Okay. Welcome back to the Daily Mastermind, George Wright III with your daily dose of inspiration, motivation, and education. And I'm joined with the guest today. You guys are going to love it. I know you love it when I talk mindset, but when we get down to wealth and strategies, it's rock and roll. So I'm here with Lane Kawaoka. Lane, how are you doing, man? Hey, what's up, George? Aloha, everybody. This is going to be really good. So if you're driving, pull over. If not, take some notes. We'll get a lot of stuff in the show notes as well. But let me give a quick intro because Lane, Man, he's got such a diverse background. This is a guy who went from accidental landlord to thousands of units. And now he's got about 2.1 billion in assets under management with 10,000 units. And so this guy's got, I'm sure, a million stories for us. But written a book, he's got a new book coming out, The Wealth Elevator. We'll talk a little bit about that. But simple passive cashflow. A lot of people that are listening to this podcast are individuals that are either looking to invest, are investing, worried about investing, don't know what to do. It's a crazy market right now. Are you seeing a lot of that, Lane? Yeah, it's definitely, I think, a good time to get in because we saw valuations come out of the market 10%, 20% over the last six months, a year. I love it. Listen, I just want people to know that you have this massive depth of knowledge because we're going to jump right into some things. But I think a lot of times, even seasoned investors get caught up a little bit in the marketplace. And so we'll get into details and things for that. But before we do, I want you to just give us a little bit of a background. Ginnis, you were 12 years as a civil engineer and you went into investing. And I don't know if that was intentional or accidental. I mentioned that, but tell us how you broke into and why you broke into real estate specifically versus stock investing commodities or something like that. Yeah. I mean, I got grown up on this linear path of go to school, study hard, invest in the 401k, the traditional stuff. And then I started to work as an engineer. I didn't like it. And then what I realized, still on this path of blindly go buy a house to live in. So I saved up a few years and bought a house in Seattle to live in. I was in my mid-20s, I think, at the time. And I was working as a construction supervisor. So we'd travel all over the country. And I was only home on Saturdays. So it was silly for me to have this big house all to myself. This is well before the days of Turo and Airbnb. But I just rented it out. I called it old property manager. I didn't know if that was how you did it, but apparently it worked. And I just started this little cashflow machine for me. And after, in the beginning, I was like, wow, there's cool beer money that's rolling in. A little extra party play, huh? And then a few months into it, I was like, wait a minute. If I just rinse, wash, repeat, did this several more times, I'll be able to quit my job doing this stuff. Like back then I thought to pay down the properties, sophisticated investors leverage debt well and buy more assets. But that was the, I didn't know too much. I didn't know anything about the rent to value ratios, 50% rules, paying down, not paying down your mortgages. And, but that's how I started, right? As an accidental landlord. And that's where I got this taste of cashflow and I got super motivated to read books. There weren't too many podcasts at the time. Just put my head down, save more money and then bought another duplex in Seattle. And then that was around 2012. And then I realized, yeah, so many investors, you know, that was investing in my backyard because I was in Seattle, started to expand outside to different markets because of the better rental value ratios, more rents per price. And that was, I was super uncomfortable because I never even visited these properties. But I, around 2015, I had 11 of these things. and just, I didn't know anybody doing this stuff. Yeah, it's funny because I've talked to so many people, myself included, just like that first time you invest outside your backyard, like in a different place. You're like, wait a minute, how am I gonna check this thing? How am I gonna know it's not gonna burn down? It was so uncomfortable, but you made a really good comment, which we'll probably come back to in the podcast, but that investors invest where the opportunity is. But let me back you up for a second because I don't know if I read it or if I saw it on your site, But you made a little comment. There's a little picture of a mentor you had picked up in 2010. And later on, you're on a panel with this guy in 2019. So it begs the question, you started experimenting in real estate, and you said you were reading books and things, but what else were you doing? Like, how did you pick up your knowledge? Nowadays, we can just Google whatever we want, but did you get mentors? Did you go through programs? What was it that you did to really educate yourself? Because I'm a big believer education is what helps you speed up the learning process. So what did you do specifically? Yeah, I eventually became a converter guy where I started to join these groups. But when I first started to do this, remember, this was all a passive thing. This wasn't a job. I was, my engineering job was like 90% of my bandwidth. And I just did it the cheap way because I was, I'm like a lot of people, just too dumb for anything. And yeah, didn't have the time to dedicate it. And I was just too cheap too. And I look back on that and I'm like, man, if you would have just paid for some things in the beginning, you would have accelerated. But I just did it the cheap, easy, free way of listening to podcasts, just read books. But looking back- Well, and how did you- I'm sorry, I didn't mean to interrupt you. But you also talk a lot about how do you do investing without making it a second job? Because a lot of people, it's a little barrier to entry, right? but they want to do something, but they've got this job that a civil engineer really is 90% of your time. Did you just pick away at it a little bit on the side? What do you recommend for somebody that's, look, I got money. I got, I know what I want. I just, I just don't have any time. Yeah. It all comes down to what do you got to work with, right? If you're broke, you need to get some money, start a business, go to college, get a job, something like that, right? I had a decent paying job and had some money. Therefore, I lined up to be more of a passive investor starting out. And for those people, there's really not too many education programs you really need to go through, right? Like just go download a real estate analyzer and you're off and rolling. There's enough YouTube videos for that. So I was not initially a real estate gung-ho operator, right? I wasn't even doing rehab to my properties. It was just like as lazy as you can get, the easiest stuff you can get type of investing. And I love how you made that comment that I just think people feel investing is a real active thing. And you said I was a passive investor. And I do believe that a lot of people don't really understand their minds. It's like you said in your book, the BS in traditional financial wisdom. The bottom line is people need to understand there's a difference between active and passive. And it doesn't mean one or the other. But can you talk to me a little bit about how you view that now? You've been through all this, but active versus passive and what, what, how you viewed that as you grew into the real estate market Yeah So like active real estate activities are like wholesaling flipping you know stuff that becomes your job if you really want to be competitive at it. There is no halfway in with that stuff. Yeah. Whereas passive investing, such as like buying properties remotely or in your backyard with normal 20% down payment, you know, that can be done very passively, especially, and I suggest everybody get a professional third-party property manager for the legal liability. And you need to focus on your highest and best use at the end of the day, which if you're listening, you need to recognize what the heck that is. And likely it's maybe your business or for a lot of my investors who are engineers, doctors, dentists, it's unfortunately going and doing a surgery or going into work. Now, if you're somebody who doesn't have a high hourly rate, anything, you may be forced to go get a job or do something on the active side of the real estate world. But I never did that. And that's why I built the whole wealth elevator construct. There's different floors to the wealth building journey. And quite frankly, it depends on where your income is and really where your net worth at. Yeah. I want to talk a little bit about your wealth elevator formula and some of these things you do. But I'm going to just draw one quick distinction, which I love how you did that because even for me, I want to make sure that the listeners are listening to this. Most people that have jobs, even if they're great paying jobs or you're a C-level exec or a high achiever, you're thinking active passive income. You're thinking, I want to have income that comes in when I'm not working and I have an active job. But what you mentioned, which I love the distinction is you can both actively invest or passively invest. You're talking about passively investing, meaning guys, you don't have to have a second job of being a landlord, a flipper, a wholesaler and doing all this work, you can passively invest for cash flow. And so I think that's an important distinction people need to realize is that it's not just the difference between the type of income you have, it's the type of investing you do. Would you agree with that? It depends on, but then it also, the added benefit is the difference between ordinary income, which comes from your active activities and passive income, which comes from your passive activities. And the reason why we like passive income, other than it's cashflow and it's cool and everything. But from a tax perspective, I can use the depreciation and passive losses to zero out my passive income. And that's why over time you get to a point where you are not really paying any taxes, right? Because you're moving away from ordinary income, which if your net worth is under two, $3 million, you're going to need a lot of ordinary income. You're going to have to be like a gas guzzling truck and pay a lot, make a lot, pay a lot of taxes. But over time, what you're trying to do is transition, tie straight down to less ordinary income as a percentage of your passive income. Because with passive income, like I said, you can use passive losses to zero that out. So you go from this gas guzzling truck mode to half Prius, half Prius electric, hybrid. And what that looks like, or we kind of consult with a lot of people is maybe your spouse is going to quit her job, right? Because she don't like it compared to you. And then your income comes down and then that percentage gets more towards the passive side. And then at some point, as you get to end game, which I defined for most people around four to $5 million of investable assets, you can cruise at that point. And you can go full electric mode, which means full passive income. Therefore, you don't really pay any taxes on that. Assuming you have enough passive activity losses offset it. It's so funny. It's like when you were saying all that, which I totally agree with, I was also thinking of mountain biking. I'm like, I have a buddy of mine that I go mountain biking with and it's freaking hard work until all these e-bikes came out. Now all of a sudden it's, hey man, I think I'm elevating a little bit. Now these bikes are like five, six grand, but they're better. I do like that distinction. So let me ask you this. Talk to me about the wealth elevator because you mentioned it. And I know a lot of these concepts you're talking about are that, but when this book's coming out, right, I can't wait to get it. We got a site that people can go to, but what are the various floors that you feel like people are at and what takes them from level to level? Talk to me a little bit about the wealth elevator. Yeah, a lot of it is determined like net worth, right? And then secondly, where your income is. So if you're starting out, you don't even got 10, 100 grand, you're probably in the basement and you're likely there because you make less than a hundred thousand dollars a year and this is maybe where i would put like a lot of our nephews and our adult in our children and adult bodies yeah the bro guys and unfortunately these guys get duped into a lot of these programs that coaching programs that you and i were talking about or that messed up right i mean it's just don't you want to just grab your nephew and just look man you got to find some way to get stiff income yeah get a job let's go go to get a job college, I'm not a huge believer in it, but heck, that's a way that I got a good paying job, whatever. But most books out there are written for the broke guys in the basement. I wanted to write that book for that second, third, fourth level and penthouse level. Now, if you're out of the basement, you have some investable money, maybe you've got a net worth of a quarter million and you're making an okay job or you have an okay business making six figures and above. you're in this probably this first floor. And this is where maybe you might want to buy little rental properties. And this is where I was in my mid twenties buying little rental properties. But as I said, you eventually scale out of this stuff and the credit investors don't really buy little rental properties because of the headache and the legal liability that comes with being the direct owner of it. And at that point, you kind of transitioned to that second floor of the wealth elevator where your net worth is maybe half a million, million dollars, but your income is pretty strong, at least $150,000, $200,000 a year. At this point, you can jump right over that first floor or kind of go straight to the NBA, as I call it. And you just plug away at there, trying to get your net worth from that one, two, three, $4 million net worth level. At that point, you're on that next stratosphere and goes on from there to the house. So you really, I think it's important for people to understand, especially like you said, the people that are broke or feel that they're not at that first, second, third level, they want to jump levels and they don't recognize that increasing your active income and building your wealth at each level is just something you've got to do. You can't, you've got to, not just from the learning process, but also it's okay to maximize out your active income. And then as you do it, you will transition. You're saying you go from these cashflow type properties to more, what other types of properties do you have at the accredited level? Are you primarily educating and teaching and providing syndication? And what other types of investments does that take someone into that right now you see as being viable for accredited investors Yeah I mean it becomes being more of a passive investor in various different syndications and that asset class the geographic areas will change But once you're plugged into the private equity world, now you can guide your money. But that's kind of what we kind of help investors educate on being a good passive investor and doing good due diligence. But what really differentiates that second floor from the first floor is it's not really about you being book smart or anything like that. I mean, of course, we've got the book that kind of teaches people about the nitty gritty. And for your guys, we can hook them up with the syndication e-course that's eight hours. We'll give that for free to them. But it's more about the community of other purely passive accredit investors. Because when, again, going back to my journey, when I was switching out of getting rid of my little rental properties and switching to being a passive investor, a lot of the lower level syndicators that I would work with the guys under $1 billion of assets and their ownership. They're all doing these programs, right? Fake it till they make it, taking selfies on social media. It's just, it's a marketing gig, right? It's a bunch of fake it till you make it. And I got my money. I got duped a few times, not going to lie, right? One person was just a shyster, stole the money. A couple of other guys were just a complete fake it till you make it, like never did anything they said they were going to do, but still good guys, right? Whatever. but like this is the hard part. I think success comes and everybody's going to go through those challenges, but what you're learning and what hopefully people are learning from this episode is they want to learn from the success and the lessons that you've gone through, that I've gone through, that people have gone through. And I think you're right. I think what you're saying is as you move up that wealth elevator, your network and your net worth both change. The people you surround yourself with are at a different level. The things they're looking at are a different level. The types of investments you have are a different level. And that's huge because that really is, once you get to that, you're right, it naturally starts to evolve for you. Do you have, I'm just curious to digress a bit. Have you seen the current marketplace shift a bunch? Does that really affect you as much as an investor with the types of passive investing you're doing? Or are you still moving money through trends and moving money into different sectors, whether commercial foreclosure, multifamily, RV parks, things like that? And we were operators of multifamily apartments, right? So that's our, if you're like a manufacturer and heavy manufacturing, you stay in that vertical because you have infrastructure built. For us, it's the teams and the intellectual knowledge. So we are in that right. Good or for worse, right? We have the experience and we already have the portfolio in that areas. But I mean, we pick a sector where workforce housing, the whole idea is the rich are getting richer, the poor are getting poor, and there's the bifurcation of the rich and poor. So we want to be in this kind of middle to lower middle class run. But yeah, as far as like last year, last summer, when interest rates started to tick up, we stopped doing new acquisitions because I can't just make, I can't make deals work at those interest rates. So still same asset class and locations. However, we're taking apart a different part of the capital stack. Might be a little too advanced, I think for most people, it took me a while to figure out this whole space. But when you're an investor, you can invest in the common equity portion, the preferred equity portion. Of course, if you write bigger checks, that's how you get access to these more filet mignon of the cattle, what we call it. But with interest rates high, I can't really make deals work. So what we've positioned is either we do preferred equity type of deals, which are more like debt arrangements before we go out. And it's a good time to be developing right now because everybody's got facing the headwinds right now, getting their capital sources lined up. So it's a little bit of zigging and zigging, but still under the same umbrella of workforce housing. Yeah. But I'll tell you why I love that. So I've got a couple of friends that are really high-end stock traders, forex traders, things like that. And it's interesting for me to listen to them as the markets change and money moves. It's really about the movement of money, right? But individuals like yourself and others, and this is something for you to listen to if you're hearing this episode, is that in markets where you're trying to learn or grow or you're unsure, it's when you really need to associate with people that have been in the market. Because not only do you maybe have some experience, Lane, that you do here, but you've got systems and you've got people and you've got knowledge to access that some people wouldn't have. And so I always find it interesting because a lot of people that are investing, even if you're a brand, you're a doctor, a high end, let's say you've got a net worth of two, three million, you want to crack into passive investing and you don't know where to go. One of the beauties at those higher levels is that most of the successful people I found can help you with your belief in what's possible because they have situational specific strategies. Like you will have certain markets with certain things at certain times that you'll do. It's the same in stock, real estate, everything else. And you're the kind of person that a lot of people need to get around if they're looking to invest and they don't know what to do, but they have the net worth. But what do you recommend for somebody, let's say current market positions, conditions, that wants to start cracking into passive investing? Where do they start? Let's say they have the net worth and they're in that level one, level two, and maybe they're just sitting out on the sidelines right now. Do you recommend they keep sitting out or where do they crack into the passive investing marketplace? place. What do you recommend? The biggest thing is interacting with other purely passive accredited investors. Unfortunately, these are definitely not the guys going to the real estate clubs because all of those guys are the broke flippers. And they're typically the general partner wannabes trying to get into the business. This is why I ask you because you're not going to go show up to a local REIA. You're not going to show up to a seminar or workshop and run into these guys. And you're saying you want to find these guys. Do you have any recommendations of where somebody would start to, or is it just start the process and start educating yourself? Start educating yourself. Because even if you did come to, let's be really transparent with people, that's how we monetize our group because we find and we curate events specifically for those people. But if you were to do this on your own, the worst, even if I did sit you at a table with five other accredited investors who both all invest in like 25 deals each, unless you're at a certain car level in terms of adding value to the conversation and not asking dumb questions what's a prep what's a good split what are regular fees sponsors i love that right but you get yourself to a basic um prerequisite level which yeah that's we have all this content on the website that you can consume for free you're wasting these guys time and as a passive investor to a passive investor unless you add value to each other like why would they want to bug you. And I think this is where a lot of passive investors go about it the wrong way. They spend all their time talking to syndicators that they find And most of the times they find just people who are really good at social media marketing which aren really that great But it talking to the syndicator heck talking to me is a waste of your time because I just going to tell you everything that you want to hear Granted, people like working with us because I'm a little bit more transparent. I tell people straight because that's just like the kind of company we run. But like, it's a waste of time, like I'm saying, right? Play the long gate and it's frustrating, but try and find purely passive accredited investors. Yeah, I love that. And you've said a couple of things that I think are really general themes of this episode, which I really want to hammer home to people. And by the way, I do love your transparency. Here's a guy, everybody that you go to his website and you're like, properties under management, stuff he's got listed. Transparency is not an issue with you. And I think what I found over time, and I think you would agree, is that transparency is always there with guys that know what they're talking about. People that really do it, they don't have a problem with transparency, but you make two comments and one is, or just two overall things. One is, guys, you've got to get the knowledge so that you bring value. You've got to bring value to people that you're around or you're not going anywhere. You can't just show up and think, I'm going to bring some money. These guys are going to make me money. Bring value. And then second, you've got to surround yourself with the right people at the right level where you're at so that you can move through those floors of the wealth elevator. I really, adding value is something that people got to do and they and investing in yourself that's one of the reasons i have to do the podcast investing in yourself as a way to build your value to the marketplace or to people you're working with because if you don't bring value nobody's gonna people that are really worth money are not going to want to spend the time with you whether it's a mentor or not what do you spend most of your time on right now i'm curious do you have a pretty freegoing lifestyle are you still you got some big goals you're starting to do this is kind of a little more on the personal end what's your what's next for lane what are you really pushing towards what's your big end game here? Right now we're in the thick of things, right? Like expenses went up across the board. Like some of my projects, like taxes tripled, insurance tripled. This is stuff that we deal with and we're still in this kind of growth mode as a company. We've done $2 billion plus of deals, but we're not yet an institution. We're still hungry. So I'm still, I'm not 40 quite yet. So I still figure I have to do things, right? You got a little runway left, man. And you got way more than I do. Let me ask you on a personal note, because I'm a big believer in daily rituals. I believe that whether it's conscious or not, most people that are successful like you are at your level have daily rituals that they feel. Maybe it's two, three, maybe it's a complete schedule lockdown. What are your daily rituals? You mentioned you were just at the gym before we talked. What are your daily rituals that you feel keep you in the zone of growth? Yeah, I went to school for industrial engineering, which is all about processes and orders. And I find myself, I can get a little bit too much ingrained in it. So I consciously try to stay, at least for me, a little bit more free flow and do what feels more right. But yeah, like a lot of it has become just unconscious, right? I'll go to the gym earlier in the day because if two o'clock, three o'clock rolls around and get tired, I ain't going, right? I know that kind of sets the table for me mentally, all the chemicals, yada, yada. So I definitely do that most days out of the week, but I'm not an early riser. I don't wake up early. I don't either. I do, but that doesn't mean I like it. So for sure. I'm still running a business day to day, right? And I got to put out fires. I don't got time to meditate and review my goals for 10 minutes in my little journal. I just don't do that stuff. I'm a big advocate of there are daily rituals that we all have. And rather than trying to follow some guru or something like that, You need to find the ones that work for you the best. For example, I do like to work out in the morning, gets my brain going, even if I don't feel like going. And I don't sit and meditate and things like that. It's not the thing for me right in the morning. But some people, maybe that's what gets them grounded, whatever. It might be systems. It might be your top three of the day, things like this. But you got to do what works for you. And you're an engineer, so you're a process guy. So I'm sure you've systematized your day and things like that too. But I find that's a pretty common trait. Is there anything you'd recommend? Or go ahead. I think, yeah, like I think trying different things, right? Like we hear a lot of these things and give it a try and then go through seasons. Like right now, I just finished up the book, The Gap in the Gain. I love that. Dan Sullivan. Yeah. And they, at the end, they talk about like, just do three freaking things, right? And every day, if you do review the day, did you finish those three things? And what are the next three things to line up? So that's something I'm self-experimenting now. Don't know if it'll stick, but I have a card that I write down on every day. And one thing for my work, right? Professionally, one thing for relationship, family, one thing for physical, one thing for just having some freaking fun. And I try and obviously overachiever, right? That's four things. Yeah, there you go. There you go. And you're in Hawaii, man. If you're not having fun out in Hawaii, then you'd have got to change your business. I don't know. Maybe not enough fun out there. Yeah, I just happened to grow up here. But I'm glad I asked you that question, though, because now we just learned. Guys, listen to me. I'm telling you, most of the successful people out there don't really talk about it unless it gets pulled out of them. But here's a guy that goes to the gym, still has a card he writes down, still reads new books. Still, these are the things, lifelong learning, habits of daily rituals are things that they do become subconscious as you do them and they become habit. But at the end of the day, I think it's some of the things learning and growing and stuff like that, that have taken you where you need to be, where I need to be, where most people can be successful. So I appreciate you sharing that with us. Listen, man, I'm super excited. I know we're short on time. So how can these guys get in touch with you, follow you? What do you recommend as far as someone that wants to say, all right, I want to get breaking into this passive investing world, or I want to the next level. I want to get connected with Elaine. Where can they go? So yeah, if they're a podcast listener, they can go to the Wealth Elevator podcast. They want to learn more about syndications, go to thewealthelevator.com slash syndication. And then yeah, if they want to reach out, lane at thewealthelevator.com. Awesome. I'm going to put those in the show notes, everybody. And I highly recommend that you dig in because I'll tell you, when you surround yourself with people that think differently and most successful people think differently, you're going to pick up more value for yourself in the marketplace. So Lane, once again, man, thank you so much for being on the podcast. Hopefully we'll be able to utilize you and get some of your nuggets and strategies and tips at our academy level with our Academy Mastermind. But thanks again, man. Is there anything else you want to add before we take off? No, thanks for having me, guys. Yeah, you're welcome. You're welcome. Okay, guys, listen, do me a favor. Share this episode. If you've learned something, if you have some type of stuff you're dealing with, feel free to hit me up on the Daily Mastermind on Instagram or Facebook. but other than that, remember, it's never too late to start living the life you're meant to live. It's never too late to start doing the things you know you need to do. So once again, my name is George Wright III, and this has been the Daily Mastermind. Have a great day.
