All right folks. It is November, 2020 monthly market update. Today’s Easter egg. He would like to download is the full, who he shared jive with. Pretty much all the goodies in their investor files and spreadsheets plus free access to the first three bottles in the e-course. Go to simple passive cashflow.com/club and join in there.
But if you haven’t met me, my name is Lane Kawaoka. I am the creator of simple passive cashflow, all about the stealing, the secrets of the wealthy, but on today, we are going to be recapping some of the news that has been happening this last month. We’ll get into the election a little bit right now. It’s still a little bit of a up, it looks like Biden is probably going to come out ahead.
But what’s teaching points that I’ve been working with some folks on lately. So a lot of people have been taking advantage of the cares act, getting a hundred thousand dollars out of their retirement accounts as we call it. Jailbreaking one tactic that is being used is safe. Investor has a big salary.
So they’re, they’re making over two, $300,000 a year. And they have a lot of money in their retirement account, but when they take money out of their retirement account, they slide it out as ordinary income. So if you’re making over two, $300,000, you’re in the highest tax bracket, it may make sense for you to put it into what’s called a QRP.
Instead, there’s more information at school, passive cashflow.com/prp. It’s another two out there, right? Every situation is a little bit different and the QRP is not the right situation for everybody. But in certain cases, it is, I think what’s another investor in our group, which you guys can join on Facebook.
Just shoot me a message. We’ll get you access to bear. But folks are using, you don’t get any tax benefits. Unfortunately, when you invest via a QRP. So it’s great for investing in Bitcoin or all these things that don’t give you the tax advantages of real estate, or if you’re just a private money lender or a debt investor, which I don’t really see why you would want it to do that in the first place.
But if you that’s what you do, or maybe you do life settlements. Two, that’s a great use for the QRP for my video window. There it is another teaching point here we’ve been using a lot of lately because we are able to be a little more liberal with the deductions. Some of the things that we had, we can do, or by calling, we don’t do full offices.
That’s a bad word. Call them administrative offices. And we do this Augusta rural. A lot of this is in my taxGuy@simplepassivecashflow.com slash tax. I’m not a CPA. I’m not a tax attorney. It’s not giving you any legal advice. This is just to get the juices flowing so that you can also go to your tax professional and pay less taxes.
That’s what it’s all about because you guys are the ones putting money into the economy and investing in. Oh, I had a thought here. It looks like this is probably going to happen. If Democrats would win just an idea. Maybe we should convert more of a retirement accounts. Or maybe take up any of your career pap.
I have one to cash. I’m thinking taxes will likely be going up generally, but understand it is mostly for the higher tax bracket folks. They’re trying to hurt the guys that are $400,000 EGI and above. But if you guys are smart, your AGI isn’t that high and you’re able to bring in a lot lower. So I don’t really want to get into the election or anything like that, but I, frankly, I don’t care who wins.
Because all the tax stuff, I personally fly under the radar and that’s really what the full sibling, passive cashflow gravy train is all about. Investing in deals, getting passive losses, loitering your ordinary income with real estate professional status. It’s all a game to game, paying less taxes equally, all the, all these rules you don’t really apply to you.
So it doesn’t really matter. Who’s in office and Oh, by the way, it’s really more depends. Who’s in the Senate because they really make the laws. My opinion, the presidents come up more of a figurehead us, especially when it comes to taxes and those types of things. But I’m probably going to be having Toby on the podcast next week, discussing implications on taxes based on who wants to be figure out who is actually the winner, but yeah, getting into the monthly news.
President Trump got COVID-19 and I think it got swept under the rug after he got it. And everybody heard the story get closed out, but shock the financial markets. And I’m just like, what the heck does the president getting COVID have anything to do with the market’s going up or down? It’s either that or newscasters are just fishing for news.
Again, the other thing big that’s still at play. We’re still waiting for that second really big, similar plan that. It’s taken a really long time to come through. Democrats want it a lot higher than Republicans and it’s in a stalemate or probably get pushed through here in the next month as selections happen.
We’ll have those talks, but either way, I think a lot of real estate investors tend to be more on the right more libertarian, if anything. But I don’t really care. One bit simple. Passive cash is not about being pulled at and go one bit, but understanding which way things move and reacting the best way as an independent investor.
But typically the Republicans are better for the economy, but if the Democrats win, they’re pretty more liberal with. Pumping fake money into the system. So that can be, I think of it as hell heads. I win tails. I win type of a scenario. That’s really where you should. You guys should get to at some point to figure out where the puck is going and skate to it as the other great ones said, but overall bright outlook for housing, the demand for housing is very strong and the confidence required for individuals to purchase a foam cannot be understated because of the bowl mortgage rates.
And right now it’s pushing up prices in a lot of areas is the low supply. So people aren’t putting their homes on the market. I don’t know if demand is higher or lower than normal. The prices are dictated by supply demand right now, supply we know as well. So that is why I says are going. So I would like the New York times.
So they came up with this article, whereas the model, the temporary laid off right after. Cool. If it happened. And I really bulged out in April and then may, and then has been tracking down in June, July, August, really visualizes how big the temporary layoffs were. And on the right side, here are the Kermit late layoffs throughout the months.
Those of you guys listening in the podcast for miles puts this on the YouTube channel. You can check it out. At simple passive cashflow.com/investor letter, where all these monthly reports will be held in case you ever miss these, we are invested in Biloxi, Mississippi, or Gulf port, and maybe you’ve seen some of the hard rock t-shirts I know that’s the first time I saw Biloxi, but I went and stayed down here on it’s like a casino role on the boardwalk there, but we have a couple of smaller apartments.
Couple of hundred units sizes there, but we chose not to do a cost segregation because in cost segregations, the crossover point to do one and spend five to $10,000 to do one to extract that bonus. Depreciation only makes sense if you’re going to hold onto the property longer than three years. And you’re just not too bullish on Biloxi in general, in a really long long-term thing.
So something it’s a great market, but we opted not to do that cost segregation because once we rehab those units and we’re going to probably just be out, but. This new story popped up. So universally music and Diane Chi U ventures is putting a 1.2 billion entertainment destination in Biloxi is eclipsing the 750 million who refridge resort and casino that the rate Steve, when developed back in 1999, I’m not saying that this one project.
It’s going to sway my thinking on my exit strategy and those a couple of deals, but that’s a lot of money. $1.2 billion, a lot of money to go in on a small town like that. So I’ll be watching this and these are the stories to be on the lookout for just like in Nashville. So Southwest value partners opens a 591 roam brand Hyatt Porto within Nashville.
Now not saying that you’re investing in full tails or anything, but hotels are a great indicator of progress. And Nashville is another market that I watch. In that’s still cash flows and it is a little bit of a buzz around the town of Nashville. Haven’t found anything yet, but always looking like I said, but Nashville is another market to be on the lookout for this is reported by Ari business online, a pretty nice building.
So news out of California and Florida for the Mickey mouse fans out there, Disney to lay off 28,000 employees at the part of, so that ain’t good or they’re closed now. No one’s going to this stuff. So this kind of makes sense. I’ll show these things will bounce right back once the pandemic fades away next year.
Moving to Texas. So business now reports that Texas central Reeses fed approval to move ahead with the Houston Dallas bullet train. So this thing is supposed to go 200 miles per hour and traveled between Dallas and Houston and less than 90 miles. I don’t know when this thing is going to be coming online.
But that’s going to be pretty cool. Texas is amazing. That’s probably why it being more democratic because everybody else, California is running to get the heck out of California. That’s part of it. I think that is why Arizona’s as long as a state to vote Democrat, because heck a lot of people are Californians for X Californians moving over there.
But again, not to get political or anything, but that’s just people moving away and you got to follow where the people are. Texas is on fire still. And something like this, even you can’t build something like this, this will get there a lot quicker, I think, than the Sacramento to California. I used to build railroad as my first career as a project engineer and track engineer.
And I’ll tell you it’s. To build this track. All it takes like moving mountains to get all the land and that ain’t going to happen in a place like California, but Texas is the one place that you’d get nice long linear pieces of land. John Burns reports. They put that together. These meat infographics.
Again, if you guys check out. The investor email@example.com slash investor letter, you can see these right. I’ll usually pull these to Instagram channel or the Facebook page, but they want to compare. What’s a better place to invest Florida or the Southeast three categories here. As far as the housing market, they think Florida has the advantage there.
The rental market, they see it as a tie. And as far as economy, they’re giving the nod to the general South. Benefiting from biotech banking, manufacturing, industrial sectors. The reason they nudged it over Florida was because of Florida service oriented, economic. Like the Orlando was what they’re probably talking about, but Florida Southeast great places to invest, especially if you’re looking for cashflow.
All right. So we’re looking at a chart from Arbor. Ranking the top markets. So Seattle, Phoenix, Austin, San Antonio, Dallas, Portland, Baltimore, Denver of Indianapolis Columbia. This is a list of, this is like, what they see is the new opportunities CEO’s of the top. I don’t really quite buy that. I think sales a great market, just doesn’t cash flow.
So I’m out, but Phoenix, Austin, San Antonio, Dallas. Our next Phoenix and Austin follow closely behind Seattle bending from resilient labor markets. Texas met shows led by Dallas and Houston. Continue to capture an outsize share of large multi-family investment. So little sub-note here. I always recommend reading the whole article.
Maturing millennial households have a growing desire for mixing the amendments of class a multi-family will also enjoy the space of the suburbs. So this is that push for what’s. Being called the term suburban won’t they family. So not really in the CBD for business district, not the marijuana CBD, but that other CBD, but more on the outskirts and suburbs, maybe 20 minutes an hour outside the city center is what they’re talking about.
These suburbs they founded before. That’s what I like to invest in because there’s a nice push towards that. A couple more graphs from Arbor. They’re showing on the left here. Large multi-family lending is going out to Dallas, Houston, Phoenix, Atlanta than DC, New York, Denver, Philadelphia, Orlando sentence only is.
So for those markets, I like a lot. Dallas, Houston, Phoenix, and plans on top for large multi-family lending to round out the other chart, which is they’re ranking at percent share of low count Dallas, Houston v-necks Atlanta and New York. Washington Orlando, Philadelphia, San Antonio. And then, so the biggest and the last chart for Arbor here, they’re trying to show the large multi-family lending.
Now, where is the lending volume per capita happening? So the tops are Orlando, Denver, Phoenix, Las Vegas, Jacksonville, Florida, San Antonio, Austin, Charlotte, Nashville, Dallas. I don’t know all this typically means, but it’s just showing you where the action is happening. Where’s the activity happening a little bit sad.
You guys know a black Panther chatter Bozeman died last month. There was a story here that unfortunately the guy didn’t have a will. So the wife files probate case. So that’s unfortunate that when you don’t have a, will you actually, when you, even, when you do have a will, all your stuff means public out there, would you really want to have in interest?
So that’s like one of those. I think that’s a shitty thing that lawyers do. They shouldn’t make you a will because by making a well, they did sure they get, they get the probate or when you die, really, they want to do it. They should be making you get a trust. So make sure you guys get a trust this year, especially if you have kids.
Friends. Don’t let friends have wills joint center for housing studies from Harvard university must be legit. It’s Harvard says that most whole water’s started do it yourself projects during the pandemic. So normally they’re hovering around the 60% and it went up to even as high as 78% in may of people starting a duet Bureau.
Cell full maintenance project. So this is probably why my lumber prices skyrocketed right before we’re going to sign a contract. Like we love her prices have come back down and it’s probably the same phenomenon. Why you guys can’t buy flour at the grocery store? Cause everybody’s. Bacon sourdough bread or whatnot.
Another thing that I watch every year is this price, water, Cooper. Accounting firm comes up with this. They team up with the urban land Institute to have this conference every year that they call your emerging trends and they come up with this really core board. It’s a nice read. It may not be super actionable.
But they released the top 10 emerging markets that are as follows Raleigh, North Carolina, Austin, Texas, Nashville, Tennessee there’s Nashville. Like I said, Dallas Fort worth. We would talk about Dallas all the time. Charlotte, North Carolina, Tampa, Florida, salt Lake city, Washington, DC, Boston, and long Island, New York, those top 10 merging markets.
From the urban land Institute and price, water merchants in trends. I read this report. I always keep in the back of my hand that they’re capturing a lot of the luxury markets. So in this list, I probably throw out Washington DC, Boston, New York, because they don’t cash flow. So I, as an investor am not hitting that niche national real estate investor.
Reports San Francisco, apartment rents, creator of the 31%. And yet most people are getting the heck out of San Francisco. A lot of the employers are telling their people to work from home because a lot of them are tech jobs and tech guys can work wherever they want for the most part. And if you have to stay at home and shelter in place and can’t go out, why would you want to be in the hustle bustle in the city where there’s in this time?
No social activities. So, this is why people aren’t getting the heck out of San Francisco. A lot of them are moving over to the Bay or Oakland or spreading out elsewhere. It is the view hall report time. Listen, I’m getting, I always get excited every year that you call report gets for these. Here are the winners and losers, California, Seattle, Portland, just get a bomb.
That’s sort of getting people are getting the hell out of town there and they are going to yep. You guessed it, Texas. The Southeast Jacksonville’s labeled all here, Austin and yep. You’re getting the heck out of the Northeast, New York, Boston, all those types of places. And if you haven’t heard it, you need to get out of Chicago.
Cause that’s that’s state is going underwater fast. I’m hoping a lot of people get into turnkeys in Gary, Indiana, which is just on the other side of the border. So they’re getting their beneficiary of a lot of people are trying to get out of the state. Gary Indiana’s to Chicago, Illinois is like people living in Vancouver, Washington, but working in Portland, Uber reports that Las Vegas, top the U S rise of apartment tenants, not paying rent.
Those Las Vegas people, 10.6% of Vegas tenants have missed a rent payment of two, 4.1% year earlier. I don’t know these last, I don’t want to say anything bad, but add, I think like gamblers there, but yeah, this is why I like to invest in more, uh, red States, especially in the South Southeast, it seems to be typical of the, of the California type of, or West coast type of mindset or blame it on somebody else.
If you can’t pay your rent, you never had your savings accounts, but yeah, maybe it’s near side of me. I love these guys. They just can’t work. So when you’re a tourist based economy and the hotels aren’t open, you don’t have very many options, but I don’t know. That’s just me. I think if you can’t page until your landlord and move out.
So if you guys are struggling building your network, we always say building your network network is all about building your net worth. It’s all about surrounding yourself with the right people, going to the local media and the free online forums out. There are some of the worst places to go for passive investors.
Because everybody’s broke, right? They’re all into house flipping and being more active. A lot of people in our tribe are more passive investors that are pretty good with their money. They save them money prudently. So we’ve got a couple options for folks. If you guys are new, trying to build your net worth up to over at least.
Quarter million dollars. And your prescription for that is buying a single family home or renter, especially if you live in a high price area or blue state, I check out the remote investor can keep ADR. And of course that’s at simple passive castle.com session can keep it, or we’ll be starting the next class probably in January, February.
And if you guys are accredited investors and looking, you’d take your way to the next level. One third of our scope is to analyze syndication deals become a sophisticated investor, and at very least. Not go onto those sucker deals. The Daisy chain deals up there. You guys can check that firstname.lastname@example.org slash journey.
And this is where we teach and we put our, all our heads together on how you can do the simple passive cashflow gravy train, which is all about paying little to no taxes via getting the passive losses. Um, these larger syndication deals and using that to pair with a real estate professional status tax strategy, a lot of ways you can do this raw, but every situation is different.
This is where we are me with information to take it to your tax professionals, to set this stuff up for you. But we are probably rebranding this as the family office, Ohana, trying to make it more of a community of high net worth investors. And it’s going to be more of a collaborative environment. Now this is the time or I switch gears and I talk a little bit about what I’m up to personally.
Hopefully I’ll give you some ideas and things to work on in December or January, but this always goes and follows the framework of Tony Robbins, six eats, but first is. How do I find growth? What was I working on as a lot of you guys know, I work with a coach and I don’t know my business, but I see it more as like accountability.
I paid people to keep me accountable because I don’t help . It is. And how much time I waste and how much leverage I can get when somebody has helped do that. But we really work. This month. That’s a big, super basic that I wanted to share with you guys. It’s called the RPM tactic, but it’s all about figuring out the first thing.
What the heck do I want? What do I want? Like if you were for spouse giving you a hard time, yelling at you, what do you want? What is your end goal, right? Or you’re not happy and you want to change something. What do you want? And then from there, once you define what you want, then you can figure out what specific actions.
That you wanted to happen and then, but to really make it stick, you need to do what purpose? What do you really, why do you want this? You have to root it in, right? It’s for example, what do you want? I want a six back on washboard. Abs. I want to flex and beach. All right. What specific actions do you have that make it happen better, blah, blah, blah, blah.
Exercise. A lot of people forget, what is my purpose? Why do I really want to do this? Because if it’s simply for vanity reasons, I guess that’s a pretty good motivator. Or maybe you just don’t want to look like you’re lazy at the beach. That can be a big motivator on nothing wrong with that, but maybe you really want to live a long life to see your kids.
But when you’re older, but that’s really important to root that. Why are doing it? How do I find contribution? I recently interviewed the now mayor of Hawaii. Bland GRD is interesting talking to him, getting into him and then talking offline with him a little bit. And this guy’s turn at burden. And that, that older age, I think he’s like in his seventies, pretty amazing watching him go.
But I pissed them off. I told them I didn’t really care about politics and you gotta get all upset with me. And I’m like, I was like, dude, like I do. All right, push your values on me grow. But yeah, I see where he’s coming from, but that’s why he’s putting his time and energy and his passion, his politics.
And I think I saw it right through and I think that it’s. That he’s the guy you want for mayor. You don’t want me, I have more thinking about myself and I’ve just quietly want to grow my empire, not at this point where I want to become there at this point. Call it six. Flustering significance will be closed.
A couple of deals this month. I think it was yesterday. Actually we closed with spring Oaks on Git 40 unit in Conroe, Texas light value. Add stabilize apartments. 140 out of 140 units are already rehabbed the already proving the business plan on the higher rents, great property. And I was there about a month ago.
I felt really confident on that one. And then a couple of weeks ago, it closed on a little 27 unit in Tempe, Arizona suburb of Phoenix, a great debt on both of these properties, both Fannie Mae. Long 12 to 15 year terms, 3.06 on the with spring Oaks deal. And that’s my strategy. These days, you can get it for such a low interest rate, like at 3%, your cash line day one.
Really your downside is pretty low. Really. The only risk is if you can keep the property occupied more than 50 or 60%, it’s usually the breakeven point and you guys have checked out the Huntsville three pack. This was the biggest year to date, but 407 unit. It was three properties. One of the properties took a really long time to close.
He find it close it much earlier than this months, but that kind of wraps up that portfolio. So the first two properties are going awesome. Higher performer rents. Those sedan often move in. I think he was a great year to toot. My horn is always to have a fulfilling life and get a little uncertainty in it.
We had some hurricanes there. Hurricane Delta messed up some of the mobile home parks in Southern Alabama uncle force. We, I forgot what the first hurricane was. I think it was like Sally, but we got through that one with a little bit damage, but Delta, these are some pictures of Delta, but right. Not just working through the insurance and that’s why you have insurance.
So the problem there is you have to put up your own working capital. That’s why you have cash reserves in your budget. So you can pay, you can overlay these types of repairs before the invoices come in, you pay your invoices. And then you get reimbursed by the insurance company. That’s the kind of painful thing, but that’s all we have commercial insurance to cover us for this type of stuff, a certainty.
He was really nice to finally pay out the first. We always tell investors that we restabilize the asset in a couple of quarters and we did, we were able to do this on Huntsville deals. Yeah. 51 grand went out for the first quarter distributions to investors. And some people like to show a bunch of checks.
We don’t do checks direct and positive. It’s 2020. So here’s a screenshot of that. Going out to me makes me feel good. Cash money going out to investors. That’s what right about making money and also celebrating a little bit too. I was in Cleveland, Ohio. We did a little investor reception to celebrate the closing of the Rockefeller.
We rented out a little space in the rock and roll hall of fame. Got to check that out. Cause I’ve talked to some investors and I sell some of you guys. In Houston in early October, too. I had a loyal investor, picnic and boy also, but I want to also announce we are not going to be doing the in-person retreat in Hawaii due to everything that’s going on, but we are going to be taking the virtual and is going to be like nothing you’ve ever done before.
It is not going to be a bunch of lame speakers giving you. They’re saying warm presentation. They give 20 other places. It’s going to be me. I’m going to be distilling the information of all of these little tactics and tricks that we’ve gathered over the past few years. The simple passive cashflow gravy train using passive losses.
The bonus integration. Yeah. We’re going to talk about that. Why you don’t want to use 10 30 ones, the hot air balloon analogy. Yeah, we’re going to talk about that, but we’re also going to implement in a lot of networking. So I’m going to teach these concepts, but I’m going to break you guys up into little mini groups.
And you’re going to be able to teach each other, the concepts and actually talk about specific strategy. Everybody’s going to be vetted coming in here. It’s all going to be pure passive investors, and everyone’s got to apply to get in, and I’m still creating the agenda and be on the lookout for that this next month.
But it is going to be amazing. I’m so excited, but new podcasts and articles that I released. This month, it’s been nice having some help creating these videos, helping me get this content out to you guys. But if any folks have any questions on any of these specific topics, let me know or ask the question in our Facebook group.
Well, we can all chime in or resistance and barriers. I need an intern. If anybody has any type of kid that is willing to do a little bit of prep work and need a little bit of a mentorship, I’d like doing that. So I want to grow this a little bigger. So I bought some decaf coffee, some channels. Stop drinking as much caffeine and I’m trying to grow like the lawn a little bit better.
And so I bought this air rater. It’s like you step on it. And there’s two pins in there. And just even if you do it several hundred times, and this thing is one of the most therapeutic things that you will ever do in your life day, you recommend it. It’s good for your lawn too. And it’s good exercise. It should listen to podcasts.
Or whatnot, but that’s something that I’m working on the side. We’ll see you guys next month, dr. Claire bye.
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