Episode 11: Lane Kawaoka – Transcript

June 13, 2021

The Pursuit of Learning – Lane Kawaoka

Mon, 5/24 9:10PM • 1:39:24


rental property, buy, money, job, passive investors, investors, started, property, day, cash flow, people, tertiary markets, investments, pay, markets, creating, rental, point, rent, assets


Clint Murphy, Lane Kawaoka

Clint Murphy  00:03

Welcome to the pursuit of learning podcast. I’m your host, Clint Murphy. My goal is for each of us to grow personally, professionally and financially, one conversation at a time. To do that, we will have conversations with subject matter experts across a variety of modalities. My job as your host, will be to dig out those golden nuggets of wisdom that will facilitate our growth. Join me on this pursuit. Today, I have the pleasure of having Layne callow go on the pursuit of learning podcast. Lane currently owns 4200 plus units across the United States. He lives in Hawaii, and recently quit his day job as an engineer, lane partners with investors who want to build their portfolio alongside investors who are too busy to mess with tenants toilets and termites, they have acquired over $350 million of real estate by syndicating over $40 million of private equity. Since 2016. ln reverse engineers the wealth building strategies that the rich use in the top 50 investing podcasts, simple passive cash flow.com. His mission is to help hard working professionals out of the rat race, one free strategy, call it as Todd lane and I talk about his path from employee to owning 4000 plus units across the country. Along the way, we cover turnkey single family rentals out of state investing, syndicated multi family investing real estate rules of thumb and real estate, financial analytics. We also discuss what markets across the country lane is targeting, and why he targets those markets, most many other things. At 35 years of age, lane has achieved a lot. And he shares how you can too. I hope that you enjoy this conversation as much as I did. Lane Welcome to the pursuit of learning. It’s great to have you. One of the things that I saw from your background was that you grew up in Hawaii. And you said that the sense of community that you had from growing up there is something that you infused around your business. Can you tell me what you learn through growing up in Hawaii, and how that’s informed your business philosophy.

Lane Kawaoka  02:46

So Hawaii for people who have haven’t visited is a lot smaller market, it is an American state. Although it is very different from the mainland USA a lot more community based a lot more based in people around you things are slower. That’s where the old Island mentality comes from. I think it’s no different than any other small town, Midwestern farm town. But you know, I think in the world today, I think there’s missing of community and especially like when I was in Seattle, I don’t know my mother see it each other, then we get inside the house, or Rob each other or something like that. But that’s just, that’s just how it is. In Hawaii. It’s a small community base. They wouldn’t people, high net worth people. The thing I’ve kind of gotten from them is you know, you’ve got it all. And money’s not an object. relationships, which is the currency of the rich people are much more community base. Everybody knows their neighbor. I mean, I lived in Seattle for 12 years. And Dude, I could even tell you who my neighbors name was right? You say hi. But nobody, nobody hangs out. Right? Very different way of life in Hawaii, very family oriented, very community oriented. And did I kind of created more of a boutique syndication company as I kind of went along to emulate that were you know, me, you don’t need to invest in me. But, you know, like people who are around they enjoy the company, right? They enjoy being with other people like minded people, especially.

Clint Murphy  04:21

So it’s not just a business. It’s a group of people that spend time together and enjoy each other’s company. Is that fair to say?

Lane Kawaoka  04:27

Pretty much right. But, you know, I think there’s a couple of things I picked up along the way as I started to expand my peer group to more high net worth, folks, and I guess you hear about it a lot of times, but you know, they say the relationships are the currency of the wealthy. Right? Well, your network is your network. So those are kind of two opposite ends of the spectrum advice, but you know, they kind of go hand in hand. I mean, as you start to grow your network as we’ll kind of dig into it, you know, syndication deals, private placements or Country Club deals. You don’t get opportunity. Unless you are in the cool kids club, around other high net worth people, you know, some things to talk about, like what kids, your private school are going to what do you how you building your family legacy? Right? What are you going to do with your several million dollar net worth, to kind of create a lasting impact for some kind of philanthropy goal? You know, you can talk about that stuff with people at work, right. They’re all figuring out what to do with their retirement, the very little bit that’s left, right, it’s just different different things that talk about, you know, definitely firstworldproblems.

Clint Murphy  05:33

So when you think about your children, someday, in what school, they’ll go to, one of the things you think about is not necessarily what they’re going to learn in school, but who they’re going to be spending your time with, because that’s going to have a long term implication on their ability to have access to some of these opportunities.

Lane Kawaoka  05:51

Right? I mean, it’s all the whole nature versus nurture thing, right. And school, I mean, I’m not a big fan of school, even though I’ve got a master’s degree and definitely a product of the system. But I don’t think school is for everybody. I do think it’s for most people, and that’s why most people should have jobs, but I don’t think it is for everybody. And so everybody’s different. Everybody has a different skill set. Most people don’t have a skill set that makes them unique to the office. And now that’s sounds low limb. But that’s why there’s jobs, that’s multi fleshy working jobs, but no good, my everybody has different kids, everybody has different skill sets. And I guess the important thing is for people to be put into the right place. And for those of you know, people who kind of see the entrepreneurial world, you see this, or you see both sides of it. But if you’re just kind of just a W two worker, even though you’re high paid, you know, computer science engineer or doctor, dentist, likely you’ve got to the traditional academic path. Right? And that’s all you may know, and you may not have offspring that is thinking that way, or geared up that way.

Clint Murphy  07:01

That’s right. And you said at one point, you were a product of this system. So you left Hawaii, you went to Washington, and you did your bachelor’s and your master’s in engineering, when you were growing up? Is engineering where you thought you would be where How did you carve that path for yourself?

Lane Kawaoka  07:18

two main things. I mean, I think I must have been good at math and science, or eight or nine. So I kind of got put into this path of being engineer, right? Straight up. I know a lot of you know, engineering, I knew I just didn’t want to be broke, right? And an ad along the way when I was 12, or 13. I’m 35. Now so you know, we had Google back then. Only the smart kids are using Google back then. Everybody dressed in red was only still using MSN and apples was garbage. Also this devils things. But yeah, I remember googling Highest Paid salaries out of college, my elementary school engineering was on top right now. It’s like, Yeah, I don’t want to go to grad school. I don’t, you know, I want the best, I want the best pay without super long time in school.

Clint Murphy  08:08

So maybe that’s why the best pay without having to get a PhD. And it’s amazing how many people don’t actually do that research in advance of choosing what degree they’re going to get. Often, they’ll go to university and rack up all that debt. And we’ll talk about the value of certain types of debt at some point, I’m sure. Without the thought of how am I going to pay this off in the future? Or why am I taking on this debt? What am I going to get out of it?

Lane Kawaoka  08:35

Right? I mean, a lot of people just go into debt, and because they think that that’s the best way to do and, you know, I but I think the status, folks are the people who have the money to go, and they just go because their parents will pay for them. I mean, they’re just kind of flushed to the system. And, you know, definitely appreciate as much and it just kind of squander the opportunity.

Clint Murphy  08:56

So then when you graduated, you took a job as a supervisor for a railroad maintenance crew, with mostly 50 plus year old colleagues who you were supervising. And I think that’s when you started to already realize maybe this nine to five isn’t a fit for me. And I should be thinking of something else. Can you tell me about some of the things that that job taught you on your path in why you maybe already started to see that this wouldn’t be your long term future?

Lane Kawaoka  09:28

Well, I mean, it’s just a lot of hours, right? I mean, it was 100% travel for work. I was a management trainee. So you know, you’re given that job, kind of as a green kid out of college. And it’s, you know, most guys will spend 1020 years to get that type of job from the ranks. But what better way to for I mean, that’s actually a good system, right? Like you have management trainees, we were college educated, go through these types of in the trenches, jobs, and it helped me a lot to build my leadership skills, learn a technical background, you know, we had a lot of machinery, we had very high stress, kind of decisions that we had to make in the minute. And the whole people aspect of especially working with a blue collar union workforce was very eye opening to me back then it’s really helped me kind of know my business today. I mean, I’m kind of lucky today, kind of doing the things that I’m doing today compared to then, in all, you know, weird hours 20 473 65 you have emergencies here there. And they paid me Well, well, I mean, pay me great, definitely more than 10 20% than what a normal job I would have been making it, or employing or something like that, building some airplanes, which is on paper, or making emails here in that.

Clint Murphy  10:42

And one of the benefits that I understand from that, actually, was the fact that it allowed you to become an accidental landlord with your first single family residential purchase. So can you tell us how that job contributed to you being an accidental landlord? And then we’ll dive into the path that eventually put you on to

Lane Kawaoka  11:03

Yes, all the way up to this point? You know, nothing special, right? I mean, I’m just following this linear path. Go to school, study hard, be a good little boy, who worked at that job for 4050 years, put money into your retirement system, and all along the way, buy a house to live in and have a dog get away? Have some kids, right?

Clint Murphy  11:24

So percent of your income, put it away, it’s going to be enough.

Lane Kawaoka  11:28

Exactly. The government will look out for your right pension. Exactly. Well, most of us don’t believe in pensions and Social Security these days. But, you know, I mean, I still go a long way. All right, I’m gonna go buy a house to live in. Right. And I have a salary that I, you know, I was pretty frugal back then, still am overweight, but I was able to save, you know, like 4050 grand of my paycheck every year. So I, after a couple years, I saved enough to go buy a $350,000 house in Seattle. And because I was never home, when I was working on the road all the time, I was like, This is dumb, when I just rent this thing out, make some money. So the Reds for 2200 bucks a month, the mortgage was 16 $100 a month, I knew nothing about the rent to value ratio, the 1% rule 50% rule, which he talked about later, all I knew I was like, you know, cash flowing, I was making some money every month, right? Like, at least four or 500 bucks a year money every single month. And I was like, shoot, if I just keep doing this a couple few more times, I’ll be able to like quit my day job, or take it easier. And that’s where it kind of started. And you know, with a lot of time on the road, you moved on that you got a lot of thinking time. So I got the thinking and strategizing how to do this better, better.

Clint Murphy  12:50

Perfect. And we’re gonna come back to the next steps. And the fact that that lit the spark, something you said reminded me of something I saw on your videos, and you talked about frugality, and frugality at that stage in your career when you’re trying to put these big down payments. So to buy homes is relatively important. And I saw that you actually had a really great list of some of the things that you did to save money. When you were early in your career, can you highlight two of two or three of the ones that the listener will find? quite entertaining, but they actually work and describe what you were doing.

Lane Kawaoka  13:27

Yeah, she’s kind of some of them are kind of embarrassing. Like, if you have like a mod pizza or pieology around them, it’s kind of a little secret or hack days, you can get the salad you get unlimited toppings. So you just load that sucker up. And now you got like much for, for the whole week, when I was working a lot, or when I was working, you know, when you go 30 miles outside of your home office area, now you’re on expenses to chain. So it should cheekily come back and go to this casino buffet every weekend. And I would just intermittent fast the next day. And then I would kind of head back on Sunday, and then go right back on expenses. There’ll be like, there’ll be like a month where I was it was kind of a game where I would only spend $100 out of my own pocket. I would charge my my anchor battery box at work. You know, I don’t know if that’s super unique or not. But I don’t know just too much time on my hands to be honest, you know, like time was very, was not valuable back then. So I would secure out and do a lot of this type of stuff. And people can check out my whole laundry list of things at simple passive cash flow calm slash cheapo, five years there. Yeah. And

Clint Murphy  14:43

we’ll put that in the show notes. So any of the links you share will have in the show notes for people to go through later. I absolutely love that list. I used to write and talk about financial independence a lot. Real Estate Investing obviously being a path to that. A lot more of it. It’s like dieting 80% is via not spending money. So all of the hacks you had as ways to save money were ingenious, and I really enjoyed them. And I quite liked the intermittent fasting, not only for fitness, but financial health. That’s something I actually wrote about once.

Lane Kawaoka  15:16

Yeah, here happens, right? I used to watch a lot or I read a lot of financial blogs in a pF blogsphere in my college days, but me start to realize that there’s a very different mindset between the stuff, the world I’m in, and people I interact with endless personal finance bloggers like mister money mustache guys, you know, they’re all into the $5 latte rule, right? If you don’t drink your latte, you know, you’ll have $20,000 after five years, right? And yeah, they’re they’re very into index funds and retail investments. And that’s the fundamental thing that I think that’s wrong is retail investments. But more so in the attitude, right, like, you know, if you kind of break down the frugality mindset, you know, the mean fire mindset, it’s all about like living less, right? It’s like, I’m gonna save up $1.2 million, and live off of it for the rest of my life. I live like a hermit and never interact with anybody and help anybody, right? Like, I’m definitely in the fat fire category. And for those who don’t know, there’s different layers of the F, IR, E, financial independence, retirement extreme kind of read some of these guys blogs is kind of lame, right? They just see about $1.2 million. They quit their six figure job. And they go to Thailand and take pictures of their food. And they don’t have any soul. I mean, it’s just very, I don’t, I call them eyes immature, right? Because I had the same mindset when I bought that first rental, then I bought a few more. And then you start to adopt this mindset of like, you know, the lights at the end of the tunnel for me. I mean, yeah, I’m still working this day job. And I and she did work it for another, you know, almost 10 years. But I started to realize that Yeah, I’m on the way out. And what am I going to do after that? Right? Like, am I just gonna go on a beach and drink a bunch of pina coladas and do nothing with my tie? I mean, that’s kind of cool. I get it, you know, but if you really start to think about it really hard, he’s really start to empathize with that situation. They’re like, this is kind of like,

Clint Murphy  17:22

That’s right. That’s right, everyone’s fire is different. And I think the path that you’re on, I very much align with is the same path that I’m on, I look at it as lean fire, fat fire. And then the third one that I generally put in there is pivot. And I would say, from what I’ve read on your path, you as well, or somewhere in between that fat fire and that pivot in that I don’t think anyone would look at what you’re doing today and say, Yeah, he’s retired. But I think I would look at what you do today and say, he’s doing what he loves. He’s enjoying it. He’s helping people. And he’s making money along the way. And so you transition from being a W two employee, for someone to living the life you want to do, doing what you want, when you want, how you want it where you want it. Is that fair to say,

Lane Kawaoka  18:10

right. And if people want to Google another term, Ikigai, it’s the alignment of you know, something, you’re good at your talents aligned with your, your what you’re doing. You enjoy doing it, you make money by doing it, and it’s something the world generally needs.

Clint Murphy  18:24

That’s right. I saw that at the end of one of your videos. And it’s something I’ve shared with a lot of people in one of my communities that I’m a part of, is finding that mix between passion purpose, what you’re good at what people will pay for, I think that’s a great thing for people to look up. I think like some of you could say, yeah, we’re like, rich shaming of people who don’t have a found this easy guy. But look, I’ve never had it before. But I think like, I call this like the path to enlightenment, well, maybe I shouldn’t call it that. Because it’s kind of hokey, right, but it’s like the past on the highway, right? The highway is when you start to go really fast. And it’s obviously how we’ve kind of created our highway system. But there’s multiple ways onto the highway, there’s multiple on ramps, some people like myself, it’s money, money, it’s important to me, money allows me to feel comfort, comfortable and to get myself a point where I can figuratively put my own oxygen mask on and help others. Now some other people I noticed like, you know, they they’re really into the Beachbody thing and they work out a lot, right. And that may be there on ramp to kind of send the elevator back down others. Now however, it is, I think, you know, people are fine. They’re there on ramp different ways. But I think that that’s that pivot, right, you’re talking and sometimes that comes later in life, because you may actually need to hit a certain level of financial independence before you’re able to take that next step. And so I don’t think it’s I don’t think it’s shaming anyone to talk about that in the We’re talking about it because we’re not necessarily comparing someone else’s journey to our journey, their point date, our point B, right? Everyone might be at a different spot on their journey. But the more they can learn about these things and understand that the more that may be able to influence their future,

Lane Kawaoka  20:17

right? But now, I mean, now I will shame I’m a little bit right like, because now today, like, I don’t go into traffic, I don’t go downtown very often. And I try and avoid that kind of stuff, right? I child, I go and do my things when I want. But you know, when I’m looking at when I’m driving around, I’m looking at the people. They’re all kind of just going through autopilot, right? Just walking, they know they’re wearing their business clothes, and the probably took them down here, 30 minutes an hour, put that get up on Get in, get in the car, get in the bus, and there’s a bee on the brake. And they got to go back in there. You know, they’re building somebody else’s dream. And they’re there. Yeah, they might like their job. But I mean, there’s, I don’t think your life starts until you kind of start working for yourself, you get yourself up to FAA status, we’re retired. And then you’re able to kind of do what you want. How you want. I mean, it’s very similar to like people who went to college for the first time, right? Not, not near house, but kind of like far away. It’s like, when you go there, you can do anything. I mean, some people do anything, right, and they get themselves into trouble. But when you finally wake up, and you’re financially free, you’re kinda like, oh, what do it. And it’s hard, because a lot most, most people at that age 30 to 50 years old. I mean, it’s kind of you’ve been trained so long, to think, Hey, this is your life between these, these gutter alleys. And you can only do these things, you need to wake up at eight need to go with the car

Clint Murphy  21:50

and drive to work every day, I would say you’ve probably fair to say you’ve been conditioned, since you were approximately five years old, to have that type of mentality. When the school systems were originally put in the way they were put in, they were basically put in to train good factory workers. And so it’s it’s effectively what we we all have been trained to do from the time we’re in kindergarten until we’re done University. And so to have that insight, you had to say, wait a second, I don’t want to go in and work for someone else from the time I wake up early in the morning, till the end of the day, work long hours, so that someone else can reap the rewards. You somewhat woke up from that system that you’ve been conditioned into? And luckily it was it started with that first single family home. So let’s let’s go back to there, and say you had a realization Wait a second, I’m getting somewhere in the neighborhood of 600 bucks a month into my jeans, maybe I should do more of this. So take us on that path of how you started to continue to accumulate homes in the Seattle area.

Lane Kawaoka  22:57

Yeah, so I mean, just to kind of break down the numbers a little bit. And this is what I was doing when I was working on the road. And yeah, you’re in your first class in the airplane that you get that gets super old. You know, just sitting there. I mean, like, when I break down the numbers, I was making like 30 something percent of my money, and they weren’t even that great of a rental, right? When you include the mortgage pay down your tenants paying down your mortgage, you’re getting that equity built up, just like you’re paying off your own mortgage, getting that for free. You’re getting that cash flow, right, that delta between all your your income minus all your expenses, you’re getting the tax benefits. And should the property appreciate, which typically in real estate does, you’re getting that out of the leverage portion. So when you combine all that stuff,

Clint Murphy  23:44

can I pause you on that? Yeah, for that one, you just mentioned something that I think a lot of listeners don’t realize about real estate, they think of the cash flow as the sole source of income on a property. And you mentioned two other key aspects, one principle pay down, and the other the long term appraisal increase. So just thought it might be worth having a little bit of an expansion on those three things, so that the listener can understand as we go through the conversation, how those three things may differ, as we talk single family, multifamily primary markets, tertiary markets, and they start to think about the moving pieces and how you might trade one for another. Well, I think tenants paying down your mortgage, right? They’re making the pcit a payment for you. And yet at the beginning of your amortization schedule, your interest is high, but a portion of that is your principal payment which lowers much. So they’re paying down your mortgage or use that essentially as money in your pocket. You can’t tap it yet. So you sell the asset or you do a refinance. But it They’re right, in addition to the obvious cash flow per month, and then like I said, the appreciate the property tends to appreciate. And remember, you’re into this property leverage with a great government subsidized and Mae, Freddie Mac loan. So if the property goes, the property is going up with you putting oftentimes be 20% down to capture them all the appreciation, it’s like you making a deal with the bank, but the bank gets none of the equity upside to the bank’s putting up the money in is that the TV deal go leverage is that the typical leverage in the US, you’re sitting on around 20%, you’re

Lane Kawaoka  25:39

80% loan to value. I mean, this is why value. America has some of the best rent to value ratios and the best loans. So it makes it very ideal to do this here in America. Whereas other countries, Canada, Europe, Asia, it’s just the relative valuations on there and cobbled with not lower leverage limits.

Clint Murphy  26:03

That’s, that’s fair to say. I’m always in, we’re gonna dive into this when we start getting into some of your rules. But I look at the 1% rule. And I think about where I live in, it’s very challenging to even think about getting anywhere near the 1% rule, which we’ll we’ll talk about later. So sorry, if we go back at this point, you’ve started to buy additional assets. And you’re starting to notice that there’s a change in the cash flow attributes to those assets.

Lane Kawaoka  26:29

Yeah, well, I guess prior to that, I mean, when you add up all the ways you’re making money, I mean, I wasn’t that great about doing this back then I was kind of a newbie, but I was making 30 something percent on my money every year. And you know, people want to go into the numbers with me, they can go on my website, or my YouTube channel, school passive cash flow.com slash returns, right? Do it like a whiteboard example, write this down? If you don’t believe me, just go look it up and ourselves sitting here. And I’m like, why am I making 30 something percent on this dinky rental? I don’t think it’s even that great. And why is my stocks only making eight to 10%? wtf, right. And as you kind of alluded to earlier, right, this is all a system. That’s right. This is all like the system, the school system. I mean, maybe it’s a little bit of a bad outlook on the whole thing. But nevertheless, the system is engineered to keep us all working. And when you start to realize all these mutual fund companies, all these washing companies, they’re creating retail investments that most people start to invest in, because the 401k unlocked it for them. Right now, the average man can go and buy paper assets. But I think what people don’t realize is a lot of time, a good half to a third of their money is being taken away and hidden fees. Right? Forget about that expense ratio being point 01. That’s not the fees, the fees are hidden. Right? Again, how am I making 30% money? And when I’m really only getting eight to 10% in a retail investment? Right? How else do we have all these skyscrapers? How else do they have all these, you know, these Wall Street salaries? And that I became pissed off, right? Because that’s not right. And that is how you know, people, hardworking people of my parents who have doctorates and master’s degree, they go to their place of work, work their ass off and hopefully retire in 50 years. Right. If, and kind of foreshadowing what we’ll talk about here. I mean, how is it that somebody can just go buy a handful of rental properties and retire in less than a decade? You know, we can’t have that happen, because nobody would work? That’s right. But he would freakin do anything. Right? We can’t have that. So you can see the reason why the collusion of this whole system, right? But yeah, that was the kind of a Tiffany I came about. And I was like, I get it, I see how this world works. I’m just gonna keep quietly buying more rental properties. And that’s what I did. I bought to a couple more units in Seattle. But this was around 2012. I started in 2009 2012, I was going to buy another property. But the, you know, this is where I just realized that sophisticated investors don’t invest in primary markets like Seattle, California, Hawaii, New York, Boston, if they’re working if they’re investing for cash flow, because you’re just not going to find the rental value ratios needed to be able to cash flow in the rental rent to value ratio is how by taking the monthly rent, divided by the purchase price. So $100,000 house that rents for $1,000. That’s 1%. And again, we’re looking for something 1% or higher.

Clint Murphy  29:50

So 1% or higher is the target for the rent to value ratio,

Lane Kawaoka  29:54

right? Because on that $1,000 rent house, each of my fingers is 100 bucks. You’re going to have to pay the professional third party property manager because we don’t we’re not landlords here, we’re investors, that’s attempting to dirty work and take on all that liability and headaches and tenants, termites and toilets, you know, 100 bucks is going to go to repairs, things will break. Another 100 bucks should go to some kind of slush fund that you save for capex breaks, like, you’re gonna have to replace the roof every 20 years or so, paycheck raking. And then you get to pay your principal interest taxes and checks. That’s the other part. So the leftover, maybe a couple 100 bucks out of that is your cash flow. Okay, so this is where that 50% rule is. So like, the rule is sort of a conservative, quick and dirty rule saying that, take your monthly rent, just cut it in half. That is how much you should have left over to pay your principal interest, taxes, insurance, your mortgage payment, that is your true cash flow. Just because your property rents $4,000 in your mortgages. 500 does it mean your cash flowing 500. But people can go to my website and get my free analyzer kind of play around with numbers themselves to kind of get a feel for it. Think it’s that simple, passive cash flow calm slash analyzer. But yeah, you got to know your numbers.

Clint Murphy  31:21

 So we’re gonna dive into you mentioned a couple key things, right? They’re actually primary markets, the corollary where they do cash flow being tertiary markets. So can we start there and unpack that for people primary markets? you indicated California, New York, areas that you might call a metropolitan area?

Lane Kawaoka  31:42

Yeah. Cool places to live, right? Or in other words, too much dumb money there for so

Clint Murphy  31:46

price. Hawaii is an I live here in Hawaii, but I sure as heck don’t fly out here. And so when I watched some of your past material, you talked about secondary markets, and you talked about tertiary markets. Can you describe what those are for people in why you choose the ones you choose?

Lane Kawaoka  32:06

Yeah, so secondary markets are kind of a shade a shade under those primary markets in terms of population too. So you know, these are still, I would say, half a million population kind of cities or several, couple million. They’re big towns. These are places like Birmingham, Atlanta, Indianapolis, Kansas City, Memphis, Little Rock. These are large cities, but they’re just not the sexy, cool ones that attracts, you know, people make stupid prices for it. And then that third year, is tertiary markets. So these are a lease we try to stay the cities there are about a quarter million population. We don’t want to be we want to be in towns or cities where it’s a pretty diverse economy, as opposed to look for downtown. It’s just that one repacking time to keep the packing plant packs up. Was that a business your skirt?

Clint Murphy  33:02

 Yeah, the whole town goes out of business with the the single line of business that it had. One might look at Detroit, for example, where it only had for a period of time, the automotive industry. And when that started to pack up, the values in Detroit dropped significant.

Lane Kawaoka  33:18

Right, right. So Detroit would be an example of a secondary market. But maybe not the best economically diverse markets. I think it’s a little bit different today. But back then certainly, it wasn’t. Some of these tertiary markets might be like a Huntsville, Alabama, I can’t really think of too many off the top of my head, but Abilene, Texas, El Paso, Texas, places like that.

Clint Murphy  33:45

Gotcha. Okay, and so you tend to avoid more of those tertiary markets and focus on the bread and butter in the secondary markets?

Lane Kawaoka  33:54

Well, that depends I mean, we try and stay the secondary and tertiary markets. But this is when you know, we’re kind of going on there deeper, were more what is how good of a deal it is. And when we could have a deal is how low are the rents today to what we can push it to in the future, or if we can fix it up to get it to. And that’s for most passive investors or folks listening to hear that might be just putting the share, right, but we kind of we fish in a pool of secondary and tertiary markets, because for us, we want to at least be able to cash flow. But then of course, we’re fishing around 100,000 plus deals to find out one magical deal out there that has the great opportunity.

Clint Murphy  34:35

Rule number one, always cash flow from the beginning without any pro forma adjustment,

Lane Kawaoka  34:42

right. So a lot of people think of real estate investing as big world. They think of like HGTV house flipping stuff that’s very different than what the world we were more buy and hold cash flow first kind of guys and you know, that’s if you think about All these people who are betting on appreciation, and more cash flowing on a month to month basis, these are the guys who always get hurt, you know, 2008 prime example that if your cash lying in there, you never have to sell, you always can just wait out. So the time the market bounces right back up. That’s right. We’re effectively like income streams. And I think this is the difference between traditional investing, traditional investing dogma that everybody teaches you, because they want your money there. Their funds is the accumulation period, right? Click save up to million dollars, or I don’t know what it is, say formula dollars, so you can live off of it in retirement and live off the rest can be happy, right? That is what we’re all taught to do. But let’s unpack it. To me, it’s, it’s dumb. Because when you get to that stage in life, what do you need, you need to put food on the table, and you need to pay your bills. So you need cash flow to do it. Right. And so what, what most people do when they get to that age, they live off their pension or social security, which we’re not going to have. But they’re they’re living off cash flow, right. So if they have two to $4 million of equities that have built up and appreciate it to that point, they’re going to convert that money to cash flow, right? Or just live up live off of it, and eventually it goes to nothing. Maybe that’s it, that’s exactly what they want to happen. But if you’re smart about it, you create cash flow streams, but I employ, well, why don’t we build cash flow streams today? After all, that’s the end game, right? Why not begin with the end in mind and build cash flow streams today. So that’s what we’re doing here we’re building, whether it’s a syndication deal, or rental property, you know, you’re buying properties and cash flow for you. And we’re creating multiple streams of income to diversify, you don’t have to worry about when stock markets go up. And the beautiful thing here is for most of my clients, they’re able to they, you know, these investments will kick off money, but they don’t need it. They’re working their day jobs, their days are numbered, don’t get me wrong, but these properties can can keep kick off cash flow and have them acquire properties quicker and quicker. Like my first few properties, I mean, it was like watching grass grow. Yeah, it was really good saving money saving 50, almost 100 grand every year, to buy one or two properties a year. But, you know, once you get a few of these properties in place, now I’m creating a third paycheck for myself. And I can accelerate that acquisition and get even more cash flow. And this is effectively why the rich get richer, right? Because their assets create more money for them to buy more assets,

Clint Murphy  37:46

you’re effectively getting to the point where your investments in your assets are creating, especially if you’re in a relationship, your assets are adding a third income to the couple. So you your partner, and now your investments are generating as much wealth as perhaps one of you is generating in your day job, which is an absolutely incredible spot to be this is nothing new, right? I

Lane Kawaoka  38:09

mean, this is like Rich Dad, Poor Dad was essentially a copy of the richest, richest person in Babylon. What’s Right, right, save 10% of your money to go buy assets, right, that make you want

Clint Murphy  38:24

problems with that is if you look at what you were doing, when you were younger, you’re saving far more than 10% of your money. When you’re saving 50 to $100,000. After tax, that’s a fair amount to be putting away to put into these investment properties. So when you start to talk to younger people, I would I would assume that a decent amount of that has to be not only how they make the investments, but how they reduce their expenditures, maybe not all the way to what we were talking about earlier with lean fire, but at least a certain level of frugality to allow them to get started on this journey. Would that be fair to say?

Lane Kawaoka  39:05

Yeah, yeah, I think I think the nice thing about when you start to buy investments, right, you’re like, Alright, I used 30 grand to go buy this house. But that created, you know, a few $100 in cash flow every month. And I see that every month. And that, that establishes that relationship where now you’re motivated. Right? I mean, I talked to a lot of families and their, their savings rate isn’t that high? And I get it. I don’t I don’t fault them for it. Because Why the hell would they want to save that money if it doesn’t equate to anything on a monthly basis? It’s just like teaching. I think a lot of parents they teach their kids about money, but I’m like, Did you just waste it? They don’t care. They don’t have any money. What they want to learn about this stuff, right? Yeah, it’s I think that’s that is like it’s a good motivator to get this stuff set up and they can see it working right now. As opposed to in a bank account making point 01 percent

Clint Murphy  40:02

Yeah, I don’t think lane that many people talk to their children about money. And I know with with our sons, I started talking with them about money in a very early age, even to the point of my oldest son going for a walk and talking about, you know, when, when he’s at a college if he goes there, and he has his job, and I said, you know, would you rather, if you have $20,000? Would you? Would you rather spend that and have fun with your friends? Or would you rather buy an apartment, it’s like, what would happen with the apartment, and I explained the idea of leverage and said, Now you’re gonna have more cash. And then in two or three years, you could buy another apartment, you can have that cash, and you could eventually buy three by four. And he looked at me, and he said, that I, I’d rather buy apartments. And that was, you know, he was probably 10 years old at the time. And so I was trying to get them started on this journey earlier. So I’ll have to get them to listen to this podcast when we’re done. So that while he’s in high school, he starts to look to acquire properties, that’ll be the goal.

Lane Kawaoka  41:00

I mean, I think it’s great. You’re talking to him like this, but I’ll be honest, I mean, you know, he’s probably still picking Santa Claus brings his like, the presence. And he’s gonna start to realize what, uh, what, how hard it is to go buy a damn apartment, for sure. And this is the steps that were missing right? Before I bought our apartment. I bought 11 single family homes. It took me 10 years. Well, it took me six years of doing this. And prior to that, I had to work for two years at a job identify. And prior to that, I had to go to the psych school in Seattle, where it rained every single day and studying my ass off when all the other policy majors were out there playing frisbee, right? These are all steps to get to here. And what likely what most people will do, they’ll give up? That’s right. They will never even get to the rental property part. And I think that’s, I’ve seen parents do what you did. And I don’t think it works. Right? You’re missing all these intermediate steps. I mean, it’s great intentions, right. But maybe another way of showing them would be, you know, like if I’ve kind of sat and watched some of my peers, they talk to their kids about oh, you know, what do you want to do you want to buy that thing? Cool. You want you can have anything you want, right? You want to buy something? Right? What’s your plan to get that? How much is it costs? That’s what you’re planning to get it? You know, you’re going to go more salons? All right, well, you’re trading your time for money, you and your uncle don’t do that. Once you go find a way to make a business where you can have your friends mow the lawn for you. Right, those are the, you know, those kind of get there. There’s wheels turning. But I think the problem is, and this is adults, kids, millennials, baby boomers, nobody ever gets anything started, done a generational thing.

Clint Murphy  42:48

Nobody ever don’t start that you’ve talked about it. They don’t take that first step. Sometimes I’ll I recognize Lena, I may overgeneralize. A lot of people like to think about the end result. They don’t like to think about the work that has to happen from today, until that end result, and they don’t take that first step. So a lot of what you talk about in your presentation is what’s that first step. And so for you it was that single family home, you grew a number of them in Seattle. And then in 2012, you decided to go out of state, what drove that decision? We talked a little bit about it being cashflow. But what was your What was your first step in going out of state?

Lane Kawaoka  43:27

Yeah, so yeah, first thing, the numbers didn’t make sense in Seattle. I wasn’t cash flowing and beginning. And I finally realized that and as prices were starting to come up, it made it super clear that I needed to kind of go elsewhere. I tried to do you know, in any of endeavor, you try and search for the other thing, right? So I also tried to go look at auctions, right, because you hear a lot about buying distressed properties at cheap. But then I wouldn’t, they would have these like dinners where they would cater free spaghetti. And they would get a bunch of investors around. And I went and I listen to the presentation. And it was kind of a war room setting where they would go look at the next properties. And I looked around the room and it’s just a bunch of old, like dumb money, budget guys who work for Microsoft and didn’t know what the heck they’re doing. And that’s when I realized I need to get out of this room because this is where dumb money is. And this is what I don’t want to be doing. So you got to try something right. So I tried I took I took a hail mary and I was like, Alright, I’m going to go buy one rental property, not going to go visit it’s not worth my time. See how it works. Got it, you know, found a few people to help me a broker or property manager and tried it out and it worked. Right proof of concept.

Clint Murphy  44:48

So how did you find them?

Lane Kawaoka  44:49

I think I just started just randomly network I found other investors that were doing the same thing. And I built kind of loose relationships. With those people, which is probably the best I could have done back then, today, I rely heavily on my network. But you know, back then when people first started, you won’t want to have that. So you’re just going to kind of have to go in on them. Hopefully, they’re not getting paid for referring you to anybody and just more in it for the money. But I kind of followed the breadcrumbs and I found that broker, I found a property manager and kind of built the team up from there.

Clint Murphy  45:23

In that first one, if I’m not mistaken, was in Birmingham.

Lane Kawaoka  45:26

Yeah, it was, I think I bought it for like 60 or 70 grand and it rented for 850 a month. And, and this was a big culture shock for me, right? Like, I mean, I grew up in Hawaii primary market. I didn’t know people who lived in $100,000 houses. I didn’t want that. But you know, that’s how most of America lives. Right? Right. Like we’re the weird ones that lives in Vancouver, BC, Seattle, Los Angeles, we’re crazy. That’s right, these prices,

Clint Murphy  45:56

until at this point, you’ve now done Birmingham, proof of concept. It worked. It’s cash flowing, life’s great again, and you start to expand out Atlanta, Indianapolis, how are you choosing these locations as you go,

Lane Kawaoka  46:10

I mean, you start to realize you start to build a short list, right of all these secondary markets with robust economies, and you kind of just refine the list with the people that you meet, again, pure passive investors, not brokers trying to sell you deals, because they’re incentivized to have you buy. Yeah, you know, after a while, you gotta you got to kind of just pick a few markets and, and build the team there. And that’s what I did, my vision was to, you know, get a few cities to cluster around. So I can concentrate my portfolio with, you know, a handful of property managers, maybe rise to the cream of the crop on their clientele list with maybe five, I had five rentals in Atlanta with one guy and make it a little bit more scalable, interacting with them. That was Yeah, just kind of rinse, wash, repeat and keep buying cash flow at that point. And then around 2015, I had amassed 11 of these rental properties. Life was pretty good. I mean, I wasn’t, I wasn’t gonna quit my job yet, right? Because with 11 rentals, and a few 100 bucks a cash flow each, that’s, you know, maybe $3,000, nothing to complain about. But I don’t know what American family can live off. $3,000 a passive. I mean, most people have kind of that magic number of 10 grand passive alone, that’s really in a pretty good place. So just to give some people a little sense, like, I mean, we had property management company, managing all the assets, but my job is to play asset manager. So when there’s a big issue, they call me, and ultimately, they’re the ones who who takes over it, but it’s my job to ensure that as the owner, you’re doing it any cost effective and timely matter. So just to give a little bit, I mean, 11 properties is a great sample size. I had maybe an eviction or two every year, some kind of big catastrophe that happened every quarter like tree fell in house or something the person buying that. No big deal,

Clint Murphy  48:06

but no bit, no big deal, but those plumbing leaks always seem to happen.

Lane Kawaoka  48:10

Yeah, I mean, it’s like clockwork, right? I mean, it’s you have 10 Kids guarantee one or two who’s gonna go to jail, right at some point. But yeah, I mean, to get to that magic number of 10 grand passive a month, I need three of these properties. And then now you’re like, Whoa, whoa, whoa, now you’re like, times that height three, and eviction every other month. That’s the kind of ticket Dasher every other week. And it’s just like, Whoa, this is I have to search and pivot for the next thing. And that’s what I did. I started to look into apartment. I didn’t know I was apartment. So that’s where I went first. And I was just kind of searching because this obviously wasn’t scalable. To be the king a single family home investor, you know, lane, and this is where I stumbled upon the power of the network I started to join different mastermind groups paid ones because that’s really the only good ones things that are cheap, easy free really never pan out I usually just a waste of time. So I started to get around high net worth, accredited investor law doctors, lawyers, engineers that were financially free and a little bit older than myself. And I started to listen. Right and it was finally I got around a group of people who were on the path and financially free, which is very different from what you’ll find a chair in your daily life, what your neighbors doing, what your coworkers doing. Don’t take any financial advice from anybody who’s not financially free, and might even be a CPA or a lawyer. That’s why they still got their suckers jobs, you know?

Clint Murphy  49:42

Yeah, I want to dive into this because I thought this was very, very important. So this is 2016. Now you’re making good money in a day job. You have 11 single family homes that you’re renting and you decide to make a very significant in estimate, I believe I saw it was in the neighborhood of $60,000. In the investment is in the most important thing you can invest in, which is yourself. So you have your mastermind groups, you have your paid learning, what are some of the greatest things you learned when you were doing that?

Lane Kawaoka  50:19

I’ll be honest, education wasn’t really that great such a dinky details. But the more important thing is he got me in the room with the right peers. And something can be said for spending money on it. And you following through, right, because now you’re the idiot who spent all this money in just that go to waste. I was committed to kind of follow through and do it. So before I put down any money, I was like, well, maybe I’ll just be that guy with 30 or 50 houses. But boy, am I glad I did it. Because I found this world of pure passive investing in syndications and private placements. And I realized that high network accredited investors invest in these types of opportunities where they’re passive LP investors. But then it also opened up another world of all these cool tax strategies. They, they do, like a lot of these big deals, they’ll do cost segregation to extract way, way more tax benefits, and gelcaps passive activity losses, which they in turn, you know, lower their ordinary income via a real estate professional status designation on their taxes, to pay little to no taxes, which creates the happy cycle even more. And then to invest more to make more money. And then also employ different strata, tax and legal strategies and infinite banking. And in this is where I uncovered the secrets of the wealthy, like a lot of these things. They’re kind of simple, right? Like simple passive cash flow. It’s very simple. But who does this? Who, who doesn’t buy their house to live? Right? Who doesn’t do retirement? Well, none of these people are doing it. But all those rich, those poor suckers out there working day jobs, they’re all doing these retirement funds, all this crazy stuff. That I think it’s great.

Clint Murphy  52:11

But it’s not. It’s simple. The problem is, it’s it’s a it’s a get rich, slowly method that people aren’t attracted to. It takes a fair amount of sacrifice to save up those down payments. And to get that ball rolling, if you will, once you have the snowball going, which you did very young, it puts you on a path that not it doesn’t seem like a lot of people can get into Am I am I wrong on that.

Lane Kawaoka  52:39

I was very lucky, right? Like I was I had money very young. And I didn’t have any skeptic spouse that really had a clingy affinity towards me living in house, that they will, you know, that’s 600 grand, a million dollars. So this was able that that was kind of my advantage, too. Kind of get that lift off the ground. I mean, in fact, I didn’t mention this. But, you know, after I had bought that first rental property I had, I was like, wow, this is my ticket out of this rat race, like fire my boss. So I actually because I was working on the road all the time. I actually just moved out. I didn’t live anywhere I didn’t mortgage or rent payment to pay. I just lived on company expenses for several years. So I was that’s how I was able to save, you know, six figures every year by just being a ramblin. Man, you know.

Clint Murphy  53:35

And you rent in Hawaii right now, don’t you?

Lane Kawaoka  53:38

Yeah, I don’t really believe in buying. I mean, maybe when my net worth is 10 million I’ll buy a house to live in. But it to me, it makes no sense.

Clint Murphy  53:46

So along that way, have you at any point lived in a home you owned? Or have you just rented in primary markets where the loan to value ratios are low, and then have your investments that you own in high rent to value ratio markets?

Lane Kawaoka  54:03

I’ve owned a couple of houses to live in, but I don’t do that today. Okay. And another big thing that separates the wealthy from the average is their viewpoint on debt. Right? Like we we go into a lot of good debt, right. And good debt is defined as you buying to picking up an asset that puts more money, a lot more money than what the debt services and this is something most people are very scared. Right? This is this is the Antichrist for a lot of people getting into any kind of debt. Isn’t that’s a tool use a tool for good and bad

Clint Murphy  54:42

if used properly. And it’s you’re absolutely accurate. When we were talking about financial independence community earlier, generally they refer to any form of debt as a sin as evil. And you or I would look at it and say well, whoa, whoa, there’s there are different types. debt if you’re carrying credit card debt to buy a TV or a couch, that’s bad debt, if you have credit card debt at 0% interest, and you used it to buy a home, that could be a really good debt. So knowing the difference between positive debt and negative debt debt that will have you effectively in the rat race longer versus debt that will allow you a path out of that rat race,

Lane Kawaoka  55:28

and like a lot of my clients will have this, this mindset of like, well, I’ll try to pay down our house, I tell them well, you know, we don’t do that. Because we want to take that lazy equity not doing anything in your home, and hospital Five, six, or five or six apartment buildings for you, right? To, in turn, play this arbitrage game where we’re making a lot more money, and it just comes down to their comfort zone and education, right to make those decisions that ultimately is going to lead them to a better place. There’s a strategy out there where you, you take your your home equity via a HELOC, and you pay down your mortgage. I think it’s I mean, it works. But I wouldn’t do it, I would rather take the money and buy investments at the end of the day, you’re going to grow your net worth faster. And that’s what it all comes down to. How does your net worth growing, being debt free is not aligned with financial freedom. Another mistake a lot of people make a lot of times is that? Well, you know, like, let’s go back to the buying a house. Right? Like I think most people should buy their house. If people are like, wait a minute, what is he saying? Just saying that buying a house but of houses of for savings account. And most people in this world are really bad with money, they get 500 bucks this big one. So for those people, most people, they should go buy a house because it prevents them from getting their grubby hands on their money. And they have to pay their watch first, usually. But for some of us who are good with their money, take the money and go buy investments. And what the cashflow you get, you’re probably good enough to not go to spend it blow it on something. So

Clint Murphy  57:17

that’s right, you just said something. And you mentioned it in one of your videos. And it really resonated with me. And it was at that stage when you started to go into multifamily. You said if you are able to save more than $30,000 a year or have substantial liquidity being a landlord, and especially flipping is not scalable. It is merely a form of capital appreciation. So at the time that you said that was that when you were making your transition from single family homes where you realized I can’t scale this and part of that may have been lane. Your point about an eviction every quarter was becoming an eviction every month and you needed to move to something that could scale is that when you made the jump to multifamily?

Lane Kawaoka  58:06

Yeah, that was kind of was when I was kind of making that jump. And I think that very similar to like, you know, some people go to the NBA, right from college, or go to college right back in the day. Know when you do that, right? There’s not really a flow chart for people. It’s kind of like, based on the person right under their talent level. And this is the same thing here. When does an investor that you know, books an onboarding call with me? When do we put them to a turnkey remote rental? When do we say well, maybe you should start to look at these private placements as a passive investment. Certainly, if you’re an accredited investor, I think it’s a no brainer. Don’t screw around with all these nice rental properties. It’s a pain in the ass. Right. But for you know, look at Nicole, I started I didn’t have any money. I learned a lot by getting rental property from Nevada. And I certainly don’t think people under a quarter or maybe even half a million dollars should do syndication because most syndications private placements are $50,000 minimum investments. That’s a huge chunk of change for somebody who’s a quarter million dollars. And overall my my general advice to people is never to go into any one deal with more than five or 10% or net worth 50 grand for someone who’s a quarter million that’s 20 25% or something like that. It’s too much.

Clint Murphy  59:27

That’s that’s a really good point in we’ll definitely come to that because I wanted to have some questions around getting into syndications and understanding it from both sides. One of the things that you talk about when you’re considering where on the spectrum between active versus passive and you chose passive and we’ll get into the reasons he chose passive, but you highlight four different things you talk time, money, knowledge and network. Can you unpack that a little further listener

Lane Kawaoka  1:00:00

Yeah, so when I have my onboarding calls, I don’t know anything but anybody, I’m kind of acting, asking specific questions to figure out where they fall in those four attributes, time, money, knowledge, network, knowledge and network are kind of intertwined. A little bit. But you know, the major ones are how much money does this dude have? How much time? Does he have the average super busy day job? Yeah, that’s that kind of dictates where we place him. I think in the Active Passive spectrum, you know, most of the active investing is wholesaling, flipping houses, I don’t really advocate for any of that type of stuff. Most of people in my community, their highest and best use is that their day job, so they shouldn’t waste their time flipping houses or wholesaling, and it’s not good tax advantage anyway. But in this world that I live in of turnkey rentals or syndications, you get semi active and passive. So when we’re kind of talking like that, you know, using those three attributes, first money, right, that’s probably the easiest one, because it’s a numerical thing. If the guy doesn’t have very much money, it’s simple. Buy a rental property, get yourself educated. You know, come back five years,

Clint Murphy  1:01:13

start with the basics,

Lane Kawaoka  1:01:14

right? Right. Because the thing about syndications is anybody can put together syndication and bring in passive investors. So if you’re a new, passive investor, new investor, you don’t have a shot, determining if this is a good deal. All these people putting together these deals, trying to find investors, they all have really polished pitch decks, you can get going up work and get one done for 50 bucks, right? You can do a webinar, right? Everybody has a podcast today. Everybody has a book these days. Yeah, this is real estate, this is a marketing business, everybody makes itself look really good. So if you don’t have any basis, in reality, you have not own rental property, or you don’t have a good network, a pure group around you to help you to determine if this is a good investment for you. I think that’s kind of dangerous.

Clint Murphy  1:02:05

So learn from the turnkey rentals yourself. So that when you ultimately do assess whether you want to invest in a syndicated deal down the road, you will at least understand the basics.

Lane Kawaoka  1:02:18

Right. Right. But it’s not necessary. Not necessary. I mean, and it may not be the right, the right way of going about it. Because the second big thing is how much time does this person have? Right? That’s right, is is this person to buy a rental property, even a turnkey one? I mean, it’s gonna take you at least six months of like work putting in four hours a week, so learn some stuff. I mean, I think that’s why people join our little incubator group, because it greatly decreases the time the learning curve. Right, but you’re paying money for that. Right. But if you were to do it yourself, I mean, you’re talking for hours a week, for six months, they kind of get yourself up to a point where you’re prudently you know, placing $30,000 to buy $100,000 house, I think any less than that would be irresponsible, but just just kind of putting up a prayer. But you know, like, if somebody you know, had a handful of kids, they’re already super, you know, they’re working 5060 hours a week. It probably would, how you better just kind of take that chance to be a syndication investor, potentially, I would still advocate for them to try get as far along the road of buying a rental property. Because trying to do that they would learn type of stuff, right? It wouldn’t be like, Oh, you know, you learned to go for years to college. You don’t get a degree, it was a waste of time. No, this is all like helpful. Right.

Clint Murphy  1:03:46

The Can you explain to the listener, what a turnkey rental is just for those who might not know.

Lane Kawaoka  1:03:53

Yeah, so turnkey rental means a lot of different things. But, you know, ideally, what it is, is there’s a house flipper out there that picks up a distressed property and fixes up all the major components, the electrical, the plumbing, the new h back, you paint puts in, you’d like hardware, that’s heavy duty, right? Better floors are more durable. Maybe they’re the nicest, you know, we’re not talking stainless steel here, but it’s good rental grade type of stuff. Sometimes they’ll even put a tenant in there for you. And sometimes even manage it for you. So it’ll be a true turnkey experience. But essentially what I mean turnkey it’s, you know, it’s a good bones, right, good, good, a good property. And maybe I usually advocate for my students to go find a third party property manager and have them put a person in there for you at that point and see if they can kind of take the reins from the builder on the house.

Clint Murphy  1:04:46

So effectively, you can turn the key, open the door and it’s ready to go.

Lane Kawaoka  1:04:50

Yeah. And it’s kind of like, you know, it’s kind of like a rental property with training wheels. There you go. You’re paying a little bit extra for it. Right? You’re definitely paying retail price, but I think even paying retail price, you’re still doing two or three times better than what you’d probably be getting in the stock market.

Clint Murphy  1:05:05

So can you tell the listeners how a syndicated deal works from the syndicators perspective? And from the investors perspective?

Lane Kawaoka  1:05:15

Yeah, so syndicators perspective, the syndicator is more of an experienced investor, they’ve been around the block, they ideally you want to find a syndicator, that this is their full time day job, they are professional, right? They’re not some it worker, this on the side, right, trying to find something that allows them to quit their day job, right? Like they are professionals, and they have networks and relationships in place with brokers or property sources to find the best deals out there. So I mean, probably go through like, several 100 to 1000. To find one, that one deal that makes sense. So they’re finding they’re going out there finding the deal. They’re even putting the debt in their own name. So none of it goes into the passive investors name. And these need sponsors, syndicators, operators, but they call it different, all different words, which means sort of the same thing. They’re going out, and they’re kind of putting a business plan together, maybe they’re doing a little bit of rehab to bump the rents up 100 bucks, you know, and then ultimately, then they have to go and come up with the capex money and downpayment money and cash reserves, which they raise from passive investors. And that’s the point where the passive investors come in. And the analogy I like to use is like an airplane. in the, in the cockpit, you have the general partners, which is that person funding around the deals, and this can be a team of people also. And oftentimes, it is sort of a team sport. But the passive investors come in, in the plane, only $50,000, minimum 70, the board the plane, and they go to sleep. And the nice thing like this analogy, you know, they’re all aligned, right? If the plane if the general partners crashed a plane, well, they died too, right in this fingertip. Example.

Clint Murphy  1:07:06

And when you’re when you’re looking at the general partner, is there is there usually a promote built into the structure?

Lane Kawaoka  1:07:12

That’s correct there. I mean, they’re not doing it for free, nobody does anything for free? Are you would you want them to? That’s, there’s usually some kind of fee structure, some kind of acquisition fee or asset management fee, and or a carried interest. So for example, it might be like, they take 20% of all the profits, right? Where the passive investors get eight. And this is where it’s, there’s no one split. That is average. Right? I mean, it’s it ranges and this is the private placement world, sort of the Wild Wild

Clint Murphy  1:07:47

West, it would you almost describe that as is similar to a hedge fund with a two and 20.

Lane Kawaoka  1:07:53

So very similar. Okay, very, very similar. But I think, you know, if a deal is fatter than normal, I would, I would assume that the general part would ratchet up their splits, which, from an LPs perspective, that’s awesome. Right? Jared Palmer found a great deal, let him get rewarded. And maybe he gives us a little bit too. But it’s economics, right? Because passive investors, there’s always a number that they want to see based on a certain perceived risk reward profile on a deal. Like on a development deal, where they’re building something from scratch, they may want to double their money in three years. With more stabilized asset, they may want to double their money by right. And some investors are really unsophisticated. They may not, they may not know what they they’re, what’s average, right in the marketplace. I mean, a lot of these these deals are kind of found on crowdfunding websites. But to me that the reason why the operator goes to the crowdfunding website is because they can’t raise the capital on their own based on their own investors. And that, to me, is a red flag. I personally want to know my sponsor.

Clint Murphy  1:09:01

That’s right. And so when you when you talk the average investor, what would you say the average investor in a syndicate deal is targeting from a limited partner investment perspective?

Lane Kawaoka  1:09:11

Yeah, like, like I said, like, you know, if it’s development deal, where they’ve got to wait a couple, two, three years for cash flow, maybe they’re looking at when the passive is so to double their money in three years, so 24% 100% return and in three years, so you know, 3030 something percent, whereas, you know, more stabilized asset that’s kicking off cash flow, even from the get go with some light value add so maybe just pumping the rents up 50 bucks, 100 bucks, maybe they’d be looking to double their money in five years. So little under 20% here. Not bad, right? I mean, when you’re, you’re also getting the passive losses thing. games on your taxes.

Clint Murphy  1:09:56

Okay, lane, where are you excited about right now. When you start to look at markets, what markets are you thinking? Are the next spot to go after?

Lane Kawaoka  1:10:05

Yeah, I mean, one of the rules that we follow are we kind of go to red states. So not the same thing politically, but we want to be in states where the landlord laws are on our side as landlords. And typically, red states tend to be a little bit more economic focus, right? You look at the people moving out of California, into states like Texas, right? You know, my top five, six markets are like Phoenix, Arizona, all the Texas, Alabama, Georgia, the Carolinas, Florida. And they’re all generally, they follow the trend of the southern states, the warmer climates, that’s where the population growth is going. And that’s where all the economic development essentially gone. So that’s what we’re going.

Clint Murphy  1:10:55

So that aligns with something I’d heard you say in the past, was that growth is tilting heavily to the south? Why do you think that is?

Lane Kawaoka  1:11:05

 I think maybe part of it is like, you know, with an aging population, people are moving to the warmer climates from the north, east north. I don’t know, I frankly don’t care. Right. Like it’s, I just followed data, the data is telling me What’s all that worth all the, you know, like the manufacturing is coming back online. I don’t really know what needs the other like economic growth, population growth. Me, I’m just trying to kind of go where the puck is gone.

Clint Murphy  1:11:35

Something I saw that you look to that was really interesting. And I’ll get it explained why did the listener is you look at what’s called the U haul band line report to see where I think you said it was where are the blue collar workers migrating to?

Lane Kawaoka  1:11:51

Yeah, so we we kind of focus on workforce housing. So our rentals are like $700 to 12 $100. We stay away from the luxury high end, because the theory is in tough times, you know, people who live in their yuppie condos, they have to move down to the D class value base apartments, which is primarily a portfolio. We also are not in the low end the slump slowly bar area sector, we’re kind of in the middle, good value housing, especially in a country where population growth is increasing. There’s just a growing demand for workforce housing, good quality housing. Yeah, that’s I mean, that’s why we invest in this type of stuff. During the pandemic, right, like I think it showed its strength. Normally, we collect 97% of our rents out of 100. People, you have a few deadbeats, but to be expected, but yeah, do do COVID in April, May of 2020, dipped on average downs in 90s,

Clint Murphy  1:12:58

which isn’t too bad.

Lane Kawaoka  1:12:59

Yeah, we’re still making money if we we stave off like 60 something percent.

Clint Murphy  1:13:04

So I think I’ve seen you talk about when you great buildings, A, B, C, and D, can you give the listeners a quick description of how you would differentiate between those four. And what I think I heard was, when the markets moving up, people who were in a D building, may move to a C, C’s move to a B, B’s may move to an A. And in a recession, your A’s go back to a b go back to a C, C’s to a D, which means if you’re always in that B and C grade building, in an up market, you should have people in in a down market are somewhat recession proofing yourself because your aims will come down to your B and C buildings. So can you tell the listener about those being seen AMD buildings?

Lane Kawaoka  1:13:47

Yeah, I mean, essentially, we’re trying to stay in the middle of the bell curve. But yeah, like we have different grading systems for not only the class of the property, but also the neighborhood tenant profile. So easiest one to define is the class of the building. And that’s usually dictated by the age, you gotta generally like a 1980s properties, a lot of the class 1960s serfs to get to the sea. Yeah, I think it helps once investors Come on our tours, and we kind of pointed out with what it is, that was simple. The one that is harder to for people to grasp is the tenant profile and location grade. So a classes you know, nice, right, it’s, it’s a way we also want to live there. We all want to live there. Class B is a mixture of white and color, it’s generally safe. You maybe don’t want to run around at nighttime. And then Class C is refer may want to cut out whatever you’re doing get in get out in a day time. Class D and effort Warzone type of properties. You’ll find stuff in those kind of areas. But yeah, I mean not to be sexist say that like that, but a young female can go running or jogging at nighttime in a class, she might be able to only do that in the V class, neighborhood during the day time. Hobbies can hang out in a class C area.

Clint Murphy  1:15:13

It’s a it’s a good way to understand it. And so would it be fair to say you’re targeting B and C buildings? In in B neighborhoods?

Lane Kawaoka  1:15:22

Yeah, yeah. Because we can’t do anything about the buildings. And most times our business plan is to improve the building. Right? So we’re trying to make it better. But we can’t really do much with the location on some of our 300 unit apartments, we have a lot more flexibility to change the complexion of the community. But for the most part, the application is it is what it is.

Clint Murphy  1:15:47

And can we talk a little bit about because I think one of the fundamental concepts with being a landlord is understanding how pennies can become dollars when you look at cap rates. And so when you talk about improving the buildings, and how small changes that may not seem large, become massive when you think about the cap rate effect. And when you think about the leverage effect. So can you maybe educate the listener on how cap rates work and how we use cap rates, income properties, and then how that even compounds further when you look at the leverage aspect of

Lane Kawaoka  1:16:26

Yeah, so like, I think when people buy houses, you know, single family homes, anything under four units, it’s evaluated on the comp approach, comparable sales, what are the properties sell for around that subject property, which is subjective, and emotional, and why don’t like it, it goes up and down. commercial properties, contrast by its evaluate the prices evaluated by the net operating income income approach. So if you can can show your net operating income, you can effectively change the price of the property, the market price, the net operating income, which we refer to as noi is your income, which is basically your rents minus your all your expenses. So you have two levers there, if you increase the rents or decreases, you can change with, you can play around with the noi. Or if you increase expenses or decrease your expenses, you can change it to most time. So we’re doing is we’re increasing the income by making our property better, but also increasing amenities. So our expenses are increasing also, but our income is greatly increasing. So when we buy a property at this sort of noi level, and this, we change it to this something higher, we kind of take that delta and that’s how much we effectively forced appreciated that asset, which has nothing to do with market appreciation.

Clint Murphy  1:17:57

Yeah, so I’ll use some numbers just for people who weren’t watching a video. And we’ll use a simple example. When we buy it revenues. $100. And expenses are 50. So our net operating income is $50. If we’re able to grow both the revenue and the expenses by 5%, revenue goes to $105. Expenses only go to 52 and a half dollars. So we’ve actually created 250 additional noi. So as long as we can keep that ratio, the same between the revenues, and expenses, we’re creating incremental net operating income.

Lane Kawaoka  1:18:37

So let me use like a simple example. Like, you know, we got, let’s just say we have 100 unit building, which I think is a small property, but 100 is easy for us math, associated podcasts for. But you know, on that 100 unit building, say there’s 20 reserved parking spaces up in the front, right? parking is a little spare. So let’s just charge almost 20 parking spaces, let’s just charge 20 bucks a month. Seems reasonable, right? So we created $400 of extra noi, per month. And you know, this is based on a year,

Clint Murphy  1:19:09

because when we bought the building, they weren’t charging for parking. And we said well, why wouldn’t why wouldn’t we charge the tenants for the parking spot?

Lane Kawaoka  1:19:15

Right? Right. So we created 40 $800 of extra noi per year, let’s just assume that these, these certain assets are trading at a five cap. So divided by point 05. So we just increase we just made $96,000 for us, just by making that one management decision.

Clint Murphy  1:19:35

Okay, so So can you explain to the listener, what the concept of a cap rate is?

Lane Kawaoka  1:19:43

The cap rate is sort of like a multiplier, right? Maybe if I explained it, like, say you have a business, right? That’s right. And if people are familiar with the term beta, but you have a certain profit you’re making and just like in businesses, and in apartment investing, real estate investing, there’s just To multiply you apply to it to determine price. And that is effectively the cap rate in the real estate world is effectively that multiplier.

Clint Murphy  1:20:09

And another way said differently for someone who may want, a simple way to look at it is what we’re effectively doing is we’re taking that income stream that is coming out of the rental property. And we’re treating it as a bond, if you will. So if we had a bond and we wanted a 5% return, we would expect a certain amount of income to flow from it. So to do that, we take the income that we’re getting from that property, and we divide it by that bond rate, and it tells us what the value of the asset is to give us our desired return level. So when we’re talking a 5% cap rate, we’re effectively saying that if we pay that price for the asset will generate a return to our bottom line being the net, the noi that Lane’s talking about, of 5%, which also means for every dollar that we increase, noi, when you divide it by that 5%, that dollar is worth $20, in asset value.

Lane Kawaoka  1:21:12

And this is how you’re able to double investors money in a relatively short period of time. And this is how this is not just waiting for the trade winds to blow or aka market appreciation, we are creating value here, we’re and the value that we’re creating is better living conditions for our tenants, who in turn, pay more money for that this isn’t a buy low, sell high. Currently, we are taking our own fate in our own hands force appreciating this asset, and creating value and then extracting that value via refinance or just selling the asset. And this is how we make money. This is not a tricks in game, buy something on Amazon for this price seller for this, like, No, we are truly adding value. And I think this is a fundamental difference that I see a lot of people not understanding is for people who will really create wealth for themselves. It’s because they created value. That’s some game.

Clint Murphy  1:22:11

Absolutely, when I love it, thank you very much. I’d like to now just maybe pivot to a few questions that I like to ask all of my guests that are a little bit different than real estate, we focused up till now on a lot of positive things that have happened on your journey. Can you tell us about a time that you failed, but it was a great lesson for you?

Lane Kawaoka  1:22:32

Yeah, I’m actually made this mistake a couple of times investing with the wrong person. Okay, you know, this, like I said, these syndication deals are great until you invest with the wrong person, it’s kind of like going to the, on the roulette wheel, hitting that Double Diamond and the house just takes your money. The lesson learned is now I have a clearer process. And I kind of call this the gold standard of investing, you’re not going to know all the people you’re working with at first. But my ideal is I don’t invest with anybody or partner with anybody unless I have somebody that I truly trust, which is an pre existing organic relationship that has invested with them in the past and can kind of sign off at callsign. Under validity track record, right? Because before I just you know, who do you know, or I know this guy know, Bob, right? Bob’s Cool. All right, let me go on basketball, right. But that’s not the gold standard. The gold standard is Oh, friend that I knew a long time that I trust that doesn’t have a dog in the fight and you’re getting any referral fee. Do you have $50,000? With this gentleman? Oh, you don’t? Well, how the heck do you know? You know, like,

Clint Murphy  1:23:45

so you’re using the degrees of separation to say, I may not know, Ted, but I know, I know, Ellen. And Ellen is someone I trust. And she’s invested $50,000 with Ted multiple times, so I can trust it. Right. Right. That makes a lot of sense. What is something that you struggle with, or are challenged by on a day to day basis,

Lane Kawaoka  1:24:09

I’m just probably just trying to get everything done in a day. I’m just like anybody else? Right. But that’s been my case since the beginning of time. I’m sure everybody deals with that. Right? But I do notice, you know, these days or the you know, I waste a lot of time, you would have found me 10. Five years ago, I would waste a lot of time doing a lot of silly things. Thinking about my net worth spreadsheet is a waste of time

Clint Murphy  1:24:33

forecasting and 10 to 20 years and yeah, like where you’ll end up well, just go make yourself end up there. Don’t spend all the time thinking about it.

Lane Kawaoka  1:24:41

I would spend a lot of time doing that couple hours every week and doing some screwing around with each stretch. Today is different. I just got a Google Keep and that’s how much money is going in this month. And these are some big bills I’m expecting done simple. I’m actually doing recruiting hopefully I’m creating value right That’s where I’m kind of turning my money into, is this value add? Do I really need to be doing this?

Clint Murphy  1:25:04

I love where you are at 35 years old, and you’re still feeling like you’ve wasted a lot of your time along the way. That’s pretty incredible. see where it goes. So flip the coin, what is something that comes easy to you that other people struggle with?

Lane Kawaoka  1:25:20

I think I execute. I am more on the side of, you know, getting things done than being perfection, which allows projects to move forward, especially if I have the right people around me to teammates to get the things that I’m not equipped to do you think that is something that has contributed to my success, good enough for government work? For some things,

Clint Murphy  1:25:44

I think not enough people realize the importance of just starting. And so you talked a bit about this earlier, and I’ve seen you talk about it in some of your videos is if you’re waiting for perfection, you’re never going to start sometimes you need to just start and figure it out along the way. So it’s it’s excellent, you’ve been able to do that throughout your career.

Lane Kawaoka  1:26:05

And most people are just it’s just subconsciously procrastinating because they don’t want to step up to that. They don’t want to take action because they could fail. So yeah, you could fail. But when you’re investing for cash back,

Clint Murphy  1:26:20

and if you never start, you always fail, right. So last question for me, is when you are operating at your absolute best, what habits routines are practices? Are you following on an on a daily basis, weekly basis, monthly basis, etc?

Lane Kawaoka  1:26:35

I’m thinking I’m just kind of working down my list of things I need to do. It’s a little chaotic. But I think I subscribe to the theory that successful people are able to ratchet up intensity. And maybe they don’t work that long. Maybe they do. I mean, I work 1012 hours a day. But the key is I’m able to hold on to a level of intensity that gets things over the finish line,

Clint Murphy  1:27:02

multiple things. And there’s something key there. How do you hold that level of intensity on an ongoing basis while maintaining your health? insanity?

Lane Kawaoka  1:27:12

I mean, I I work out a lot I do CrossFit, it’s short, it’s quick, being getting nighttime, get my seven, eight hours of sleep, try and eat well go, I think that the health is a big part of it. Because if you’re not able to function, you’re not going to be able to physically hit that mental intensity level of you’re going to need to get things done.

Clint Murphy  1:27:33

What do you do to maintain your mental health? Are there any practices to either?

Lane Kawaoka  1:27:36

I don’t know, I probably should get better at this. You know? I mean, that’s the danger, right of like high intensity people they burn out. That’s right. That’s right. I mean, it just translate, you know, I can I can get kooky kind of workout. Hey, good things, right.

Clint Murphy  1:27:53

Yeah, you just listed a lot of things that, you know, you necessarily may not have thought about when I first asked the question that you said, You eat well, you exercise, you sleep seven, eight hours a night right there, you’re probably doing three things that 80% of the population doesn’t do. So those may be some keys to helping you continue to operate at such a high intensity.

Lane Kawaoka  1:28:16

Let’s just simple right. The simple things. It’s not like one thing that I have, like a float tank in my house or something like that. Right. It’s the basics. I try not to operate at 99% all the time.

Clint Murphy  1:28:31

Absolutely. As a crossfitter. You probably have heard of Matt Frazier. Yeah. Yeah. always pays off. Yeah. And I heard Matt on a podcast in the he said, a lot of people ask him, because you may, you may not remember that when he originally started competing in the CrossFit Games. He was doing a double major in engineering and business at the same time, and he was still on the podium. And when I asked him how he did that, he said, it’s simple. It’s really, really simple. It isn’t easy, but it’s simple. I take everything in life that isn’t contributing to my goals. And I cut it the effort.

Lane Kawaoka  1:29:07

Yeah, that’s exactly actually that is I don’t think it was him and him and Dave passional. But I think that’s where I got the term simple, from simple passive cash flow. That’s why I came up with that term, actually, was that Greg Glassman guy who people don’t like anyone, but yeah, he’s up here, the quote, will turn into the Matt Frazier quote, but it was the same quote, it was things aren’t easy with a very simple, simple bouncy castle, I’m sure had a T shirt like that. But yeah,

Clint Murphy  1:29:37

so is there anything at this point that we’ve missed that you want to dive into a little bit deeper?

Lane Kawaoka  1:29:41

No, I mean, I guess what do you think what the barriers I mean, we’ve we’ve laid out a path for people that is proven, and yet might take some time. What do you think are the barriers that people aren’t just going to get that? People listen podcast is the torturous I don’t listen to podcasts these days. But I I see a lot of people, they listen, and they get this warm and fuzzy feeling and they appease that need for growth. But they don’t do any.

Clint Murphy  1:30:09

Yeah, I’d say there’s, there’s a number of things that are there. And that’s a really great one to unpack is a lot of what I’ve seen from the people that I’m close to, is one, I don’t think they believe the numbers until they actually do it. Right. So you can share your numbers, they may think that you’re just making it up, I’ve been on the same path as you for probably the last 10 years. And so I absolutely agree with your numbers, I’m seeing them in action, I understand them and and outside of my own personal investing I now for the last decade, I’ve worked in real estate development. So fundamentally understand the path you’re taking in believe it. Number two is the average person seems to not take the steps needed to achieve in Lana generally break that down into three things, know what you want, know what it takes to get it, we have a plan, be willing to do what it takes. And so you’ve laid out something that to me and to you is simple, but it’s not easy. And I think a lot of people out there, one, they don’t necessarily know what they want to, they don’t necessarily know how to achieve it. nor are they willing to do the work to figure that out, which takes you to step three, if you’re not willing to do the work to figure out how to do it, then you’re probably not going to do the work that’s needed to get it done. And so when you look at real estate investing, and you look at the path you took, which I find extremely impressive, you were saving a large portion of your income. So when you think back on those frugal hacks, and you say, it may have felt a little embarrassing at the time, it is absolutely to me not embarrassing, it is fundamentally a key to how you achieved what you did at a young age. And I think a lot of people aren’t willing to live without, because they see other people spending their money and living that lifestyle. They see social media, and they’re not willing to do without, so that they can do more in the future. And so those are those are a few of the fundamental reasons that jumped out to me. And then no to the last one is that is they look at friends on social media, they look at, you know, we always call it the Joneses. Keeping up with the person next door who has a nice car, you know, they may not realize that that person’s in debt to buy that car. Like when my kids come home and tell me that a kid at school is rich. I asked them how they know that kids rich, and they talk about possessions. And so I started teaching them at a young age that possessions are nothing. It’s what is that person’s network? How much debt do they have? Are they really rich? Or is their dad not sleeping at night, because he has a ginormous mortgage that he has to pay down. And it’s not to get to have cashflow, generating assets. So those are the major reasons for me. One, I think you’re right. It’s simple. But it’s not easy to people aren’t willing to do the work that’s needed to get there. And three, what you’re talking about takes money. And a lot of people want to spend their money on keeping up with the Joneses instead of investing in their own future. That’s, that’s my take. And that may be very, very cynical. What do you think the barriers are?

Lane Kawaoka  1:33:34

I think one thing that people can look at the situation and be like, wow, like, you know, I can’t see 50 or 100 grand a year, right? I have a family, you know, that maybe already used to a higher level of standard of living. And so my message to them is like, Well, that doesn’t matter, you know, if you can save 510 grand, that’s a start, right? You know, like, you gotta get you on the escalator to buy a rental property. And that’s $30,000 of liquidity that you need. You don’t need to be like me, right? You don’t need to be seven feet tall and dunk a basketball or do this. So I take that take a little more time, that’s for sure. But anybody can do and we’re not asking people to go out and buy 4200 units this next year, right? This might just be buy a rental property this year in the next three years. Right? And we’re not asking you to withdraw all your retirement funds. It’s get let’s get proof of concept. Right? And I think that’s when I look into the eyes of people and they’ll never tell me what the real reason is. Because we’re adults, and we always have layers for onion and we never reveal what’s the true meaning. It’s, I try and like create the goal like very attainable and kind of keep it moderate. But at the end of the day, it’s people just are unable to get out of their comfort zones. Right. But if I can kind of lower that barrier to know what you’re trying to buy one great shot to see if it’s going to work. Right I think that’s how that’s all To me, like my job these days is not really. I mean, all the strategies are kind of simple. How do I get people on? How do I get them on the on ramp? highway?

Clint Murphy  1:35:12

That’s a great point.

Lane Kawaoka  1:35:13

It’s like diet and exercise, right? I mean, I think exercise is a great on ramp to kind of learning about these same habit changers, right? Or life changers, like we got, we got Albert here, right? We can have them do a trail run every single day, right? We’re gonna start small, it’s gonna take them a while to get to his goals. But you know, if we dogmatic about it, he’s not us, he may not be able to have that intensity on time. He doesn’t sleep like this girl, you too, too much. But how do we get them that initial proof of concept to get them kind of just keep kicking the can down the road getting moving in the right direction? That’s kind of where I kind of struggle with most people are? That’s where I kind of focus on. If people are, there’s two people in this world, like people who are willing to kind of just make make small progress and large progress do but then there’s people who are unwilling, because they have some kind of limiting belief that they think that this not for them, or it’s all fake. Right. But really, it’s potentially somebody who Yeah, maybe they’ve they’ve fallen for a scam. Before, right? It’s kind of stuck to that side. A little bit too good to be sure, yeah. But maybe they just don’t think that this is for them. Because they were told that they have to go to school and work at that job for 4050 years. That’s just, that’s what’s their thing is

Clint Murphy  1:36:38

at that one, you said right there. So if we think about the average person we talked about earlier, that from the time we’re in kindergarten, till we get out of college, we’re basically stuck in that same program, which teaches you nine to five. And so all of a sudden, you’re saying, hey, there’s a path out of that. Now, you’re one person who’s explaining something to them, it’s completely different than what they’ve known their entire life. And so it’s probably easier to believe that you’re the exception to the rule versus something that they can do. That it’s hard.

Lane Kawaoka  1:37:13

I mean, you got to I mean, that’s why I do events with people. And people are very different than, like a club of financial friends. And we keep out on this stuff, right? And because our friends don’t understand what we do, you know, that’s, that’s the makings of any great hobby. Well,

Clint Murphy  1:37:32

that’s a good point, how can they find you?

Lane Kawaoka  1:37:35

So people are interested in rental properties, you know, they’re on the lower end of the network spectrum. My suggestion would be going to my podcast of passive cash flow, passive investing. And definitely focus in on the beginning podcasts, at least 12 of the first 12 because back then 2016, when I first made the podcast, the goal was to Holly, how do you get around a property? Where do you go, right? What are you looking for? How do you do the numbers, all the stuff we kind of talked about today? That was kind of the focus. But as I became more of an accredited investors and kind of online today, I kind of switch right, a lot of my strategies change to kind of where we’re at today, and it will continue to change for sure. That’s the evolution. But if people are more credit investors, you’ll check out like maybe the tail end of the podcasts, see what starts to learn, right? very different, different things that you’re taught out there. Yeah, check out the podcasts. Simple passive cash flow calm is the URL. My email address is ln at simple passive cash flow, calm. Yeah. Thanks for having me.

Clint Murphy  1:38:48

Great. Thank you. And thank you for joining us on the pursuit of learning. Make sure to hit the subscribe button and head over to our website, the pursuit of learning comm where you will find our show notes, transcripts and more. If you like what you see, sign up for our mailing list. Until next time, your host in learning Clint Murphy.

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