Lane Kawaoka  - The Wealth Elevator

On the Reaching Higher Wealth Floors: "For some people out there, above a few million dollars net worth, time is more valuable than money. It's not the pursuit of money anymore, but it's the pursuit of trading in the money for the experiences."

One of the most important things to know when building your wealth is to use the tools that are available to you.  Interestingly, the tools available to you grow as your wealth increases.  This means you need to build your awareness of opportunities, as you build your wealth.

Lane Kawaoka, founder of The Wealth Elevator and a seasoned real estate investor, helps build that awareness to educate people that are in wealth building mode.

Lane started out like most of us, as a young worker-bee, blindly following the traditional path—working a W-2 job, saving up for a house, and living frugally.  Realizing he wanted more and more was out there, he moved to discovering the power of cash flow and passive income through real estate investing. Starting with a single rental property, Lane scaled his investment portfolio strategically and ultimately transitioned from hands-on property management to larger commercial deals and passive investments.

Lane and James dive deep into the nuts and bolts of real estate, including how to evaluate a property with the rent-to-value ratio, why market selection and insider knowledge are critical, and how networking with the right crowd can redefine your investment trajectory. Lane breaks down key concepts like forced appreciation, the difference between Class A, B, and C properties, and the barriers to entry that can be both a curse and a blessing in the business.

Listen as Lane explains the value of knowing what opportunities are available to you at the floor you are on in the wealth elevator.

Enjoy!

Visit Lane at: https://thewealthelevator.com/

On Instagram: https://www.instagram.com/thewealthelevator/

 

Podcast Overview:

00:00 Network Determines Success

08:15 Strategic Networking vs. Weekend Warriors

12:10 Real Estate Investment Strategies

20:33 Investing in Apartment Demand

26:26 Building Wealth Through Real Estate Investments

27:48 Scaling Passive Income Strategies

36:46 Contractor Reliance Challenges

38:32 AI's Impact on Workforce Polarization

47:42 Wealthy's Real Estate Strategy

50:53 "Wealth Strategy and Investment Growth"

59:19 Self-Reflection on Book Quality

Podcast Transcription:

Lane Kawaoka [00:00:00]:

On a whim, I just got a. Got a property manager started to rent it out. And that was kind of where I got this taste of cash flow. And that was back in 2009, 2010. And when I mean the numbers, you look at this thing called the rent to value ratio, where you take the monthly rents divided by the purchase price. If that is not anywhere near 1% or higher, it's not going to work. You know, like, it might be a great place to live, great school district, but, you know, we're trying to find good rental properties that cash flow. And that was kind of why I started to buy these turnkey rentals.

Lane Kawaoka [00:00:32]:

Out in Birmingham, Atlanta, Indianapolis.

James Kademan [00:00:41]:

You have found Authentic Business Adventures, the business program that brings you the struggle stories and triumphant successes of business owners across the land. Downloadable audio episodes can be found in the podcast link [email protected] we are locally underwritten by the bank of Sun Prairie Calls On Call, Extraordinary Answering Service, as well as the Bold Business Book. And today we're welcoming Slash, preparing to learn from Lane Kawaoka. I hope I did that. Okay, Lane of the wealth elevator. We're talking real estate investing here. So, Lane, how is it going today?

Lane Kawaoka [00:01:13]:

It's good. Aloha, everybody. Thanks for having me, James.

James Kademan [00:01:16]:

Yeah, thank you. I'm excited you're in Hawaii, but were you born and raised in Hawaii?

Lane Kawaoka [00:01:24]:

I was. I grew up here, but I spent maybe a dozen years up in the cold, wet Seattle.

James Kademan [00:01:29]:

All right. Oh, yeah, okay, fair. How did you end up getting in real estate investing?

Lane Kawaoka [00:01:36]:

Yeah, I guess like my path. I graduated college, up until that point was always taught to go to school, study hard, eventually became an engineer, which is if you're looking to not go to too much postgraduate doctor degree, you get paid the most out of college.

James Kademan [00:01:53]:

Right.

Lane Kawaoka [00:01:54]:

And that's what I did. I got paid a decent salary right out of college, and I saved up to buy a house to live in because that's what I'm, you know, we're all blindly taught to do that in the 401k. Bought the house to live in in my early 20s. And here I am living all by myself and I had this job where I would travel all over for work. And, you know, I was a construction supervisor and I was never home. So on a whim, I just got a. Got a property manager, started to rent it out, and that was kind of where I got this taste of cash flow. And that was back in 2009, 2010.

James Kademan [00:02:28]:

All right, so were you renting it out? Airbnb type stuff because you would come back to it or you just rented it out and you'd stay somewhere else.

Lane Kawaoka [00:02:35]:

Yeah, long term rental. And I was homeless basically for several years there really. But I was living off the company dime from hotel to hotel. So what this did is it turbocharged my savings like before that. Most of my clients today, they're able to save, you know, fifty thousand, hundred thousand dollars a year. Back then I was, you know, doc, you know, those are the doctors and dentists guys out there or business owners. But at the time, you know, I was maybe saving 30 grand a year. That's how I was able to save up 80 grand down payment, couple years out of college.

Lane Kawaoka [00:03:13]:

But when I was, you know, quote unquote homeless, I was triple charging that to six figures every single year. And that went to buying more and more rentals. From 2009 to 2015. 2015, I had 11 rental properties. There was a little bit of switch that happened in the middle. You know, stopped buying, you know, had a few nets in Seattle, but Seattle is a primary market like California, Hawaii, New York, San Francisco. It's just not going to work in terms of the numbers. And when I mean the numbers, you look at this thing called the rent to value ratio where you take the monthly rents divided by the purchase price.

Lane Kawaoka [00:03:50]:

If that is not anywhere near 1% or higher, it's not going to work. You know, like it might be a great place to live, great school district, but you know, we're trying to find good rental properties, that cash flow. And that was kind of why I started to buy these turnkey rentals out in Birmingham, Atlanta, Indianapolis. And that was kind of the formula up until 2015.

James Kademan [00:04:11]:

All right, what changed in 2015?

Lane Kawaoka [00:04:14]:

2015, I, like I said, I had 11 rental properties. And this is kind of what I talk about in my book, you know, for higher net worth investors. Once you get past a million dollars net worth, you start to realize that you're a target for life lawsuits and litigations. And you know, when you're under that, you're not giving me legal advice here. You're not really a target per se, but this is why you don't really want to own little rental properties after a certain point. And in my book I have kind of a chart, you know, when does that switch happen? But you know, essentially that's in becoming a credit investor, right? Net worth, million dollar or greater or $200,000 a year income or greater kind of puts in that category to not mess around with the small little rental properties and the Headaches that come with that. And, oh, by the way, you get the debt in your name when you do that type of stuff. And what I discovered at this time is, I'm sure you talk about on your podcast a lot.

Lane Kawaoka [00:05:08]:

It's all your network, right? The people you hang out with, the five people you. You become, the five people you hang out with. Up until this point, you know, my parents were not wealthy, they were not accredited investors. I didn't have a rich uncle. So I was just kind of doing this all by myself and kind of haphazardly, I kind of met up with a bunch of accredited investors at that point, started to understand what the heck that word means, and started to realize I need to surround myself with those types of people. And I started hearing these best practices that I later put into the book of what the wealthy people do with, you know, multi million dollars of net worth. And a lot of them had the same story that I did. They bought little rental properties, judiciously, good savers, ran their businesses, and then they parlayed that into bigger deals as a passive investor in syndications and private placements, which, if you're kind of wondering what that is, the analogy I like to use, it's kind of like an airplane, you know, in a deal, the cockpit is your pilots and co pilots, those are your general partners, sponsors, operators that do everything in the deal.

Lane Kawaoka [00:06:10]:

They find the deal, they get the lending in their name, they run it, they distribute, etc. And then the past investors are now allowed to just come on coach and ride, right, and go to sleep. But this allows them to diversify into many, many different assets across the board, right? Apartments, self storage facilities, mobile home parks, venture capital, private equity, buying businesses too, and allows them to kind of put. Put the best people in the cockpit to fly the airplane. But the big difference here is if you notice you're cutting out the middlemen, right? Like you can invest in REITs and other wall street products, but there's just so many middlemen in those things,