The Wealth Elevator for Creating Passive Cashflow with Lane Kawaoka

‍

Welcome back to The Daily Mastermind, your daily dose of inspiration, motivation, and education. I’ve got a guest with me today, and if you’re into mindset and money, this is going to be a great one. When we start talking wealth strategies, it’s go time.

Lane Kaa is with us today, and if you’re driving—pull over. If you’re not—take notes. Don’t worry, we’ll also include a lot in the show notes.

Thanks, George. Aloha everybody.

I’m excited because Lane brings massive depth to this space. From an “accidental landlord” to managing over 10,000 units and $2.1 billion in assets, this guy’s journey is loaded with lessons. He’s written books, has another one on the way—The Wealth Elevator—and his Simple Passive Cashflow brand is well known. A lot of our listeners are actively investing, considering it, or watching from the sidelines wondering what’s next in this market. Are you seeing a lot of that uncertainty right now?

Yeah, definitely. It's actually a great time to get in. Over the last six to twelve months, we’ve seen valuations drop 10 to 20 percent.

That’s what I like to hear. The market’s changing, and even seasoned investors get caught up sometimes. So we’ll dive into some practical tips today. But first, give us a little background. You spent over a decade as a civil engineer before pivoting. Was real estate intentional for you, or did you stumble into it?

I was definitely on the traditional “go to school, work hard, invest in a 401k” kind of path. After getting my degree and working as an engineer, I realized I didn’t love what I was doing. But I was still following the script—so I bought a house in Seattle to live in. Problem was, I was traveling a lot for work, only home on Saturdays. So it didn’t make sense to have a big place all to myself.

That was before Airbnb and Turo. So I just rented it out and called a property manager. I had no clue what I was doing, but it worked. Suddenly I had a little cash flow machine. At first it was just beer money, but after a few months I thought—what if I repeat this?

That lightbulb moment. It always starts there.

Exactly. I didn’t know much about rental value ratios, paying down mortgages, or any of the 50% rules. But the income got me motivated. I started saving more, reading more books—there weren’t as many podcasts back then—and bought a duplex next.

By 2012, I realized investors in my area were expanding to other markets for better rental value ratios. It was uncomfortable at first because I hadn’t even visited those out-of-state properties. But by 2015, I had 11 properties.

That’s wild. And you make a great point—your first time investing outside your local area is scary. It’s like, how do I check on the property? What if it burns down? But like you said—real investors invest where the opportunity is.

Exactly. And speaking of mindset, I saw a photo of you on a panel in 2019 with someone who mentored you back in 2010. That shows how far you’ve come. But what really helped you get from reading books to actually knowing what to do? These days we can Google anything, but what was your path to learning and growing?

I started out just listening to podcasts and reading books. I didn’t have the time or desire to pay for expensive coaching back then. Looking back, I probably should’ve. It would’ve accelerated the process. But at the time, it was all passive for me. I didn’t want a second job.

‍

Active vs. Passive Investing: Knowing the Difference

I had a solid job and some savings, so I leaned into being a passive investor. That’s the path that made sense for me. Most people don’t realize you don’t need to turn investing into a second job. You don’t have to be the landlord, flipper, or wholesaler doing everything yourself.

That’s so important. I think a lot of people confuse the idea of passive income with active investing. You’re talking about creating passive income through truly passive investing—not becoming a second-job landlord. That’s a huge distinction.

Exactly. There’s also a difference in how that income is taxed. Passive income, like rental income, is treated differently than your W2 or business income. Passive losses—through depreciation—can offset your passive gains. That’s one of the biggest reasons I love real estate. Over time, you can build a lifestyle where you earn more and pay less in taxes.

I love that comparison you made earlier—starting out, most people are like gas-guzzling trucks. You make a lot, you spend a lot, and you pay a lot in taxes. But as you shift more into passive income, you become like a hybrid vehicle, or even fully electric. You keep more, invest smarter, and become more efficient.

Exactly. And for a lot of high-income families, maybe one spouse doesn’t like their job. As the passive income grows, that spouse can step away. Then the household income lowers, but so does the tax liability. You start leaning more heavily into wealth instead of just high income.

‍

Climbing the Wealth Elevator

You’ve got this concept I love called the Wealth Elevator. Let’s talk about that. Your book’s coming out soon, and you’ve mapped out different floors or levels. Can you break that down for us?

It’s all based on two things: your income and your net worth. If you’re just starting—say you’ve got less than $100,000 and you’re making under six figures—you’re probably in the basement. That’s where most books and courses are targeted. But I wanted to speak to the folks in that second, third, and fourth level... and beyond.

If you’ve got some investable capital—maybe a $250K net worth and a decent-paying job—you’re on the first floor. That’s where people start buying single-family rentals. That’s where I was in my twenties.

Eventually, you hit a point where owning small rentals just doesn’t make sense anymore. Accredited investors rarely mess with single-family homes because the legal liability and headaches aren’t worth it. That’s when you transition to the second or third floor—where your net worth is in the $500K to $1 million range, and your income’s well over $150K.

At that point, you can jump straight into private placements or syndications—what I call the “MBA” of wealth building. You stop focusing on owning the asset directly and start guiding your capital strategically.

And that’s a powerful truth. People want to skip steps. But each floor teaches you something—and you can't really shortcut that learning curve.

Exactly. People want to move fast, but building wealth is about learning and evolving at each level. At higher levels, your investment types change, the people you surround yourself with change, and so does your strategy. Eventually, you’re at the penthouse, where your passive income covers everything, and taxes become optional.

‍

What's Next in the Market?

Let me ask—what’s your take on the current market? Are you still moving money, or just holding steady right now?

We’re still operators in multi-family, so we stay in that lane. We’ve got infrastructure, teams, and knowledge there. But we’ve definitely adjusted. When interest rates started climbing, we paused new acquisitions. We couldn’t make deals pencil out.

Instead of common equity, we shifted to preferred equity—more like structured debt. We’re also looking at development because capital is harder to come by now, which creates opportunities. We’re still in the same asset class—workforce housing—but we’re shifting where we sit in the capital stack.

That’s a big takeaway. It’s not always about the asset type—it’s about adapting your position in the cycle. You're not leaving the game, you’re just playing it smarter.

Exactly. It’s about making strategic adjustments within your wheelhouse.

‍

Breaking Into Passive Investing

For someone sitting on the sidelines right now, maybe with a solid net worth but unsure where to start—what’s your recommendation? Should they wait or begin exploring passive investments now?

The most important thing is to start surrounding yourself with other purely passive accredited investors. And to be honest, those people aren’t hanging out at your local real estate meetups. Most of those events attract newer flippers and general partner hopefuls.

Exactly. That’s why I’m asking you—because if someone shows up at a weekend workshop, they’re probably not sitting next to the type of investor they want to become. So how do they find that crowd?

Start educating yourself. That’s really the best first step. Even if I sat you at a table with five experienced accredited investors, if you don’t speak their language, they’re not going to engage with you. You have to bring value. And to do that, you need a base level of knowledge—like how to analyze deals, understand sponsor structures, ask good questions, and avoid the fluff.

That’s why we offer a ton of free content on our site. People need to get to that “prerequisite” level before they can network effectively. Otherwise, they’re just wasting people’s time—and no one serious wants that.

That’s such a key point. It’s not enough to bring money—you’ve got to bring value to the table. The fastest way to do that is by investing in yourself, learning the language, and showing up with something to contribute.

Exactly. And the biggest mistake I see is people spending too much time talking to syndicators, not other passive investors. Sponsors are trained to tell you everything you want to hear. That’s their job. But if you’re not careful, you’ll get pulled into shiny marketing and shallow promises.

‍

The Importance of Community

I think you just hit on another theme that’s run through this entire episode: you’ve got to surround yourself with the right people for the level you’re at. And if you want to level up, you’ve got to add value first. Whether it’s in mentorship or partnerships, value opens doors.

Exactly. That’s why I built the community side of our brand—so accredited investors could connect without noise. You learn faster, make better decisions, and avoid unnecessary risk when you’re surrounded by people who’ve already been where you’re trying to go.

‍

Personal Habits and Daily Growth

Let me shift gears a bit. I’m a big believer in daily rituals. They look different for everyone, but most successful people I meet have some kind of daily structure or rhythm that keeps them sharp. What are your daily rituals right now?

I studied industrial engineering, so I definitely love systems—but I try to keep things flexible. I work out in the morning because I know if I wait until later, I’ll skip it. That workout sets the tone for my day. I don’t wake up super early. I’m not into meditating for 20 minutes or journaling in the dark.

I love that honesty. I’m not a big early-morning guru either. I think the point is: find what works for you, not what looks good on Instagram.

Exactly. Right now, I’m experimenting with a simple routine based on the book The Gap and the Gain by Dan Sullivan and Ben Hardy. I just focus on three things every day—one for business, one for health, one for relationships, and one for fun. That’s my checklist. Nothing complicated.

There it is. Another common trait—lifelong learning and daily intention.

Yep. That’s what it’s all about.

‍

What’s Next and How to Connect

So what’s next for you? Are you in build mode, or are you enjoying more flexibility these days?

We’re still in growth mode as a company. Expenses have gone up across the board—taxes, insurance, you name it. Even after doing over $2 billion in deals, we’re not quite at the institutional level yet, so there’s still a lot of work to do. I’m not even 40 yet, so I figure I’ve still got some runway.

You’ve got time, man! More than I do.

I’m just trying to keep moving forward—scaling what we’ve built, staying focused, and continuing to serve investors who are serious about growing their wealth.

‍

How to Get Started with Lane’s Resources

For people who want to get in touch with you, learn more about syndications, or just start leveling up—where do they go?

If you’re a podcast listener, check out The Wealth Elevator podcast. If you want to learn more about syndications and investing passively, go to thewealthelevator.com/syndication. And if you want to reach out directly, shoot me an email at Lane@thewealthelevator.com.

Awesome. I’ll make sure those are in the show notes. And listen, I highly recommend everyone listening takes this opportunity seriously. You don’t build wealth by sitting still—you build it by surrounding yourself with people who challenge the way you think. Lane, thanks again for being on the show. I’d love to bring you back to share more with our Academy Mastermind as well.

Yeah, man. Thanks for having me.

‍

Final Thoughts

All right, everyone—here’s what I want you to take away from this episode. You’ve got to invest in yourself so you can bring value to the conversations you want to be in. And you’ve got to surround yourself with the right people at the right level. You don’t build wealth alone. You build it through community, intention, and strategy.

If you found value in today’s episode, please share it with someone. Tag me on Instagram or Facebook at @thedailymastermind. And remember—
📍 It’s never too late to start living the life you were meant to live. It’s never too late to start doing what you know you need to do.

I’m George Wright III, and this has been The Daily Mastermind. Have a great day.