The Wealth Elevator Podcast: Real Estate, Taxes, Investing

I met Bo (online) in early 2018. When I first chatted with him he was another propeller hat.

What makes him different but more importantly what tangible steps did he take.

Bio:

Bo is a buy and hold real estate investor from Southern California and has picked up 6 rental properties in 6 months since closing on his first property. He invests in working class neighborhoods across the markets of Indianapolis, Kansas City, and Little Rock. During the day, Bo works as a senior consultant for a regional CPA firm and hopes to create passive income to become financially free and also educate others to do the same.

Story

1. Learned about REI at a young age (landlord from 10-18 yrs old) was a chinese lady who taught her son how to be a landlord
2. Started to rent out room in 3 bed primary room for cash flow
3. Parents had "renter's mentality/scarcity mindset"

“I cant afford that right now” - Rich Dad “How can i afford that”

“This is good enough. I don’t really want that bigger house, better car or fancy vacation anyway.”

Let go of fear!!

Why I chose REI -passive income: “David Bach - automatic millionaire, latte factor, pay yourself first”

RD → Pay yourself first, but with a purpose, savers are losers (inflation, money not making a return, etc.)

1. Started consuming all podcasts, books, audiobooks, and attending real estate conferences and meetups 
2. Met mentors (lane, who showed him how to invest out of state (instead of REITs, other passive stuff)
3. Good mentors/Bad mentors
4. People who try to sell you things
5. Good mentors - are doing deals, negotiation tactics (saved 3K on first deal). Dont have to re-create wheel, introduce them to their circle of friends/investors. Looks at deals - responds 24-48 hrs
6. Ongoing relationship - i sent them leads if i find any, send them vendor listing compiled, heloc listing,
7. Bad mentors - arent doing the things they are “promoting”/exp from 10 years ago
8. Goal is to continue to BRRR in KC, Indy, Little Rock (atleast 10 in each location)
9. Build brand = blog, podcasting, networking like a madman
10. Tips
11. Bad things
12. "Motivation gets you started, but habits keep you going." Finding my why - which is building income for my aging parents, and building a legacy for my family got me started. But I know that Ive started things in the past that have fizzled out - Like what?

Trying the latest workout, studying for licensure

To finish strong, I knew I needed to create lifelong habits that will help me take a step (no matter how small) in the direction where I want to go and the person that I want to be. To take a page out of Grant Cardone’s book - 10x rule. Uncle G says by increasing your target goals, and taking massive action (10x) your mindset will shift and so will your results.

1. Another key thing ive learned was create systems and processes that you can leverage in the future, whether it be

routine checkups w/ your PMs - What exactly?

1. Utilizing custom spreadsheet to keep track of all P&L items across 6 properties
2. “Gauge” expense % and if over time its trending towards higher than expected (i.e. 50%) then have a check in call w/ PM to understand why
3. Depending on area, (now learning KC basements are prone to flooding), consult them to see if we need to take preventive measures, drylocking, sump pumps, ventilation, etc.
4. Actually took this from your spreadsheet (bi-annual checkin)

underwriting deals - What exactly?

1. Using a checklist to make sure it fits your criteria
2. If it deviates, explain why (“deal is at 50cents a dollar, than the typical 70cents, diff strategy/airbnb, venturing into new area)
3. Run it by 2-3 locals
4. Stress test it - lower rents by 10-15%, increase maintenance and vac from usual 8%/8% to 10%/12%
5. What could go wrong? If a rehab, add in 10-15% contingency
6. How long can i sustain vacancy

whatever that helps you streamline your business and reduce unwanted risk. Luckily for me, my background as an accountant and consultant that specializes in compliance and internal controls helped me view this new business venture in terms of how I approach a new client - I look at the business environment, risks that the company faces, and find solutions to mitigate the risk if it cannot be completely eliminated.

1. Words of wisdom for scared newbies newbies that are out there looking for buy and hold properties, especially as an out of state investor? Another favorite quote of mine is one that says “its not what you dont know that gets you in trouble, but what you think you know that just aint so”. Im not sure if i interpreted it the way the speaker intended it, but I like to refer to this whenever people come to me and relay information that they heard from a friend, or read in an article somewhere that the next crash is here or that out of state investing is super risky. If i have done my due dilligence (talked to 5-10 different investors from indy and get multiple viewpoints, fly out to the market, underwrite dozens of properties) I am okay with taking calculated risks.

My piece of advice is if you want to get into real estate investing, treat it like a business, take the time to educate yourself, and take massive action - DONT get into analysis paralysis. Also - team up with the right people. No one became successful by themselves, real estate investing is a team sport you need the right acquisitions manager, the right lender, the right property manager, etc. Tips to find other passive investors? Bigger pockets, facebook groups (joined like 50), google: real estate investing blog/website and contact all of them, ask other influencers (lanes introduced me to a couple ppl)

1. What's next?: my passion - helping other people. I see alot of my friends and family members struggle financially, and often give them a copy of rich dad poor dad to read and educate themselves about finances. I see real estate as a vehicle to really achieve that financial freedom to make choices in life that really motivate you, get you excited, as we weren't created to go to school for 15 years, work a 9-5 for 40 years and then hope you have saved enough to retire at 65.

I ask alot of my friends what they would be doing if money was not an issue, and alot of the times I get blank stares, as they really haven't thought about that question. I give them a couple of minutes then they start talking about their passion projects such as making music, DJing, being a travel blogger, building homes for the homeless. But we are stuck in a rat race that doesnt allow us to look around us and truly live life since we are busy looking forward with our blinders on trying to get ahead. For me personally, I truly feel joy when I am able to help others and see changes being made in their lives. I hope that I can leverage my experience working at a financial services company, as an accountant, and now real estate investor to help others who feel stuck and trapped, so they can create passive income and follow their passion project.

[email protected]

www.biggercashflow.com

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Isn't Amazon going to kill Shopping Centers? 

Michael Flight has an extensive background in commercial real estate investing and is principal of Concordia Realty.

Concordia Realty specializes in shopping plazas and retail properties. They prefer to purchase operational commercial projects with existing income. They concentrate on strip shopping centers and they occasionally renovate or restructure existing commercial properties.

They have over a million square feet of retail space located in the Illinois, Indiana, and Michigan markets. Increasingly they are interested in Ohio and Wisconsin. They continually look for good opportunities and are working to expand into new areas.

Michael became involved in real estate shortly after college where he worked as a broker and then began working with a syndicator that owned shopping malls. In 1990, he started out on his own by founding Concordia.

Take us back to Pre-1990, how did you get into Real Estate Investing?

What does Value add mean in shopping centers?

Finding better tenants, upgrading and renovating buildings, and increasing rents.

Isn't Amazon going to kill Shopping Centers?

He says, “A lot of negative press about retail real estate has been generated by companies like Amazon competing online. This has driven down prices and opened up opportunities for Concordia. It’s hard to get goods delivered that last mile to parts of rural America. Even Amazon has invested in companies like Whole Foods as they recognize the need for retail outlets.” They are examining different merchandising strategies and like to see that their tenants have an online component to their businesses.

What types of Shopping Centers do bad?

He discusses the types of retail stores that will likely do well in the current environment and those that may fail.

How are Cap Rates in Shopping centers compare with other asset classes?

Institutional investors?

What are you personally investing in as a LP?

What is something that I (apartment refugee) should do? Go to a boot camp?

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Website link - SimplePassiveCashflow.com/155jason

Jason Ricks discusses his options as being and investor after having some experience as an investor of small residential units and now transitioning to syndications.

His day job is in commercial shopping centers which brings a unique perspective to the conversation.

From all in 401(k)index investor starting out to single family purchase while simultaneously receiving AMLI equity share position. 

Failed attempt of Single/Duplex investing.

Lane shares his rule: After over 1000 strategy calls with investors and coaching clients over the past couple years here is what I tell W2 employees... For those who are able to save more than $30k a year or have substantial liquidity (over 200k), being a landlord and especially flipping is a lot of work. If you like it cool/good for you... but just remember why we got into this... To be free from a JOB. A lot of us (80%) who stumble upon simplepassivecashflow.com and start drinking Kool-Aide will be financially free in 4-7 years pending taking action. So I always urge people to start with the end in mind and take a more passive approach.

Do the math here… you with 300 dollars per property (2 months of work to buy a turnkey rental) you are going to need 20-40 of these to replace your income. I have 10 of these and have systems in place but have 1-2 evictions a year and 3-4 big things that happen. Image if I had 30, just 3 x those numbers.

Directly investing in a turnkey rental or small MFH is a good way to start to learn and build up the war chest to go into my scaleable investments such as private placement syndications. Whatever you do, try to be as close to the investment as possible. This is the fundamental problem I have with Wall Street who takes too much fees off the hard-working efforts of the middle class.

Due Diligence process, PPM, and why I decided to invest in the deal.

Focus on buying retail properties, and using my retail CRE knowledge moving forward.

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Check your lazy equity

Investing out of the country with hotel investing 

SimplePassiveCashflow.com/154kira

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https://youtu.be/YYNq4EZEjgk

Show notes: SimplePassiveCashflow.com/153rice

Buy the book we discussed here

Coming out of college—I worked for the department of economic development up in Albany New York, and it was a really interesting experience. I was charged with helping being a part of projects where we try to keep businesses in New York or otherwise help them locate there, which is difficult to do given the high taxes that are in New York.

Did that for a couple of years, didn’t want to be a civil servant my whole life, so I went to law school—like most aimless people do as they try to find their way.

They say a fool and his money are soon parted, and, for the 1 percent, this is especially true. The more wealth one has, the more risks to their financial security. But with the right knowledge, planning, and guidance, the affluent can not only preserve their assets but enjoy them as well.

Private wealth manager Frazer Rice has seen every challenge and success that the well-off can face. In Wealth, Actually, he shares his holistic, adaptable approach to wealth management. Through a combination of philosophical discussion, practical advice, humor, and anecdotes, he shows how prosperous individuals can determine what they want their wealth to do; communicate with loved ones about their fortune; avoid overspending; handle wealth threats; evaluate, grow, and protect investments; and choose the best advisors.

Money shouldn’t be the dream—but, when it’s managed right, it can be the perfect tool to make dreams come true.

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7 Lessons learned from first few deals

7 - Not Googling the crime on the property

6 - Not communicating enough through the closing process with LP’s (1031 story)

5 - Not following up with the mortgage broker enough (going through a mortgage broker)

4 - Not having a relationship with the leasing person (found out she was working multiple props)

3 - Not asking if the PM can handle investor checks

2 - Not firing a Property Manager fast enough

1 - Not starting soon enough (invested in SFR’s, but scaled with MFH)

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https://simplepassivecashflow.com/151doctor/

Check out more on you Youtube Channel

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Take the hint from other high level investors and be aware that MFH Apartments is where a lot of new syndicators are starting businesses and where all the gurus are teaching about the space. It might be time to look elsewhere other than Apartments and into mobile home parks.

Learn more about the asset class here - https://simplepassivecashflow.com/mobile-home-park-investing/

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Full notes and SPC guide to QRPs and Retirement plans

Simplepassivecashflow.com/QRP

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Too much good stuff - go ready the full article here:

SimplePassiveCashflow.com/investorletter

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