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Diversifying your Real Estate Portfolio Using Syndications with Lane Kawaoka

Diversifying your Real Estate Using Syndications with Lane Kawaoka

Lane Kawaoka – Owner of over 2600 rental units, Leader of the Hui Deal Pipeline Club, which has acquired over $155 million of real estate by syndicating over $15 million of private equity since 2016, and Host the Simple Passive Cash Flow podcast, talks to Neil Henderson and Brittany Henderson, the hosts of The Road to Family Freedom podcast. Lane discusses working with turn-key operators, investing in mobile homes, and diversifying with syndications.

Read Full TranscriptNeil Henderson [0:06]

Greetings, friends and families. I’m Neil. And I’m Brittany, you’re listening to the road to family freedom podcast. Our guest this week owns over 2600 rental units and as the leader of the deal pipeline Club, which has acquired over 150 $5 million of real estate by syndicating over $15 million of private equity since 2016. He’s also the host of and he’s also the host of the simple passive cash flow podcast, land Co. Coco, welcome to the road to family freedom. Hey, thanks for having me. Absolutely. So you, you began your investing career in Seattle? Correct when you had a full time job as an engineer? Right. Right. And you were sort of an accidental landlord. You bought your first property as just as your primary residence? Correct.

Lane Kawaoka [0:58]

Right. So I did not have to take that leap of faith that a lot of people do getting started. Yeah, fell into

Neil Henderson [1:03]

it. And then you and then you got into buying turnkey properties, correct?

Lane Kawaoka [1:09]

That’s correct. Okay, started. It started with a couple primary residence or more primary marketplaces and then 1031 for a bunch of turkeys. Gotcha.

Brittany Henderson [1:20]

Um, can you tell us a little bit about that first property that you bought?

Lane Kawaoka [1:25]

Yeah, so it’s a my primary residence, it was a class rental in a great area just north of Seattle $350,000 purchase price, which was a lot back then in 2009. It rented for 2200 a month. More p It was 1600.

Neil Henderson [1:44]

So that was definitely not the definitely not the 1% rule.

Lane Kawaoka [1:48]

Right. But, I mean, I thought it cash flow, you know? Yeah, a little bit. I know back then.

Neil Henderson [1:53]

Yeah. And you did you live in that you lived in it first.

Lane Kawaoka [2:00]

I lived in in for about a year, and then caught up an old landlord and said, Hey, I want to rent this out. Because I just, you know, I think I don’t know how old I was, like, early 20 something year old and kind of living the single life and I was like, let’s crank this out. Let’s make some money. Yeah.

Neil Henderson [2:19]

What, um, where did you? Did you come in with a 20%? down payment? Or are we able to do like a since you were owner occupied? Did you do like a 3%? down?

Lane Kawaoka [2:31]

Yeah, I came in with a 20% down payment. So you know, at the time, I was making, like, 80 grand at a college? Yeah. Probably saving a big chunk of that 30 grand starting out every year. But then when I started to read it out. That was really my secret sauce. Right? Just being able to see a lot of money. Putting it all through investments 20% down payments along the way.

Neil Henderson [2:53]

Gotcha. And where did you live? Once you started reading it out? Where did you live? What was your primary residence then?

Lane Kawaoka [3:00]

I lived on the company dime. They, it was 100% travel job. So Oh, wow. Just move around from hotel to hotel, on the job. And on the weekends when I wasn’t working, I would kind of work. I mean, there was always work to be done. So just kind of stay in hotels, or no few. I would say like probably five or six times they probably had to get a hotel for myself. Because there was no work to be done. You know? Yeah, yeah. But yeah, and you know, with all the money saved, it was it was kind of worth it.

Brittany Henderson [3:37]

Yeah. What kinds of lessons did you learn from that first property?

Lane Kawaoka [3:44]

Um, first off, you know, I started to listen to bunch of podcasts, read the books, you don’t buy properties in the primary markets, like Seattle, California, New York, Boston, you know, because the rent to value ratios don’t work there. 30 $50,000 2200 a month, that’s well below the 1% rule. first lesson, their second lesson was you don’t buy properties in a class areas, in that that property was probably one of the most prime locations other than like a Bellevue or Medina or Bill Gates lives. But, you know, you kind of move towards more B and C class areas. So I learned that early. And then that was eventually why I sold my first couple properties in Seattle, get out to more turnkey, or capital markets, secondary markets.

Neil Henderson [4:38]

Before we get into that, talk to us a little for our listeners that maybe don’t understand why you wouldn’t necessarily want to buy a class property as a rental, as opposed to be NC

Lane Kawaoka [4:50]

Yes. So typically, there’s you’re not going to hit the cash flow. numbers there went to value numbers. Number one, numbers, numbers always go first. With this, you know, it’s just a different philosophy. I think most investors, like all amateurs, they invest for like appreciation, right? Bible so high makes total sense. You know, when you kind of look at from that point of view, but sophisticated investors who aren’t looking to just take some swings at home runs all the time, and they have a decent amount of capital saved up. It’s sort of like capital preservation game, too. So what they are doing is they’re kind of going after both, which first starts with cash flow. And then they’re going to also play it a little bit with appreciation, but to them appreciation is Dyson, top of the gate. Yeah.

Neil Henderson [5:41]

So that that first Seattle property probably didn’t cash flow, great. But it probably mean, given what the Seattle markets done and appreciated like crazy didn’t.

Lane Kawaoka [5:51]

Yeah, that $350,000 property I sold in 2015. For 5500. So you know, as much as I say, appreciation with gambling, and you know, shame on it, you know, that pocket pocket like $150. And on that, and that was able to buy five more traditional single families across the markets. That was a key step. And then my other property, also create appreciated hundred thousand. So I was that was how I did this tender, they want to exchange rate exchange two properties for nine.

Neil Henderson [6:29]

Yeah. Well, you know, the thing that we often talk about with cash flow is invest for cash flow first, and people think, well, that’s so that I can have the cash flow to retire on cash flow later. But it actually also, it’s the safety net, it’s what you know, it’s what’s going to keep the lights on, you know, as the market fluctuates, you know, in the real estate market, over time is almost always going to go up, you know, if you given enough time. And so having that cash flow, to allow you to hold laundry property is what’s going to what’s going to keep you going.

Lane Kawaoka [7:03]

Right, right. I mean, another philosophy I always had was like, hey, I want my, you know, we all think about saving, saving, saving in a pension in the future. But I’d rather have my pension today, you know, and multiple streams of income. And first, you know, I, I’ve been like my job, I hated my job, you know, find any other construction supervisor who has a good experience out in the field for the first five years, and you probably looking at the boss’s kid or something like that. It just doesn’t happen. So my primary goal was like, I need to get out of this rat race, this sucks. So I wanted to replace my income. So for me, that was I saw those cash flow first.

Brittany Henderson [7:49]

So once you decided to get out of those primary markets, you started investing in turnkey properties.

Lane Kawaoka [7:58]

Yeah, so 2012, around, the rent to value ratios got even worse, because when the prices really started to come back up to what it is today, so I thought my investment career was over. But you know, many times when you hit resistance, you kind of go around that and you pivot. So this was a pivot for me, I looked at one of these Birmingham turnkey rentals at $70,000. And they rent it for like, 850. And I was like, You know what, like, the Seattle market, investing in my backyard is closing up, it ain’t gonna work anymore. I can try to force it, like everybody else forces it, and not cash flow and actually lead money every month with negative cash flow. Or I could try this out. I mean, it was just like a, you know, 20 grand down payment to just try it out. So that’s what I did. And it worked. And, yeah, so the two properties and all that on the turnkey

Neil Henderson [8:54]

stuff. So you took, so you took all that capital equity from those Seattle properties, and 1031 exchange them into how many turkeys? Nine.

Lane Kawaoka [9:08]

So I had 10 at that point, and I later on purchased another one to get up to 11.

Neil Henderson [9:15]

Gotcha. And you financed all of them? Or did you buy any of them for cash?

Lane Kawaoka [9:21]

Yeah, finance, all of them got up to that magic 10 Fannie Mae loans that your your allotted. But, you know, I just kind of want to point out to like, from, I think a lot of problems I see talking to investors is they have just too much equity in their homes, right. Like those first couple Seattle properties, I had 100 hundred 50,000 respectively, in those two houses. But I was still making the same amount of income. Yeah, there was mortgage paid down texts, benefits, but that kind of stays the same dude, life of the whole, you got to figure out what your return on equity as an investor is, I mean, in the beginning, it’s all great, right? You’re very leverage, your LTV is high. But then your LTV goes down. So does your return on equity. Now, one of the biggest mistakes I see unsophisticated investors make are like, well, I’m cash flowing. You know, so like, if you think of a person who owns a house outright, like, my stupid landlord, I don’t know what they’re thinking, but they own this, this million dollar house here in Hawaii outright, I rented for $3,000 they think to themselves that their cat, their cash flowing all that money, which they are. But we all know a bunch of that goes to more expenses. They’re making like two or 3% on their money. $3,000 a month, right? Yeah. And like, it’s just, if they open their eyes, and like figured out what the return on equity was, they realized that you have investors need to re leverage their funds via 1031 exchange, which I don’t really like, or selling the asset or dig a new 30 year note and getting that equity out.

Neil Henderson [11:05]

Yeah, we, you know, we it’s something that we struggle with, we have substantial amount of equity here in our home here in Las Vegas. And we need to live in it for now. So we can’t just up and we can’t stop and sell it, you know, so we, you know, we’re exploring strategies on how to how to put that equity to work, at some point, which we will, which we’re, we’re pretty close to do. And we’ll talk about later on a different show. I’m curious why, what you don’t like about 1031 exchanges.

Lane Kawaoka [11:36]

So for most investors who are high net worth, well paid, I believe they will graduate towards private placements in syndications, which are not real estate. They’re investing in real estate. But you cannot like kind of exchange into a syndication or private placement, their LLC. And yeah, there’s all the YouTube videos about you can do a tick and in whatnot, but those are impractical from a syndicators standpoint. Just not, yeah, not practical. So you can go down this road of getting a single family home, great appreciation, and rolling it into a quad Plex, and then a 16, Plex and 32 Plex. And that’s what we call a mom and pop investor. A lot of things flawed in that, in that that method, you know, you got all your capital in one asset, right, sophisticated investors in no more than 5% or even 10% of their network, anyone deal. That’s why they like to go 50 Grand 50 grand into a couple of dozen deals. And that’s kind of their, their vision. That’s my kind of my vision of wealth building today.

Neil Henderson [12:44]

Yeah. So I want to get into to how you’re investing now. But I want to talk a little bit more about why you shifted away from turkeys.

Lane Kawaoka [12:58]

Yeah, so I had about 11 of these turkeys. And you know, at the time, that was when I started my podcast, because all my buddies were asking, go play basketball, like, hey, like, how you getting on these properties, like 2000 miles away, you don’t go visit them, you know, they thought it was crazy. So and may try and help your friends. But like, you know, it’s real estate, right? Because still, nobody does anything. So what does any millennial do, but then make a podcast so he can just give him a cute QR code. I don’t do that. That’s kind of geeky. But I give him a URL to go download the podcast. So initially, that my podcast was all about, like buying turnkey rentals, like all the like the nuances of that. But then from 2016, I started that podcast was when I started to, like change my, my thinking a little bit. Because with these 10 with these 11 single family homes, you know, you’re having an eviction or two every year, and you’re having a big catastrophe, probably every quarter. Which which is not bad, right? Because your man, the manager of property managers getting all that nonsense behind the scenes, but you know, 1011 single family home, that’s $23,000 passive a month. 300 bucks each. Not bad, right? But that’s not the sun enough for me to quit my job, right? Like, you know, I get paid 100 grand a year, I need a lot more than that. I need 30 houses. So you just do the math. That’s an eviction every almost every month, and that’s a catastrophe every few weeks. Just not scalable is the word.

Brittany Henderson [14:33]

Yeah. Well, and then you’re also probably losing a lot of your cash flow on dealing with those catastrophes, or if there’s an eviction fixing. Yeah, anything afterwards? I mean, I give you that. I mean, the

Lane Kawaoka [14:48]

the cash flow, and all the numbers made sense. Don’t get me wrong, right. Like, you’re still making money. I would say whatever, four would probably lose money for the year. But overall, the whole portfolio would hit that magic number of, you know, two $300 cash flow per property. So we’re good there. But yeah, from a scalability standpoint, and especially when eventually when the property appreciate so you have more mortgage pay down or this good problem to have, which is, you know, more equity in the property, you’ve got a real leverage that imagined a net that 30 properties, it’s just becomes ridiculous.

Neil Henderson [15:26]

Gotcha. Sorry, I lost, I lost my train of thought for a second. Did you you did you work with a single turnkey operator? Or were you working with multiple?

Lane Kawaoka [15:43]

Yes, I initially I went with one of those marketers so that you can buy turnkey rentals three ways through a marketer who have a podcast, they have like some kind of office and they kind of hook you up with a turnkey provider. Yeah. So obviously, there’s a fee for that. And ideally, you’d like this marketer to kind of help you out, right, which is not always the case, because I did work with a different company, and they were pretty useless in my opinion. And they’ll typically mark up a property anywhere from like a few grand to even 10 grand back in the day, when the numbers were a lot better. Which is fine. You know, as a high paid professional, you sort of want reliability, and you’re kind of shooting in the dark when you’re first starting out. Um, but eventually what I did is, you know, once you figure out what a good rental property is, and, you know, kind of what’s what, you go through the process, you can pretty much take a broker and go find properties that are on that are kind of fitting your criteria, no little less rehab, maybe under $25,000 of rehab going in to get it ready, if any, and then, you know, you’re kind of getting a little bit better price, just buying off MLS. Gotcha. Makes sense.

Brittany Henderson [16:56]

So, how are you investing now?

Neil Henderson [17:00]

No, sorry. Nevermind, I’m fine. We’re having Well, we can talk about a screen record. No, no, it’s fine. I do want to ask the question. So you were you were in the Birmingham market? Atlanta and Indianapolis?

Lane Kawaoka [17:21]

Primarily, right? right ahead. Five in Atlanta for in Birmingham and, and one in Indianapolis and Pennsylvania. And obviously, if you’re watching me like, maneuver my troops around you, you’re you thinking I’m going to put more in Indianapolis and, and Pennsylvania, which I probably was, but then I saw this whole scalability issue happen. And at that time, I was like, Well, let me follow the obvious breadcrumbs and go into multifamily apartments. And let me just kind of look into this because a lot of people said go ahead and slide join, like one of these mentorship groups paid like $30,000 for a mentor to teach me how to do this. So I could be the guy who picks up 100 unit 200 unit. Yeah. Which was, which is good. Like, you know, you learn how to underwrite the deals, you take the p&l roles, you put it into analyze yourself, and then you put it offers, but big part of that the hardest part is finding the deal. You know, you it’s it’s a full time job pretty much like networking, with brokers trying to be buddy buddy with them. And at the time living in Seattle. And I’ll just say this, if you don’t live near the DRF, there’s no way you’re going to get these deals sent out to you. Yeah, you get sent deals, but 99% of deals that are being emailed out to you or just garbage. If you get a deal email via mass mail. It’s garbage.

Neil Henderson [18:44]

Yeah. One that one that he’s shopped around to all of his his preferred buyers, and they’re all went No way, man.

Lane Kawaoka [18:51]

Yeah, yeah. If you want is the broker sends it to you, he touches that attachment. And he gives you a quick half sentence like, amen. I think this for you. Yeah, like, so I did this for about 18 months, months to analyze, like a couple hundred properties. And one would think it was a waste of $30,000 to get that coaching. But it also prevented me from buying all these these deals that maybe I would have, you know, if I didn’t know any better. And then, you know, so me and my partner, we are doing this for about 18 months, and we had like a little strategy change, you know, we had about 40 units together. So we knew what we were doing. But in the eyes of brokers, like you know, they don’t care, it’s all single, it’s all under 50 units type of stuff. So we’re like, Hey, we need to build our track record, and which meant, let’s go LP and a couple of deals. So at least we can look cool on paper. So we did that we had 300 something units under our name, just as LPs. And then, uh, you know, I think both of us were kind of like, Hey, this is kind of nice, right? And we, everybody needs to do this exercise. Like I, I took down how much I had on paper, and I like kind of mapped it out. And I said, hey, my money just grows that like 15% of years LP, here’s what I will be financially, right in five years, 10 years, and my net worth at the time, because I’ve been investing since 2009. Was wasn’t where I wanted to be. And I wasn’t financially free by any stretch of the imagination. But I was on my my track. And I was like, Well, why do I need to be the operator putting down like, just thousands of dollars on hard money, we’re good, just be at LP. So that’s why he’s kind of focused on just sort of being a good intimate partner networking with, I stopped talking to these brokers and I started to just find good operators, joining mastermind groups, and, you know, because I knew how to analyze the deals I knew, like, like, cut through the crap. And I just had to find other people and build my network of their passive investors to be able to vet out sponsors.

Neil Henderson [20:59]

Gotcha. Were you at the time when you first started investing as an LP? Were you an accredited investor? Or did you we did you come in more as on on different like five or six B or camera with the regular what the reg is?

Lane Kawaoka [21:14]

Yeah, I was a non accredited investor. So I would get in on on five or six be deals. But you know, I think that’s a misnomer. Like most people say, Well, when I get a credit, I could start investing. But I think this I heard a stat out there like 90 to 97% of deals are final six B which are not a non accredited, accepting. So when people will say that it’s like, dude, your network just sucks. You just don’t know anybody. Yeah, you need to get out, get out from your computer, and go outside. But unfortunately, like the one of the worst places to go to find these type of deals, or your local Ria, or, you know, on the internet forums, because those places are just a bunch of broke people. Let’s be honest, right? You go to a real estate club, because you’re broke and you need to get unbroken real estate was what you here’s the with the way of making money, which it is, yeah, but high net worth people who are in exclusive deals are not at the local area.

Neil Henderson [22:10]

Yeah. Where do you were? Where do you suggest people find network for those kinds of deals? And for those kinds of people?

Lane Kawaoka [22:19]

Well, I mean, I’m kind of like the accidental landlord. I’m kind of just slinging advice that I didn’t really do. I mean, I had a podcast. So people came to me, and I built my passive investor network that way, and I joined a mastermind group, so I paid the player. So that was my path into it. But if you’re cheap, Will God help you? He don’t want to pay to get into some of these groups. I don’t know what she can do. But the only other thing is like thinking your network, you must have some rich person in these deals. Like that’s a key thing. When I pull my investors. It’s like, how many people do you know in a private placement? You know, if the people have like one or two? The next? What I normally see is there in probably about a dozen private placements or syndications, you know, just happens. But obviously, most people aren’t, you know, in those type of groups, right? They don’t know anybody, and therefore, they don’t aren’t in any of these deals. So that’s the key, you have to grow your passive investor network.

Brittany Henderson [23:27]

Did you have any issues with the limited partnerships that you were in?

Neil Henderson [23:33]

Was it all sunshine and rainbows?

Lane Kawaoka [23:35]

Um, you know, so like, you know, not all of them are going right, right. And that’s what it took me about 18 months of just building relationships with other passive investors to like, get comfortable. Because my first deal that I did back in 2013, was sort of like a syndication, or I just invested with a shyster. It went on for a couple of years, where, you know, I was getting my checks I was supposed to be, but I think what they were doing is they were siphoning off the cash, and just running it like a Ponzi scheme and paying us money out of that. So, you know, lesson learned, later on, after I went into the deal a year after I learned from my network. Yeah, this guy’s a shyster. And then sure enough, another year later, I got this letter saying, Oh, we were bankrupt, bankrupt, you need to take back this, this asset, and it’s all messed up. So lesson learned is, and that’s why I say you need to build up your passive investor network, because these guys are out there. And you have to build up other people who have been success stories, and can vouch for these people. And you know, that takes a while to build up those real relationships. I think people are too near sighted and short term thinking thing, they can just go around and meet people and ask them, who are they using? They ain’t going to happen, you know, I’m not, I don’t know who you are, I wouldn’t share my track record, or who I would work with, or who I would eat you to show me something to, you know. So, so, yeah, that that kind of, you know, that kind of cemented that, you know, know, like, or trust, you got to know and trust, especially who you’re working with. So, I, one of the things that finally made me jump in was I probably met about like three or four people who are in like, 20, or 40, syndicated deals, you know, so they get great experience, great. If anything, just, you know, I was like, I was able to get to know them pretty well. And, you know, took a few times meeting. And, you know, at that point, I was able to ask, like, Hey, you know, so now how, you know, out of those deals, like what’s the kind of the spread, you know, like, and then they’re like, Well, okay, so out of 20 or 20, syndicated deals at 50. Grand apiece, you know, maybe like one or two, they’re like, yeah, we didn’t really hit our numbers on, we don’t lose our money. But like, we, you know, it’s maybe like a 20 30% return in three years, you know, kind of fell on its face. And they were like, yeah, maybe we didn’t mean, there was something weird there. But you know, they got out. Yeah, that the general partner kind of cut bait. But you also hear about these horror stories, right of like people embezzling money, running utilities, through their, their name, they get kickbacks, etc. On the opposite side, you know, you hear about deals that double their money in like, two years or three years, much because of market appreciation. I mean, just look at Dallas, right? Like, you could be an idiot. And you could double people’s money in just pure market appreciation. You can see it because they haven’t implemented the business plan. And it’s just getting the market carrying them. Right. Yeah, I’m not quite the case these days, definitely to underwrite your deals to like 2% rent increases per year. Yeah. And expected to be three, four or 5%. And,

Neil Henderson [26:57]


Lane Kawaoka [26:59]

And then they said, like, you know, everything else in the middle is just kind of hits the numbers, you know, I mean, so like, yeah, yeah. It’s kind of like playing Minesweeper, right? I mean, for the most part, you’ll be like, all right, well, let’s let me do this, you know?

Neil Henderson [27:16]

And are you? I know you’re your fan of diversification. Are you diversified across asset class operator and geography with your syndications?

Lane Kawaoka [27:27]

Yeah, the, you know, the four ways you diversify with syndications, right? You hit it on the head, different partners, right? Because, you know, maybe I just don’t trust people, but I don’t want to go in on one operator. Because now these are people right? Like, maybe, maybe working with house flippers is a little bit different. But like, you know, these lot of people are just living paycheck to paycheck. And you never know, when times get tough, what’s going to happen? And I wouldn’t fault somebody for choosing their family over their LPs. You know, I mean, it you know, when when it’s kind of that doomsday scenario, I get it, you know, gotta pay your bills, you got to feed your kids. So, how do I mitigate that? Well, I work with a variety of different operators. I probably work with like, nine or 10 different guys at this point, sponsorship groups. And then the other way use different asset classes right multifamily is what I know best. But I know from some of my mentors is that you don’t go all into one asset class. It’s silly, right? Anyone asset class can get bummed out with any other particular incident like multifamily, multifamily, just getting really really overheated just, I think it is the logical progression. And people are thinking well yet Fannie Mae financing so well, and you can also get a property manager and you can just plug and play and that’s why a lot of people are doing it who really shouldn’t be doing it. You know, like Self Storage, you know, like that stuff. The comps. coms drive your deal. If you’re not kidding, your rent per square foot calms. Your deal blows up, and your deal can blow up pretty pretty quickly and self storage because they can just build that stuff so quickly, which is the complete opposite of what mobile home parks are, right? you’ll you’ll never get a new part permitted. See, your comps are pretty steadfast. And yeah, geographic locations, I’m probably in like 10 or 12 different states. And and then also the fourth way I diversify is like during these deals are like different business plans, like some are more like shorter play, some are more longer term plays, like 10 year olds, are blind pool funds. So those are the ways I kind of look at, you know, like, I have my investment philosophy with this type of reward and risk spectrum. But there’s no deal that hits that perfectly. See, what you’re trying to do is you’re trying to build a grid of risk reward types and trying to speckle them and then the the center of mass if you want to, you know, I’m kind of freaking out engineering wise, you want to get that center of mass where you want it to be. Most of my stuff is in, you know, Class B and C multifamily cash flowing today, in case ever recession, but 20% of my deal, do some flyers like an assisted living deal. bought some chocolate and coffee farms. I haven’t bought the coffee, the chocolate farmers yet but the coffee farm so far. And you’re like, well, that’s really random. But you know, it’s a smaller part of my portfolio.

Neil Henderson [30:32]

So I’m curious before we move on, how how does a coffee farm syndication work?

Lane Kawaoka [30:39]

So this one is a little bit different. It’s a there’s a deed to the land. But it also comes with a side agreement for the turnkey operation. So it’s not technically a syndication even though I think at one point, they probably should turn it into syndication because the deed is it’s just a really hard thing to sign to all investors. This is a huge headache.

Neil Henderson [31:07]

But it’s more of a, it’s more of a joint venture at this point.

Lane Kawaoka [31:11]

Right. Right. And you do individual contracts with all owners where I think a syndication would just be a lot more cleaner. Yeah, in my opinion, I like the syndication better, because it’s kind of book or bigger documents, little media SEC is involved. So I like that better.

Neil Henderson [31:29]

Gotcha. Um, you know, one of the things that I love about multifamily Self Storage, assisted living facilities, mobile home parks is that there’s there’s demographic, tailwinds behind them. I mean, it’s just this massive wave of baby boomers are retiring. They don’t have many of them, you know, have had spent most of their work life outside, outside the pension era, you know, most importantly, charge of their own retirement. And most of them have most of their wealth built up in their primary residence. Because they didn’t save enough for retirement. And now they’re getting close to they’re getting close to retirement, they’re going well, now I don’t have I don’t have any money to retire on, I have to sell my home, or have to downsize and now they they sell their home and they start renting, move into a move into a multifamily property. And they don’t, they don’t want to get rid of their stuff. So they stick it in self storage. And then not long after, or if they’re in really bad shape, they move into a mobile home park. And a mobile home park is basically, you know, your step above homelessness, you know, nobody ever moves out of a mobile home park, you know, there’s nowhere to go from there. So is that sort of, is that kind of an investment philosophy that you agree with? You follow along with that?

Lane Kawaoka [32:55]

I mean, I agree with that. I mean, I have a little bit different. You know, to your point, I mean, I look at is like the population is growing right period, you know, America’s needs workforce housing, that drives that demand. I don’t think it quite flows in that order. I think it’s just like, there’s, if you think of the population, there’s this bell curve, you know, and people, there’s a whole bunch of people that make under like, 4030 grand a year. And I think a huge misnomer with the mobile home parks. And if you haven’t been in a mobile home park, or one of you know, these ones that I’m picking up, you know, I don’t think you should talk, right? Like, I’m because the first time I went, I took my wife and I was like, Man, this is a lot nicer than all my C class apartments. In fact, it’s probably a nicer community than the classic be apartments. It just, it just totally is mind blowing. If you’ve never grown up in a mobile home park. And it definitely is not trailer park trash. It is on paper, you think it’s D class, right? I think that’s where people don’t get it. But it’s, um, it’s very Yeah, you just got to go walk the property, like a lot of these things like, you know, like a posse apartment until I guys Hey, just coming into this classy apartment, and then we can go to class B. And now you know, like, you just feel it’s very different. And it’s very intuitive. That’s why Real Estate’s so easy thinking special skills.

Brittany Henderson [34:24]

So can you tell us a little bit about how you’re using infinite banking?

Lane Kawaoka [34:30]

Yeah, so infinite banking is more for like high net worth, guys, I’ll start off saying that if your net worth is like under $500,000, you know, listen, but this is really not for you. So when I’m going into deals, I want to, you know, deals are sort of infrequent, right. And I don’t want to have too much liquidity, lying around, doing nothing, making zero percent in the bank as it’s waiting. So I want to stick it into a infinite banking system, which uses life insurance, which normally life insurance is kind of a scam, right? You know, your buddy from college or high school takes you out for lunch. He he and he says, Hey, I got this thing, I don’t really quite understand it, but it’s pretty awesome. You know, he’ll, he’ll sign you up for it. But 99.99% of these life insurances are not designed the right way to what you’re looking for as a syndication, private placement, or even any investor in general, who is trying to build an opportunity for not the opportunities, own fun. But I’ve kind of coined this term, the Opportunity Fund that I have money lying around, that’s making a return small return tax free, like maybe four or 5%, in my life insurance, but as deals come up, I can go take money from that, take a loan from that, and put it into that deal. So you know, I always try and have a little cash on hand to go into a deal that pops up. But if to come up, like we’re right off another kind of screwed. So what do I do in that circumstance? Will I have some cash value built up in my life insurance policy, so I’ll take a loan from that, to go into the deal. And after that point, I’ll kind of pay myself back interest, you know, pay replenish the cash value. So here’s how I explain it, it’s kind of confusing, it’s probably going to probably have to Google it and find a bunch of YouTube videos. But when you’re designing these policies, you’re trying to design it for a liquidity, high liquidity. So there’s three levers are soo, these ways to design this thing. There’s liquidity lover, there is how much interest rate you’re getting, which is you know, how much money is growing? And then how much is the death payout, which is like the whole purpose of insurance in the first place. But idea what I’m talking about insurance here, we’re just calling insurance, we don’t get taxed on it. Right. That’s the loophole. That’s a trick to this, the government loses because of this little loophole. So again, bye those three lovers, I want a high amount of liquidity because I want to put the money in and I want the most ability to pull out the most money so I can go and invest it. To do that, I need to give up the other two levers, which are I want really low death payout, which sounds crazy. And I want a low interest rate. And that’s what makes most life insurance guys who don’t get it, I freaked out. Well, why would why would you want to do that, you know, don’t you want a higher interest rate on to an investor. But no, you want a higher liquidity, you want that higher cash value. So here’s a real life example, you put 550 thousand dollars. And initially, let’s make no mistake, there’s a lot of fees with it. So you’re going to put your $50,000 in, you’re likely to see maybe like $30,000 of cash value show up. So that meant a huge chunk, like, you know, was at 20 30% went to feed your first year, your you normally sign up for like a program where you you’re putting money in for five or six years. So for the third year, you put in 50,000, your fees structure kind of tight, right down to like about 90 10%. So you put 90 $50,000, and you’ve got about $40,000 in cash value, by the time you’re five comes around, you put $50,000 it’s pretty much all cash value, so that the fees go down. So it’s all font loaded. So you kind of kind of designed these these life insurance. So these infinite banking schemes to like, five years, so $50,000, that’s a quarter of a million dollars. So that’s what I kind of did when I started. And I learned that it was a little bit too much for me because I ran a money. So I was able to like downgrade how much I put in. But you know, now it’s a nice cash value built up right? Where I can go into deals, I can replenish it. And when I’m not when deals are kind of low, like kind of now, it can be making a decent interest rate tax free. And that’s the that’s why people do it, you’re, you’re creating this balance of growing tax free, even though it’s at 4%. But it’s really like 6%, right, because it’s paying taxes on it. And when you take the money out to take a loan, you may be paying 5% or so. But you can you can call it a business expense, at least that’s what I do. You can do whatever you want. But now that interest rate is so deductible. So if you’re kind of following along, there’s a delta between me technically making 6%. And you’re borrowing at like four. So there’s like a one or 2% Delta in there. And that just sort of the nice, like, byproduct of this whole system. And this is kind of like what the wealthy do. They’ve got a big nice portion in their life insurance to be able to pull out for any big opportunity that comes up. And I think that’s that’s the paradigm shift between wealthy people and regular people is that regular people worried about emergency funds. I’m worried about my Opportunity Fund. I need money to go into good deals as they come along.

Neil Henderson [40:06]

Gotcha. And you’re, you know, you’ve got a, let’s say, a syndication that’s paying an 8% preferred return. During the whole period, you’re maybe paying, you know, 5% on the loan from the insurance, but you’re still making 3% you know, delta on the syndication and then there’s the equity bump at the end when the syndication exit, correct.

Lane Kawaoka [40:34]

Right, right. It’s kind of like using your keylock to go into deals. Gotcha.

Neil Henderson [40:40]

never done that before. But

Lane Kawaoka [40:43]

no, no, I sold my properties. I just went up and did it. But the lock is a great we’re working with a lot of newer investors, like it’s a great way of dipping your toe in without doing like a irreversible transaction, like selling your home or setting up, you know, paying a point for origination costs and getting a new law. For new people getting started is a great way to test it out. Eventually, you’ve got to get a pony up and sell the property or get a new loan and get the equity cash out refinance. Because the problem with the heat loss is they only give you access to you know, 80% or 70% of it. There’s 20 or 30%. that’s never been to utilize. Yes, it’s kind of like the you know, the this, the Gatorade on the bottom of the Gator a big thing that they they put on the coaches head, you never really get that right. Yeah, it’s always there.

Neil Henderson [41:32]

Yeah. So and are you how are they? Are they utilizing it to sort of burry into properties? You know, by by reefat by rehab, rent refinance, repeat.

Lane Kawaoka [41:44]

I guess I mean, I don’t know. I mean, I, I don’t really do you know, birth stuff, right. Like, most of my guys, myself included, were high net worth, we’re too busy to screw around with that stuff. I don’t like her strategy at all. I mean, in the meantime, you could have bought two or three assets from the get goal. Set it forget it work at your job, you know, I mean, I think a lot of my guys, their salaries are like hundred 50 and above and even 300. And for them, it’s just like, well, screw it. I’m just gonna go work, extra shift this weekend, do an operation. And yeah, who needs this birth? Yeah, you know, it is a paradigm, right? Like, for people who make less than 5060 grand a year, maybe that stuff makes more sense. But if you’re a high net worth hype professional, a lot of times it might just be like, just working a little bit more in your job. I mean, for me, my truck, as an engineer, I mean, maybe I just should have just sucked up to my boss a little bit harder and got into that, you know, raised and got up to like, $150,000 a year, that probably was my highest and best use, I think that’s the key, what’s your highest and best use for your time and energy? Gotcha.

Neil Henderson [42:53]

I’ve heard you talk about the drawback with trade off there, because a lot of pressure are, you know, they’re working their way up the corporate ladder, and they’re, they’re making $150,000 and they’re striving to make, you know, $160,000 but what happens is, they’re they’re getting that $10,000 a year bump for 30% more of their time and energy.

Lane Kawaoka [43:18]

Yeah, I was gonna say 50% more bs that? Yeah, maybe I was maybe I was just working construction. And there’s just holidays. But yeah, it just doesn’t make any sense. And it’s like a perfect storm brewing, right, like your first 10 years working? Yeah, you can do that. Because you don’t have kids that when you have kids, there’s more more demands on your time. And then, you know, if you if now you’re looking at this whole, like debate of like, do we send them the daycare, and now, maybe it’s makes more sense for one spouse to like, stay at home and that we lose that income stream, and then it’s just like, man, it life’s hard. As hard for folks

Brittany Henderson [43:56]

preaching to the choir.

Neil Henderson [44:00]

I don’t know if you noticed our four year old or five year old, popping in here every once in a while we’ve got

Lane Kawaoka [44:06]

Yeah, I mean, that’s, you know, like, one interesting thing I’ve seen from like, my investors is like, you know, they’re either under the age of, you know, kids, like, under 30. And they’re super cool heart, you know, they’re super into this. And it was an all the podcasts, or they’re like, over the age of like, 42 the kids are like, you know, not older than five years old, like seven years old, they kind of go and do their own thing. And now the other parents have a lot more time to focus on investing. But yeah, when that, you know, when you’re like, 3030 years old to like, 40 years old, or when your kids are like infant toddler age, that’s like no man’s land. So when I see investor, like, come up to me like, like, you’re kind of an anomaly there, you know, like, you sure you want to do this? Like, there must be some there’s usually some huge pain point that has happened.

Neil Henderson [45:01]

Yeah, it was a challenge for me when I first you know, we got, we got into real estate, we sort of accidental landlord into a short term rental. It’s we have a short term rental at the front of our house, and allows us to kind of house hack pays for a mortgage. So what sort of gave us the first taste of real estate investing? And, but it was also right around the time that our son was about two years old.

Brittany Henderson [45:28]

No, he was six months old. And I was cleaning it.

Neil Henderson [45:35]

Yeah. And it, you know, so it’s like, I suddenly my eyes get opened to real estate investing, right at the time where I have the absolute least time in my life, I have no sleep. I can’t, you know, you know, kid is is awake at all hours. And so I understand what you’re saying there about sort of that no man’s land?

Lane Kawaoka [45:56]

Yeah, yeah. I mean, there’s like, it’s kind of like an interesting thing, esophageal thing, but, like, pain is usually what gets people to start listening to these podcasts, and, you know, maybe taking action that they wouldn’t have done otherwise. So that pain is usually like kind of exactly what you’re describing, right? situation, you look up to the sky, and like no, this this cannot continue. Or like, my boss, my boss is sort of like screwing me over there. You know, my coworkers are kind of in my situation, or is like, traveling all the time. And I’m like, never home. And I was like, Oh, this is cool now but I I look projected myself 10 years in the future. This, you know, this, that this is not going to happen. But I think that that pain, like it’s cool, because it like, it motivates you to like listen to podcast get started. But it definitely wins over three to nine months. And I see it right, like people that come into my system, it’s like they disappear after six months of life, they get going so lady I’m in conscious trying to trick people into the right things like the more conservative route just to get started, like how you guys did and how I did just get that taste, right? And then you get success. But you know, as much as pain pushes you I think you need something bigger to pull you with a that is some greater, greater good, or some you know, cuz that that’ll be the more sustainable motivation, I think. And for some people, it’s like building legacy wealth for their family.

Brittany Henderson [47:28]

Yeah. So you have a group coaching program to maybe help some of these people move through this.

Lane Kawaoka [47:36]

Yeah, so I, what I do is like a passive investor accelerator group. So most of the folks in the group are accredited. So it’s definitely a close knit community. Like I said, the biggest thing is, you know, growing your network of passive investors, you know, my hope is people in this group, though, you know, they live all over the continental United States, that may be like when they travel, they go meet each other for coffee or have each other for dinner, you know, those are the those what you have to do when you’re a passive investor. It’s building real relationships with people doing the same thing. It, it helped me out. And I think a lot of people don’t realize how important it is, the higher your net worth goes, the more important your network is. And I think, you know, talking about another entrepreneur yesterday, like going from zero to $500,000. net worth, you don’t really need, you don’t really need a network, per se, you just need to work your butt off to get there. But from going from half a million to 5 million in need other people around you.

Neil Henderson [48:42]

It’s a good point. So when you when you start off, how did you, you’ve you’ve talked touched about this a little bit, did you start off listening to podcast before you start investing in term keys?

Lane Kawaoka [49:01]

Yeah, so I, I bought my first one. And then then I started to listen to all the podcasts and then read some books. Got the basics? And then then I did the turn keys.

Neil Henderson [49:16]

And then how long did that take you before you bought your first turnkey deal?

Lane Kawaoka [49:22]

Well, I mean, unfortunately, I had to save up money, the 20% down payment. So it took that was really the constraint. So it took me like a couple years to kind of, you know, build up those cash reserves to three years, after I bought that second rental in Seattle, the finding pull the trigger on the first one out of state. big step. I mean, definitely glad I did it. Because I mean that that logic, that progression is critical. To be able to not be an investor who is reliant on having a property where you can feel it touch it every day, to be able to be distant from it.

Neil Henderson [49:59]

It’s a real forum, I have conversations with people all the time about real estate investing. And that’s a real foreign concept. But why would you ever How could you ever invest? Somewhere where you don’t live? You don’t see the you know, and I have friends that I have friends on the other side of the spectrum, like, yeah, I own 10 houses I’ve never seen I’ve never set eyes, like physically on any of them ever.

Lane Kawaoka [50:20]

Yeah, I mean, that’s how I am. I’m like, you know, when you’re going to stop being a landlord and start being an investor, you know, because I took a group to Birmingham, Atlanta for an investor tour, and take them to one of my properties. And it was kind of like, yeah, I’ve never been here before. But here’s one of my rentals. And, you know, a lot of my guys are like, what, like, that’s crazy, man. And like, Look, I don’t know how to do an eviction. I know how long it takes I paid the bills, but I don’t know how to do it. Every states different. You know, I can’t tell you know, they’re going through the property. And like, I guess there’s like, different. There’s like, PVC plumbing. And then there’s like this new, more plastic way that’s a lot more modern a lot better and doesn’t freeze. It wouldn’t freeze it. It gets bigger. All stuff. I don’t know. Yeah. And you know, they’re all geek out on it. I’m like, that’s cool. I don’t care. You know, I’m an investor. Right? Yeah, you you have professionals to do this stuff. Just like when I was an engineer, like, I was more of a project manager. I don’t know how to build a bridge. I don’t know how to build a Colver. Right. I don’t have a clue how to do that. Yeah. But I get the project done. And that’s my role as an investor. And I’m the project manager to get it done.

Neil Henderson [51:31]

Yeah. Our our very first podcast guests is a friend of mine by the name of Alex Felice. And he’s bought a bunch of properties in North Carolina and things like that. And he has a great quote about he said, What are you going to do? Like, if you’re, if you’re people use the the idea of your, your real estate being close to you as a crutch? Like, what are you gonna do is the is the the tenant stops paying rent, go over there and choke them out for the rent, you’re going to have to probably you’re going to have to hire a lawyer, you’re going to have to go through that process. And it doesn’t matter. That process doesn’t matter. If they’re two doors down or 2000 miles away. It’s the same process. But

Lane Kawaoka [52:16]

Right, right. Yeah, I mean, hey, look, you know, what do I know? Right? success leaves clues.

Neil Henderson [52:25]

Yeah, exactly. And there’s plenty of, you know, there. What I sent, my father was a landlord. Back in the 80s. And I love my father. He’s a wonderful man. a smart man. But he was a terrible landlord. And part of it was that he was, you know, he worked a full time job, he was a very successful career military officer. You know, and there was no systems, they didn’t have a property manager. He tried to do everything himself. I remember, he used me to go over and spread, you know, anti pitching stuff on the roof, you know, one of his condos that he owned. And then he had this little house, you know, on one side of town, and the guy who lived in it with his wife was probably a low level mobster, always paid his rent and cash always late, my dad always had to chase him for rent. And, you know, hire a professional, hire a professional to do that stuff, where that’s why they’re there. And, and, yeah, you’re given up eight to 10%. But, you know, you’re going to make more money with scale. And, and buying back your time and allowing you to do those things.

Lane Kawaoka [53:36]

Yeah. But he was at a huge disadvantage, right? Like, I mean, without the Internet, and just no emails. Let me call this guy, we check up what he’s doing. You know, it’s just like, how did they ever get anything done back in the day?

Neil Henderson [53:51]

They did. Imagine how,

Lane Kawaoka [53:53]

yeah, yeah. I mean, with the internet, I mean, there’s really no excuse. I mean,

Neil Henderson [54:00]

you can hire people, you know, what, you’ve got a contract? Or what if your contractors, you know, not, you know, getting their job done. So well, you can hire people on Fiverr to go and take pictures of a place once a week to see see what’s going on with it, you know, you can you know, if you’ve, if you’ve got a contractor, I hope you found them, you didn’t just find them from Craigslist, I hope you found them from a property manager or a real estate agent, lean on that lean on that professional to basically keep their thumb on the contractor.

Lane Kawaoka [54:31]

Yeah, yeah. And if you don’t know, like, what you were just saying there, like, it’s 2019, go to YouTube and figure it out. Everything is out there. So it’s just more it’s just more of a motivation thing, and you know, executing than anything. There is no excuse to know.

Brittany Henderson [54:52]

So moving on, what, what does a day in the life of a passive real estate investor? Or guess? I don’t know if you can say yourself that or if you? Um, yeah,

Lane Kawaoka [55:02]

I mean, today, I’m kind of more full time, I’m going to quit my job five, five months ago. So it’s a little bit more miles off. So but you know, not too long ago, I was working a full time job. But I kind of created my life a little bit around investing thing. So I was working private for my first seven years. And obviously, we all know, work in private, higher salary, which is great, but lot less quality of life, and less free time for extracurriculars, like real estate investing. And so I went to more public sector jobs later on, and that, so that’s my, my tip number one, find the easier jobs. You know, now that I’m in my early 30s, you know, that’s kind of when they kind of look around, and all the old people are retiring, and just a game of attrition, and they kind of look to me to take a manager role, but just, like, I’m stupid, you know, like, or, like, I know, a lot of my peers, they kind of make excuses. Like, yeah, you know, my kid, he’s, I get to spend more time with them, you know, just so people, they think that you’re just, you know, they don’t push you into those management jobs for 50%. More Bs, 10% more pay. Right? So it is kind of funny, but then you get, the reason why I love is just because it’s like the people around me are just so, so difficult, right? And you start to work for like, difficult people, and a lot of my investors, they, they, they can I do the same thing, they don’t take promotions, but then you start to realize, especially in the private sector, that if somebody is in middle management, and they’re over the age of like, 55, and they haven’t gotten their own personal finances straight, you’re really not working with the, you know, holy person, they’re not there, because they want to be there that they’re out of necessity. Yeah, and it just makes life difficult when you’re, when you’re working with those type of people who are more worried about their, their family, or just staying at their JOBI. You know, that’s when you go to the public sector, I think people are a little bit more nicer. You know, that’s a lot less cut road. So you don’t have that as much. But to get back to your question, you know, so my jobs are pretty easy. I, we get a lot of work coming down my phone, in my cubicle, you know, get the work done in a job. And they pay us to do a job, but you can typically do it in a fraction of the time that’s allotted. Make your phone calls, don’t tell your co workers what you’re doing, unless you trust them, but I would just keep it to yourself. And yeah, I mean, that’s, that’s the life of a working professional. I mean, it’s kind of like, it’s kind of like living two lives for a lot of people, especially once your portfolio starts to get a little bigger.

Brittany Henderson [58:08]

So what, uh, what does your time look like now that you don’t have your job?

Lane Kawaoka [58:14]

Yeah, so I wake up, um, it’s, it’s pretty awesome. Because I

Neil Henderson [58:18]

podcast people wake you up at early to, early to get on jump on a podcast.

Lane Kawaoka [58:25]

Yeah, I mean, you know, like, I, I forced myself to, like, you know, I read that book, like, willpower is not right. Like, it’s basically like, you need to create systems. So as much as I say, like, Well, today, I get to live my life and what I choose to do something I love, right, as opposed to working for the man, you know, everything I do goes to my bottom line, you know, me, right, I get to get all the spoils for whatever efforts I do, but I still get, you know, I can still fall into a trap of like, you know, at lunchtime, I’ll turn on the TV and it goes to the ESPN classic hard words a non watching like the 2000, like 13 NBA Finals, right? or whatever, you know, I can I can, I need to set up systems where I kind of get what I need to be done. But now I live a life of I can choose what I want, as opposed some forced to do something. Yeah. So again, that’s where the whole you find something that pulls you to the right way. And for me, it’s just, you know, just creating more content online helping people make the right financial decisions, whether that’s not buying your primary residence, Sullivan and screwing yourself over with a big mortgage or buying that first rental. So a lot of my day is just I’m sort of like the writer, I guess, you know, I mentioned that’s what a writer lifestyle is modern day writers a second just blog and I do podcasts. And then, you know, a small fraction of my time is the actual investing. No, because just like being a passive investor working a day job is shouldn’t take more than a few hours a week. Maybe I do a little bit more networking on the phone than the average person. But you know, it should be like, it shouldn’t take that long. And I’ll try it out to the mainland every couple months, at least every quarter. But only as a deal comes up, right? I mean, when when I do a deal, I I’m there, I got to be on boots on the ground. And I have to like, get up, get a feel for the ambiance of the location, and maybe that might kill the deal. Um, but I think that now I don’t have to worry about like burning up my vacation on, you know, going out and doing due diligence properly or going to a conference. That’s a nice thing.

Neil Henderson [1:00:47]

Gotcha. I’m just sorry, do you have Did you have kids?

Lane Kawaoka [1:00:55]

No, no, I have a dog. Yeah. So that’s one of my big advantages at this time. Yeah, that’s the nice thing about starting early, you can kind of set the foundation before the storms come. So what I hear ya.

Neil Henderson [1:01:14]

So what do you see? So have you do you have any systems or anything like that, that sort of help you stay on task and automate things?

Lane Kawaoka [1:01:28]

Yeah. So I’m, I’m a big systems guy, I would recommend the book by David Allen getting things done. It’s a great way of keeping an inbox. So you’re thinking of new ideas, instead of just using your your brain to hold on to what you need to do. I work out of my inbox, I get to your inbox pretty frequently. Awesome, where I get everything done, I need to do always on subscribing to junk emails. And then consciously using my time where I should be be being sucked in all these directions. And one of the problems I always struggle with is like doing like bigger projects, like editing a podcast, or analyzing this one deal for those kind of projects that take longer than 10 minutes, I definitely get time block it and put it into my calendar. So it’s there. And if I don’t get it done, I have to drag it to the next day and assign it to a certain time slot to get done. That’s that’s kind of the struggle that I live through today. But yeah, not the end of the world. That’s first world problems, for sure. Yeah.

Brittany Henderson [1:02:38]

Are you outsourcing anything?

Lane Kawaoka [1:02:40]

I’m sorry to say that’s like a struggle in itself. Like, the funny. I feel like everything I can do to be better. And it’s just sometimes it takes longer for me to explain it. I struggle with music videos in the past. I mean, because I paid them to little bit like three bucks. And I just got lower quality people that just yeah, go Sydney after they find a better paying job. But no, I mean, I want to kind of, you know, I always want to kind of keep my stuff smaller. I think when you go to big, that’s when you kind of lose touch with folks. And

Neil Henderson [1:03:17]

that’s true. Do you? Do you outsource the editing of your podcast you do yourself? Just curious. Um,

Lane Kawaoka [1:03:25]

I kind of do myself unfortunately. And that’s, you know, that’s that that’s kind of like, probably a huge disadvantage that I can do that stuff like, right like I I edit all my videos. And I on for what was great is like, I couldn’t do it initially. So that’s why I did it. But then this is also becomes a disadvantage to me because I keep doing the damn thing. And it’s taking my time.

Neil Henderson [1:03:49]

So sort of my issues well, as I’m come from a media background, so I can’t do it, I can do it. I can edit the video, I can edit the audio. And it just it became it just became this massive, huge time suck. And it was a it was a roadblock. Especially Yeah, I’ve got a full time job and a family and a five year old and a wife that want to want my time. And I find it was just like I have to I put it off on on pro who could focus on doing it. So

Lane Kawaoka [1:04:19]

yeah, yeah. I mean, I remember when I was like in high school, like, you know, you do the tape test for bad and like I was editing that stuff, for sure. I mean, that’s where you, that’s where you learn the skills, but you need to let go of that stuff at some point. Yes. That makes sense.

Neil Henderson [1:04:38]

Alright, last question.

Brittany Henderson [1:04:40]

So what advice would you have for someone that is looking to get into real estate, just starting out just

Lane Kawaoka [1:04:46]

starting out, other than the obvious, just do it, I would find somebody who will be able to kind of look over your shoulder. A lot of times, it might just be easier to just pay someone like a few grand. Hey, man, like, I just need you to run this transaction to me and look over my shoulder make sure I don’t do anything stupid be essentially like insurance for me. How much do you want? Yeah, you know, and you can be cheap about it. You can try and find free to be people. But euros, it’s always this blend of like, well, how much time is your is worth? Right? Like, for a higher paid professionals? It just makes more sense to just pay up a few grand and find somebody who signed up as a sort of a consultant for you. Yeah, but yeah, I mean that w might just get going. I mean, the first deal is never going to be the best. But it just gets you started and look at my first deal. giving him the 1% rented out ratio in the private market to buy got the wheels going.

Neil Henderson [1:05:45]

Yeah, I often talk about you know, people, so many people just need to have their handheld, a little bit on those on that first or second deal. And I think what you’re talking about there is a great ideas like just, you know, have somebody that’s sort of what turnkey is, in a way you’re having somebody kind of hold your hand and do it. And I think that’s a great way to, to get started, especially for a busy professional. But, you know, even if you’re not doing turnkey, it’s helpful to think just have somebody say, hey, just I’ll pay you some money. Let’s you know, just be over my shoulder and say, Yeah, don’t don’t buy that deal. Yeah,

Lane Kawaoka [1:06:19]

I mean, I’d say like, just like if I like Turkey to for a lot of guys getting started, right? They keep going to do all this stuff that’s complicated and risky. Just start off in the shallow side of the pool. And like, you know, but I think the one of the bad things I see are like people will take too long they want to listen to like so many podcasts, read all these books, like I would just say like, the first 20 of my podcasts are like all about turnkey rentals. Just knock those out an afternoon and real free millionaire real estate investor by Gary Keller and you’re good to go. You don’t really need more than that. That’s it Eddie 20 right there.

Neil Henderson [1:06:55]

Yeah. Yeah. Great point. Lane coke up. Thank you for so much for sharing with us today. You’ve got your coaching program, and how can people? How can people access that coaching program?

Lane Kawaoka [1:07:10]

They can go to simple passive cash flow, comm slash journey stands for the journey to simple passive cash flow, which will take together and yeah, if you guys come through, yeah, let me know. You guys came through you guys. And I’m just so I know kind of where people are coming from to, it’s always, I always asked like, well, How’d you find me? It helps me understand, like, what their trajectory is and where they’re going. And you know, cuz everybody’s a little bit different. Maybe turnkey isn’t for you.

Neil Henderson [1:07:39]

Yeah, sure. Sure. And is that the best way for people to reach us? Is that journey link?

Lane Kawaoka [1:07:45]

Yeah, yeah. Simple. Passive cash flow. Calm is my euro and simple passive cash flow is the iTunes Google Play. But yeah, I mean, my email is lane at simple passive cash flow. And I’m employee number one, so I get to pick that one.

Neil Henderson [1:08:00]

Thank you so much for being part of our show today.

Lane Kawaoka [1:08:02]

Thanks. Okay. Thanks, guys. Okay. Or

Neil Henderson [1:08:09]

what was Mr. Lane? Excuse me? Let’s try this again. Well, that was lane color oka from simple passive cash Check them out when you get a chance. Do you think there was a key lesson you learned from this interview today?

Brittany Henderson [1:08:26]

Um, I think one of the key things is you got to just do it. I think that’s something that, you know, we’ve had to sort of keep things, you know, keep learning is that we need to just move forward with something. And, you know, it’s, it’s, those first ones aren’t going to be perfect, but just getting them done. getting something done is beneficial in itself helps the learning process and kind of breaks the seal. You can’t really say that, but

Neil Henderson [1:09:01]

Well, there’s the you know, the, there’s the law of the first deal, which a lot of a lot of real estate investors talk about. And so many real estate investors spend their whole time, you know, Ready, aim, aim, aim, aim. And they have a lot of problems getting getting past that first deal. So I liked what he said is that find somebody to essentially find somebody to hold your hand either and but you will determine key where you sort of learn, you know, the process and learn it or hire somebody pay somebody a couple thousand dollars and just say, Hey, you know, I want you to sort of look over my shoulder is up by this deal. And, you know, make sure I’m doing it, right. Yeah, make sure I’m not making mistakes. So for me, it was the idea of, and I’ve actually talked about this past, which is your equity in your home, you gotta you got to start factoring in your return on equity. He talked about his, you know, his landlords on a million dollar property there in in LA, where he lives. And he pan East Bay, and he pays $3,000 a month for rent. And, you know, they probably own that place free and clear. Now, there’s a trade off, you know, people talk about, you know, they’re able to sleep at night, because they don’t have debt on a property. But they’re also they’re making no return on the money at all, really, I mean, they’re basically just keep up with inflation. And in some cases, you’d be better off, you know, finding a way to put that equity to work. And it’s something we’re contemplating. We’ll talk more about some of the time, but we have a lot of equity in our home, we’re talking about ways that we might be able to put that to work in a very specific way. And so it was, it was for me.

Brittany Henderson [1:10:49]

So, knowledge, how did he acquire his knowledge? And how long did it

Neil Henderson [1:10:54]

take? He talked about, you know, it was mainly podcasts and a couple of books. And then he’s, like, experience real life experience. And he, but it mainly took him he said, it took him a couple of years to do that first deal. That was mainly just saving money. Yes. They said about the down payment for you. Yeah, and I like their what he said at the end, which is and it goes along with what we just talked about, which is don’t get bogged down in listening to all 200 podcasts that bigger pockets is up to I think they’re up over 300 You don’t need to listen to all 300 of those bigger pockets, podcasts. You don’t need to read 300 books. He’s right, you can probably get away with listening to 20 podcasts and reading one book. And one good book. So how much money does it take to get started?

Brittany Henderson [1:11:50]

And this one’s I mean, oh, yeah, came out initially in his niche.

Neil Henderson [1:11:58]

Well, he, he bought a, he was sort of an accidental landlords, he never really intended that to be a rental property. But he bought a, an A class property in Seattle for $350,000 with 20%. Down, so he was probably looking at $70,000. Yeah. Now later on, he then went into, you know, Birmingham and doing turnkey, sir was buying properties that were $70,000 and putting 20% down. So now you’re talking $14,000. So it you know, it does take money, like if you’re going to buy a turnkey properties like he did, it is going to take you’re going to have to come in with that down payment. Yeah. Yeah.

Brittany Henderson [1:12:47]


Neil Henderson [1:12:48]

how much time does he spend on this real estate and beverage now?

Brittany Henderson [1:12:52]

Well, the real estate endeavors themselves, it sounds like a few hours a week. He’s mostly just doing like, thought leadership platform like content and things like that. And that was really he kind of made that point that if you’re a busy professional, and you’re looking to do like, passive investing that you really don’t need much more than a few hours a week.

Neil Henderson [1:13:16]

Probably most of his time is spent on either networking or his thought leadership. Which lane if you’re listening, you need to start outsourcing things. So could he do this strategy from anywhere in the world?

Brittany Henderson [1:13:33]

I guess I mean, we didn’t really talk about that. Super specifically. But he he invests not where he lives. does he care? I mean, he lives in Hawaii, so it’s definitely not going to you know, I

Neil Henderson [1:13:50]

even when he was investing in when he was in Seattle, he was investing in markets like Birmingham and Atlanta.

Brittany Henderson [1:13:58]

Yeah, yeah. I’m sure there’s probably some restrictions with time zones and all that kind of stuff. But you know, we’ve talked about that before on numerous podcasts. This is a strategy that you can do on distance for sure. Yep.

Neil Henderson [1:14:13]

Okay, well that that’s all for today. You can join us again next week we’re doing this all over again.

Brittany Henderson [1:14:20]

Let’s hit the road by

Post-Interview Analysis 

  • Key Lessons Learned: Find easier jobs that don’t take too much of your time so that you can focus on real estate.
  • How did they acquire their knowledge or what knowledge did they need to acquire? He listened to podcasts and read some books and bought some turnkeys.
  • How much money did it take to get started? His first property was an A-class rental $350,000 purchase price in 2009.
  • Could they do this strategy from anywhere in the world? Lane created his lifestyle where he can run his business from his inbox.

What you’ll learn about in this episode

  • How did Lane Kawaoka get started in real estate and what was the first property he bought? 
  • Did he come down with a 20% down payment? 
  • Where did he live after renting out his first house?  
  • What lessons did he learn from his first property? 
  • How did Lane get involved in turn-key properties?  
  • What doesn’t he like about 1031 Exchanges? 
  • Did he work with a single turn-key operator? 
  • Was he an accredited investor? 
  • What ways does he diversify with syndications? 
  • What is Lane’s basic investment philosophy? 
  • How is he using infinite banking?  
  • Lane compares high-net-worth jobs to investing in real estate for extra money. 
  • What does his passive investor accelerator group offer? 
  • What tips does Lane Kawaoka have to offer? 
  • Does Lane have any kids?  
  • Does he have any systems that keep him on track? 
  • Does he outsource anything?  
  • What advice would he have for someone just starting out? 

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