywhere) and Old-world-order rules (nail that sticks out gets hammered)3) Speaking of hammers… people like to get hammered with Soju4) Foreshadowing of housing in the USA – Looking at the skyline you see an abundance of what I will call Class B housing. Think 1990s built 20-30 story, 300-400 unit, 500-1100 square foot apartments, max 50 parking spaces due to reliance on public transportation. The trend I believe that the USA will follow as more and more people will live in apartments. Just follow the rise the microhomes and the gradual increase in rent per square foot in comparison to wages and inflation. 5) Binary Economy – Korea/Japan has a noticeable higher level of middle class than China/Thailand/Taiwan as evident as more cars for regular people and not just the Uber rich. In my travels in other Asian countries with wider wealth gaps between upper and lower class (China/Thailand/Taiwan) you can see these binomial economies play out in small things like sushi menus having cheap California-roll and super expensive caviar rolls in the same restaurant. In the USA although there are places the rich people hangout and regular people go the gap is not as clear than in Asia. Cars are seen as luxuries in Asia and are more expensive that the same model in the USA because those who can afford it are Uber rich – they are super rich and don’t care. The same Lululemon pants (I guess this is a luxury) are 100 dollars in the USA and $130 in Asia. 5) Korean K-Pop is a huge thing. Idolization of celebrities is something that is talked about a lot in tin-foil hat (sociology) media as a means to keep the average public’s attention off the increasing wealth divide. The thought is if you are infatuated will what the Kardasians are doing you will not have the attention to see how different taxes and arrangements are benefiting the wealthy. In America, it seems sports athletes are put on this pedestal. Just a theory here again but don’t underestimate the power of K-Pop. At the DMZ border between North and South Korea soft propaganda is playing over the loudspeaker over to the North Korea side. This recently stopped a few months ago due to de escalation but it was reported that one North Korean defector contributed his betrayal to the K-Pop… And he was really hungry.

  1. Look for deals that have more recession proof assets in 2019
  2. Join our group coaching with bi-weekly calls for less than a cell phone bill
  3. Flowstate – Song of the month – Reik – Noviembre Sin Ti

Get in as a [Founding] Group Coaching student!

The group coaching is something that I have been trying to put together a couple years now after I accumulated a lot of content and got a feel for coaching students these past few years in a one-on-one setting – see

I’m code naming this project, “The Journey to Simple Passive Cashflow” and it will consist of:

1) 27 weeks of curated content with concepts building on top of each other

2) Participants go through those modules together and are able to interact on the Bi-Weekly Call and the Private Facebook group in a “group study” environment

3) Bi-Weekly hour power calls switch between the topics of a) Acquiring you direct investment and b) more high-level wealth building concepts and syndication education

It’s going to be a really cool format where people take the journey together. Think like a Fraternity/Sorority without the weird stuff. When I was going through programs it was most beneficial to connect and climb the ladder with quality people. Who knows someone of your Cohorts might do a deal together or become lifelong friends or accountability partners.

Still working on the website but here is a survey to get on the waiting list:


What’s in the Pipeline?


% Chance of happening – Details – Timing:

1) Currently open for investors – 101-Unit Class C in Gulfport MS

2) 30% – MFH Apartment

3) 90% – Finally a Non-MFH fund syndication (where I do the admin/accounting) to lower costs and get higher prefs and lower minimal investments. Q2 2019


Unlock additional info by joining the Hui –



January 17-19 – Online – Use code “LANE” for a discount at

February 16 – Honolulu, Hawaii – Use code “SPC” for a discount at

March 1-2 – Scottsdale, AZ – Titans of Multi-Family Real Estate –

March 14-17 – Los Angeles –

Current investors in past deals let’s meet up when you are in Hawaii.  Non-investors you can still kick it with Lane


The Hui Deal Pipeline Club is a free investor club where I filter investments and underwrite the numbers and partners myself. Unlike other investor lists and groups, my investors have personal access to me and know that I personally have skin in the game investing alongside with my investors.


We have acquired over $155 Million dollars of real estate acquired by syndicating over $13 Million Dollars of private equity since 2016.


Track Record of success:

15 Apartments Buildings Purchased, 2 Manufactured Home developments, and an Assisted-Living Facility

2,100+ total units

10 US Markets – AL, GA, IN, OK, LA, IA, TX, WA, PA, MO

Started investing in 2009 – 9 years of experience

Countless Mastermind and Mentorships in the Live & Virtual clubs through the education platform at

2,600 investors and 100 new Kool-Aid drinkers every month!



Investor Quarterly Letter #1 & My Journey to SPC

2018 Q3 @$5,400/Mo

Get the uncut version by signing up for the Hui Deal Pipeline Club

Side topics:

Getting frustrated at W2

What are we talking about “Metric?”

What I don’t like about engineers

New Podcasts & Articles:

Not ‘Faux’ News [Lane’s Real Talk]:

  • May Yardi Report – LinkU.S. multifamily rents rose $4 to $1,381 in May. This represents a 2% year-over-year increase but a 50-basis-point decline from April, as new deliveries took a toll on occupancy rates and growth.

I don’t care about politics but lets understand what’s happening…

Everyone saw Trump shaking hands with KJO from North Korea

For nearly 20 years, U.S. foreign policy has been dominated by military campaigns in Iraq and Afghanistan.

Fighting two wars made it necessary to make deals with other nations to secure key strategic military placement (ie bases in Turkey).

Everything is connected and when you become aware of this the world’s events make sense.

Turkey attacked the Kurds because they knew the U.S. would value the air bases in Turkey over supporting the Kurds.

Russia annexed Crimea because they knew we wouldn’t intervene militarily (Obama would not send more troops).

China built island naval bases in order to expand their military presence.

When the cat’s away the mice play…

Seeing the end game, Russia seized Crimea because they correctly calculated that Obama would not put U.S. troops into yet another battlefield.

Trump’s policy is more independent and less reliant on other countries.

When Saudi Arabia recently petitioned the U.S. for military support, Trump told them to pay for it.

When the UN voted against U.S. agendas, Trump told them that the U.S. would review the support and money it gives to countries that consistently work against the U.S.

One could describe this as hardball. It works in a lot of real estate deals when the winner is the party that is willing to walk away first. Who knows if it will work in world politics???

Right now the US economics look good and rents continue to raise at a steady pace (although not expected to mimic the growth in 2014-2016).

Although we all shake our heads at stories like this…

Call it a flashback but Subprime mortgages are bank except with a new name, “non-prime.”

“allow … borrowers to have FICO credit scores as low as 500 … can take out loans of up to $1.5 million … can also do cash-out refinances … up to $500,000. Recent credit events, like a foreclosure, bankruptcy or a history of late payments are acceptable.”

Other stories remind us of the big picture…

Trump signs bipartisan bill rolling back some Dodd-Frank bank regulations – Los Angeles Times, 5/24/18

“Community banks, which enjoy broad support among Republicans and Democrats, will be freed from Dodd-Frank’s mortgage rules if they make fewer than 500 mortgages a year.”

This unraveling of Dodd-Frank with make lending easier, which is awesome for real estate investors.

Interest rates:


Link to Hui’ Google Drive – Treasure Trove of Real Estate Investing Goodies!


Hacking my 6 needs

  1. Growth: Revamped my messaging to you. I will start doing these monthly tailored messages.


New initiative: Per the advice of my new health advisor (who said “my VO2 max sucks”) I an starting the day with 5-10 rounds of high intensity calisthenics to get my heart rate over 140 bpm. This should be done in 5 minutes and continue in the fasted state after. Recently I paid for a health MD. It’s cool because he took my blood biomarkers, did a DNA sample, and gave me a supplement plan. We get together and chat about how things are going with Dex scans and VO2 max readings (think Gatorade commercials with Lance Armstrong with the mask on while biking). It cost a couple thousand dollars but I figure it can’t hurt. Your health is wealth. He sold me when he said “MD’s are normally idiots” (He is an MD himself).


Morning time supplements:


Vitamin D3 – 5000iu

Omega 3 – 2g

Vitamin K2 – 1g

Alpha Liponic Acid – 1

Multivitamin – 3

DHEA – 1

CoQ10 – 1

Zanthosyn (Astaxanthin) – 12mg

Anastrozole – 0.5mg


Evening time supplements:

Melatonin – 3mg – PM

Zinc Magnesium – 2g

Zanthosyn (Astaxanthin) – 12mg

2. Contribution: I interviewed four candidates for a job. I don’t know if I will work with any of them but I feel like I definitely helped them get where they need to go. Apply here.

3. Significance: Mailing out 160 books (email me for final twenty) and spoke at two events and gave out books there. I also wrote my first Forbes article.

4. Uncertainty: Doing a syndication in a new area in a new partnership. Finishing up two flips (38k & 21k) in Atlanta and will put on market $oon.

5. Certainty: I got bonus depreciation on my K1 and got first distribution checks from Syndications per plan. Also got paid back on a 2nd lien private money loan I did on a flip. And replenished money back into right before the 12% fund closed. A lot of my deals are starting to get cashflow now.

6. Love/Connection: Helped out a few people locally at my meetup get out of a tough legal situation with a lawyer referral. Hosted a mastermind meeting with like-minded people. We had whiskey it was good fun and I think I will continue. I realized part of the reason I don’t like my W2 job is that I am surrounded by W2 mindsets and I too am a product of my peer group.



What I need help on: More time – need to add staff or I will just continue to be a super employee of one. Join my team!

Lessons learned:

#LaneHack – I use a lot of Gmail inbox labels. Here are some great suggestions in this article.

I especially like the one about filtering all emails that have the keyword “unsubscribe” which are likely to be things trying to sell me things.

It’s not all about Money:

Flowstate – Song of the month – Avicii Bromance – Avicii died this past month 🙁 – Sign up for the Club to download 😉

Be ready for the best sunset and sunrise captures:

Join the club and find out what the easter egg is…

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