The Elevator of Wealth

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Lane Kawaoka  – The Wealth Elevator

 

Podcast Overview:

00:00 Network Determines Success
08:15 Strategic Networking vs. Weekend Warriors
12:10 Real Estate Investment Strategies
20:33 Investing in Apartment Demand
26:26 Building Wealth Through Real Estate Investments
27:48 Scaling Passive Income Strategies
36:46 Contractor Reliance Challenges
38:32 AI’s Impact on Workforce Polarization
47:42 Wealthy’s Real Estate Strategy
50:53 “Wealth Strategy and Investment Growth”
59:19 Self-Reflection on Book Quality

Podcast Transcription:

Lane Kawaoka [00:00:00]:
On a whim, I just got a. Got a property manager started to rent it out. And that was kind of where I got this taste of cash flow. And that was back in 2009, 2010. And when I mean the numbers, you look at this thing called the rent to value ratio, where you take the monthly rents divided by the purchase price. If that is not anywhere near 1% or higher, it’s not going to work. You know, like, it might be a great place to live, great school district, but, you know, we’re trying to find good rental properties that cash flow. And that was kind of why I started to buy these turnkey rentals.

Lane Kawaoka [00:00:32]:
Out in Birmingham, Atlanta, Indianapolis.

James Kademan [00:00:41]:
You have found Authentic Business Adventures, the business program that brings you the struggle stories and triumphant successes of business owners across the land. Downloadable audio episodes can be found in the podcast link found@drawincustomers.com we are locally underwritten by the bank of Sun Prairie Calls On Call, Extraordinary Answering Service, as well as the Bold Business Book. And today we’re welcoming Slash, preparing to learn from Lane Kawaoka. I hope I did that. Okay, Lane of the wealth elevator. We’re talking real estate investing here. So, Lane, how is it going today?

Lane Kawaoka [00:01:13]:
It’s good. Aloha, everybody. Thanks for having me, James.

James Kademan [00:01:16]:
Yeah, thank you. I’m excited you’re in Hawaii, but were you born and raised in Hawaii?

Lane Kawaoka [00:01:24]:
I was. I grew up here, but I spent maybe a dozen years up in the cold, wet Seattle.

James Kademan [00:01:29]:
All right. Oh, yeah, okay, fair. How did you end up getting in real estate investing?

Lane Kawaoka [00:01:36]:
Yeah, I guess like my path. I graduated college, up until that point was always taught to go to school, study hard, eventually became an engineer, which is if you’re looking to not go to too much postgraduate doctor degree, you get paid the most out of college.

James Kademan [00:01:53]:
Right.

Lane Kawaoka [00:01:54]:
And that’s what I did. I got paid a decent salary right out of college, and I saved up to buy a house to live in because that’s what I’m, you know, we’re all blindly taught to do that in the 401k. Bought the house to live in in my early 20s. And here I am living all by myself and I had this job where I would travel all over for work. And, you know, I was a construction supervisor and I was never home. So on a whim, I just got a. Got a property manager, started to rent it out, and that was kind of where I got this taste of cash flow. And that was back in 2009, 2010.

James Kademan [00:02:28]:
All right, so were you renting it out? Airbnb type stuff because you would come back to it or you just rented it out and you’d stay somewhere else.

Lane Kawaoka [00:02:35]:
Yeah, long term rental. And I was homeless basically for several years there really. But I was living off the company dime from hotel to hotel. So what this did is it turbocharged my savings like before that. Most of my clients today, they’re able to save, you know, fifty thousand, hundred thousand dollars a year. Back then I was, you know, doc, you know, those are the doctors and dentists guys out there or business owners. But at the time, you know, I was maybe saving 30 grand a year. That’s how I was able to save up 80 grand down payment, couple years out of college.

Lane Kawaoka [00:03:13]:
But when I was, you know, quote unquote homeless, I was triple charging that to six figures every single year. And that went to buying more and more rentals. From 2009 to 2015. 2015, I had 11 rental properties. There was a little bit of switch that happened in the middle. You know, stopped buying, you know, had a few nets in Seattle, but Seattle is a primary market like California, Hawaii, New York, San Francisco. It’s just not going to work in terms of the numbers. And when I mean the numbers, you look at this thing called the rent to value ratio where you take the monthly rents divided by the purchase price.

Lane Kawaoka [00:03:50]:
If that is not anywhere near 1% or higher, it’s not going to work. You know, like it might be a great place to live, great school district, but you know, we’re trying to find good rental properties, that cash flow. And that was kind of why I started to buy these turnkey rentals out in Birmingham, Atlanta, Indianapolis. And that was kind of the formula up until 2015.

James Kademan [00:04:11]:
All right, what changed in 2015?

Lane Kawaoka [00:04:14]:
2015, I, like I said, I had 11 rental properties. And this is kind of what I talk about in my book, you know, for higher net worth investors. Once you get past a million dollars net worth, you start to realize that you’re a target for life lawsuits and litigations. And you know, when you’re under that, you’re not giving me legal advice here. You’re not really a target per se, but this is why you don’t really want to own little rental properties after a certain point. And in my book I have kind of a chart, you know, when does that switch happen? But you know, essentially that’s in becoming a credit investor, right? Net worth, million dollar or greater or $200,000 a year income or greater kind of puts in that category to not mess around with the small little rental properties and the Headaches that come with that. And, oh, by the way, you get the debt in your name when you do that type of stuff. And what I discovered at this time is, I’m sure you talk about on your podcast a lot.

Lane Kawaoka [00:05:08]:
It’s all your network, right? The people you hang out with, the five people you. You become, the five people you hang out with. Up until this point, you know, my parents were not wealthy, they were not accredited investors. I didn’t have a rich uncle. So I was just kind of doing this all by myself and kind of haphazardly, I kind of met up with a bunch of accredited investors at that point, started to understand what the heck that word means, and started to realize I need to surround myself with those types of people. And I started hearing these best practices that I later put into the book of what the wealthy people do with, you know, multi million dollars of net worth. And a lot of them had the same story that I did. They bought little rental properties, judiciously, good savers, ran their businesses, and then they parlayed that into bigger deals as a passive investor in syndications and private placements, which, if you’re kind of wondering what that is, the analogy I like to use, it’s kind of like an airplane, you know, in a deal, the cockpit is your pilots and co pilots, those are your general partners, sponsors, operators that do everything in the deal.

Lane Kawaoka [00:06:10]:
They find the deal, they get the lending in their name, they run it, they distribute, etc. And then the past investors are now allowed to just come on coach and ride, right, and go to sleep. But this allows them to diversify into many, many different assets across the board, right? Apartments, self storage facilities, mobile home parks, venture capital, private equity, buying businesses too, and allows them to kind of put. Put the best people in the cockpit to fly the airplane. But the big difference here is if you notice you’re cutting out the middlemen, right? Like you can invest in REITs and other wall street products, but there’s just so many middlemen in those things, and very little profits and returns go to investors. At the end of the day, that’s fair.

James Kademan [00:06:56]:
You touched on a lot of things there, Lane, so I’m gonna hit one. That’s a very important point for everyone, regardless of what you’re doing, job, investment, whatever, is that you become essentially who you surround yourself with. So who you hang out with, which means you gotta make sure you’re hanging out with people that you want to become or that you like hanging around with. And that goes. I think it’s safe to say finances, health, weight, income, whatever, just insert, I’m going to call it a data metric here. You hang out with your people, you take the average and typically you’ll find. Well, the average, that’s where I’m at. So you’re a smart man to find that crowd and hang out with that syndication crowd and then you end up becoming in the average there.

James Kademan [00:07:41]:
So that’s cool. That’s very cool.

Lane Kawaoka [00:07:42]:
Yeah. And, and that’s the hard part though, right? Like when you’re, when you’re a beginner in anything, you’re gonna get access to the free groups out there. And typically it’s probably on the other end of the spectrum. It’s absolutely people you don’t want to hang out with. Although sometimes there’s a diamond in a rough with somebody with similar trajectory as yours. Similar. You know, everybody has similar aspirations, of course, but who has the follow through, right? That’s what you’re trying to figure out. You know, a lot of these groups were pay to play groups.

Lane Kawaoka [00:08:15]:
I mean that’s kind of what separates like the weekend warrior who goes to the local real estate club, who thinks they want to get rich fixing and flipping properties where obviously we’re not, we’re not not fixing, flipping properties. We’ve got money and we’re going to buy and hold and, and slowly value add over the years. But you know, just I, I remember like even speaking from my business side, right, like they always tell you, hey, get out there and network with other entrepreneurs you need, especially if they’re outside your industry. But you know, when you go to random networking events that are uncurated, typically you find people who are just getting started and inherently not that they’re bad people, but that’s just where they are in terms of the life cycle. They’re out there for themselves. So you have a lot of these, like it’s just a waste of time, right? Everybody’s looking to get what they can get.

James Kademan [00:09:04]:
I always joke it’s just a bunch of sharks trying to, trying to sell each other.

Lane Kawaoka [00:09:09]:
Well, it’s just a bunch of like minnows trying to, you know, crabs in a bucket trying to pull each other down, essentially.

James Kademan [00:09:15]:
Yeah. It’s interesting because the networking groups that I’m been in attended all that kind of stuff. You can have the checklist, right? You got the mortgage broker, the life insurance sales guy, the personal property lines, insurance, insert all the basic things there. And it’s just they have no interest necessarily in learning about what you have or growing and then piggybacking on that, you think, would Warren Buffett come to a place like this and just network around, try the chicken wings or whatever that they have at this event or like, what are we trying to do here? Who are you trying to hang out with to become so very smart move.

Lane Kawaoka [00:09:52]:
Yeah. I mean, then again, has he gone to these things 80 years ago perhaps?

James Kademan [00:09:59]:
I don’t know if they had them 80 years ago.

Lane Kawaoka [00:10:01]:
Yeah, it’s a start. You got to start somewhere. But I would say as soon as you start to pay for things and you know, as long as you, as soon as you start to pay $10, the main thing, things start to happen, I would say.

James Kademan [00:10:14]:
Right, that’s fair. You know, you mentioned the real estate investing groups. I was interviewing a guy, this is years ago that’s got a real estate investment group locally here. And I asked him of the people that go there, that pay the nut, whatever to be members of this thing and they go to the classes, how many are actually investing in real estate? And he surprised me with the answer because I think it was right in the neighborhood of 25% of the people actually ended up investing in real estate. And of those 25% they did well. But 75% of them just went to the classes and kind of were just, I don’t know, hoping or wishing. I don’t know why they didn’t actually pull the trigger. But it’s interesting that only one out of four actually ended up investing.

James Kademan [00:11:00]:
So I don’t know if that’s your experience at all.

Lane Kawaoka [00:11:02]:
Yeah, I mean if you’re talking general real estate investing groups, like the thing about real estate is you need capital to get into the game. It’s a capital intensive business. You know, I’ve always taught our folks to buy properties 20 down. Like there’s, I guess there are strategies out there that people like to tout on YouTube videos that no money down. But to me, like you trade time for money in that circumstance and it’s just, to me, it ain’t going to happen. Most of our investors are credit investors and they run successful businesses and they’ve got money. So let’s just jump them up on the. Literally the second floor of the wealth elevator is kind of what we call it in our, in our construct in my book.

Lane Kawaoka [00:11:44]:
But that’s, you know, like, I think that’s the biggest thing. There’s a barrier to entry and whether searching businesses have bare to entry. Like a CrossFit gym has a very low barrier to entry. You get a bunch of bumper plates, some equipment, 10, 20 grand year. You’ve got a great gym. Quite the opposite with Warren Buffett’s railroad.

James Kademan [00:12:02]:
Right.

Lane Kawaoka [00:12:03]:
How much do you need to start a railroad? I don’t know, billions of dollars?

James Kademan [00:12:06]:
Come on. Infrastructure, your capital expense is insane.

James Kademan [00:12:09]:
Yeah, right.

Lane Kawaoka [00:12:10]:
So you know, buying a little rental property and is along that spectrum a little bit on the, the starter side, but you still need 20, $30,000 to buy a hundred thousand dollar house out there. And that can be a bad thing. But various entries can also be good things too. So whatever business you and you know, you can think, well, what moat do I have of my businesses? Where, where, where’s competition coming in? What’s their barrier to, to coming and competing directly with me? And that’s why I like real estate. And that’s why we, we’ve kind of gravitated more to commercial properties, apartment buildings, over 50, 100 units. Because you know, typically you have to buy them with more than 10 to 20 million dollars and you’ll have to get 2 to 5 million dollars down payment just to buy one of those things. It definitely thins the herd of our competition. So we feel like in terms of, of course you’ve got the big, big institutions buying large properties too.

James Kademan [00:13:06]:
Right.

Lane Kawaoka [00:13:06]:
But the competition is less fierce than the armies of mom and pa investors out there buying properties under $5 million.

James Kademan [00:13:15]:
That is so true. I can tell you me looking at properties around here, I’m just outside of Madison, Wisconsin and I’m like, I’m talking with some buddies and I’m telling them I don’t understand for the multi family stuff here. It just, the math doesn’t work from a cash flow perspective. Like why are people even buying these properties if they’re not cash flowing? Because I look at it as you’re essentially buying a business. That apartment unit is offering the service of living space to people and they pay you and you look at revenue, profit and loss and all this kind of stuff and I’m just not seeing the, the profit margin on these places. And their counter was their people are banking on appreciation. And I saw on your website that you talked about that that was, what did you call it? Speculation, Is that right? Something like that?

Lane Kawaoka [00:14:06]:
Yeah. Yeah. There’s two kinds of appreciation out there. There’s market appreciation, which I think is what you’re, you’re talking right? Dumbass luck. You buy property, it goes up with appreciation. But the second one we try and focus on is what’s called force appreciation, where you’re increasing the value of the, the asset and whether it’s a Apartment building, a single family home or a business. You know that in real estate that’s called net operating income. Your income minus expenses.

Lane Kawaoka [00:14:35]:
In the business world, you know, everybody talks about abita, right? Earnings before, you know, expenses and debt service. And essentially if you, you try. The name of the game is two things. Increase the revenue or income, decrease expenses. So in apartments it’s very simple what we do. We, we try increase the revenue by improving the living conditions. Kicking out the riff raff. New.

Lane Kawaoka [00:15:05]:
Typically what we’ll do is the same. It’s, it sounds super boring. But this is why we like real estate, right? This is why the caps are so low in real estate. Because it’s pretty. It’s an archaic business plan. You know, change out the flooring, appliances, paint job, new playground equipment, you know, maybe put 5, 10 grand per unit and bump the rents up by 100 bucks. And if you somewhat keep the expenses where there are or maybe even lower expensive with better management, you know, you increase the value of that property by the factor of what the market cap is. No different than, you know, if you run a marketing agency and you just talk to one guy and he brings you 10 new clients, you just bump your income right there.

Lane Kawaoka [00:15:47]:
Obviously that’s a lot more volatile and a lot more risky, but there’s a lot more upside there. Which is why we also look at buying other businesses too as private equity. So we’re kind of in both buckets, the real estate bucket.

James Kademan [00:16:00]:
The.

Lane Kawaoka [00:16:00]:
There’s reasons why we like that obviously. And then the. For the higher upside and inclined higher risks. We like venture capital and private equity to buying businesses or going into new ventures like that.

James Kademan [00:16:12]:
All right, so you, you’re in investing in businesses as well, beyond just real estate.

Lane Kawaoka [00:16:17]:
Yeah. So we’re in the business of like. And I talk about this concept in my book, right? Like in my book I talk about the different floors of the wealth elevator, which is synonymous with the different, the lifecycle of an investor or a wealthy person.

James Kademan [00:16:32]:
Right.

Lane Kawaoka [00:16:33]:
When you’re in the beginning stages, under a million, under a few million dollars net worth, you’re kind of on that first or second floor of the wealth elevator. You might buy a little rental properties. You’re probably running your own business, right. The idea is to create value in your business. Or maybe your business is being a little landlord and owning a handful of rental properties, as I did from 2009 to 2015. At some point you kind of switch to being an operator and into more of a passive investor. Now I can’t say when that switch exactly happens. But you know, in the fourth floor above on the wealth elevator and have a kind of a chart in my book on this.

Lane Kawaoka [00:17:10]:
And if people want to grab a book on this, they can shoot my team at email at the wealth elevator and we’ll get you hooked up with a free copy. But you know, $100 million net worth families.

James Kademan [00:17:22]:
Right.

Lane Kawaoka [00:17:22]:
These are what’s called has quote unquote family offices. They may be still doing their family business that initially got that step up in net worth there. But more than likely they’ve realized that their best and highest use for their time and money is that they become good damn investors and they diversify their holdings and they can’t be the operator in everything. Now maybe if they become an apartment operator, they can focus on that, but that doesn’t, that’s not diversification.

James Kademan [00:17:56]:
Right.

Lane Kawaoka [00:17:56]:
I mean, I. That’s me.

James Kademan [00:17:57]:
Right.

Lane Kawaoka [00:17:58]:
Like in 2023-2024, there was a big correction in commercial real estate. Everything went down 20 to 30%, which is why now’s a great time to get involved in commercial real estate. And I had 90% plus of my net worth in that stuff. And I got hit super hard.

James Kademan [00:18:14]:
Oh, you ran commercial real estate there. Okay, interesting. Okay, that’s interesting. I thought for a second there, I thought you meant the residential stuff. I’m like, oh, we’re in a bubble.

Lane Kawaoka [00:18:25]:
Because we’re really different. It’s totally different. Commercial and residential. Real estate resident.

James Kademan [00:18:31]:
Yeah.

Lane Kawaoka [00:18:32]:
You haven’t had that dynamic happen because people buy properties on a 30 year mortgage.

James Kademan [00:18:38]:
Right.

Lane Kawaoka [00:18:40]:
So right now people don’t aren’t needing to sell. So therefore you don’t test the supply and demand dynamic. But in commercial real estate, people buy properties on anywhere from like a year loan to a nine year loan, ten year loan. It might be amortized over 25, 30 years, but the loan terms are a lot shorter. And this is why you have this dynamic where you can have pricing move more dynamically with the market as opposed to saying somewhat fixed. With the residential world.

James Kademan [00:19:11]:
Yeah. You’re having to refinance every few years. Commercial property. Yeah.

Lane Kawaoka [00:19:16]:
And if you have a dynamic where interest rates skyrocket on you, 40 year high is what we’ve had quickest time in history. You have a period where buyers stop buying. I mean, we stopped buying after the summer of 2022 for a couple years. I couldn’t make the numbers work on these things. And I still have trouble finding deals that work in the sector.

James Kademan [00:19:37]:
This is for commercial property.

Lane Kawaoka [00:19:38]:
Commercial properties.

James Kademan [00:19:39]:
Okay.

Lane Kawaoka [00:19:40]:
Which is, I mean, I think A great case in point is office space. Obviously there’s other dynamics with work from home and stuff like that that exasperates this. But you see properties that were selling for like millions trade for like 20 cents, 30 cents on the dollar. Obviously apartments haven’t come down that much in terms of discount, but it’s still kind of, you see it out there.

James Kademan [00:20:04]:
You do see the discount in apartments and large apartment complexes.

Lane Kawaoka [00:20:09]:
Yeah, yeah. I mean office space, I think, I mean you have like the, the individual case in points where you have that skyscraper, I forget where, like in San Francisco that is trading for less than half. I’m pretty confident saying that. Yeah, less than half than what it was at the peak, you know, apartment seat. There’s still fundamental good dynamic on it, which is why we invest in this stuff.

James Kademan [00:20:32]:
Right.

Lane Kawaoka [00:20:33]:
Like my investment thesis. And you know, this is not financial advice. It’s just what I, what I invest off of is I want to invest off like a common need of people. And I see the dynamic of the rich getting richer and the poor getting poor and the lower middle class, middle class becoming more lower middle class living in apartments, kind of becoming, you know, I think you’re starting to see the younger generations, you know, they typically live in apartments anyway, but long term they’re not going to be able to afford a house, especially with their stagnant wages. That’s been the same for, since the last decade or two. And you know, I think that that growing demand and an increasing population in the lower end spectrum, I think that that points to good fundamentals for apartments.

James Kademan [00:21:22]:
Yeah, it’s interesting. I look around us and we have apartment buildings going up everywhere to the point that I asked my kid, I’m like, hey, let’s go for a motorcycle ride. And he’s like, all we’re gonna see is corn and apartments. And I was like, hey, you’re not wrong. So anyways, it’s interesting because I was talking to other real estate buddies of mine and I’m like, who’s moving into these places? And according to their numbers, we’re still locally in the southern Wisconsin area. We are still. I don’t know if the nomenclature that they use, essentially more people are coming in than there are places to put them. So that’s why there’s all these buildings going up.

James Kademan [00:22:02]:
But I don’t. Is that the case or is that. Are you aware of that on a nationwide level or is that just.

Lane Kawaoka [00:22:09]:
That’s why I like investing in real estate and I like to kind of self direct my money. I don’t invest in stocks, bonds, mutual funds. Because with that stuff you can’t do insider trading.

James Kademan [00:22:20]:
Right?

Lane Kawaoka [00:22:21]:
But with real estate you better be doing insider trading, right? You better be picking the markets that have increasing population. And a lot of this data is readily available. You know, you, you can probably use ChatGPT and figure out very quickly, hey, which, which cities are your more growing cities. And then you know, you, from there you look at the submarkets. But even if population was flat or projected to be somewhat coming down, I still look at like okay, what part of the population?

James Kademan [00:22:54]:
Right.

Lane Kawaoka [00:22:55]:
Again, I like to invest in the lower middle class. What’s called is the workforce housing the average Joe that makes 40 to 60 thousand dollars maybe a little bit less. And all they can afford is $800 to $1,200 apartment complex. And even that might be stretching them a little bit.

James Kademan [00:23:15]:
Tell me, you mentioned the B and C level stuff on your website. As far as investing. Can you just for the crowd differentiate between. I imagine there’s an A B and a C. What is the difference between those three? Is it just finishes, is it location and finishes parking? Just speak to that so we understand.

Lane Kawaoka [00:23:34]:
Yeah, yeah. So you can, you know, kind of the quick and dirty and you know, speaking the lingo a little bit with real estate, investors will typically grade properties in terms of grades.

James Kademan [00:23:44]:
Right?

Lane Kawaoka [00:23:44]:
Just like grade school ABC where A is your nicer properties and you typically can call it just by the age, the vintage of the properties. There’s no hard and fast rule, but for the most part these days anything built 1995 or newer is going to be your class A stuff. Class B is going to be 1980s and then class C is going to be 1960s and below. Obviously I, you know, I didn’t make it perfect because it’s not perfect. It’s a little bit of touch and go here, there and then your class D or war zone is kind of older than that.

James Kademan [00:24:23]:
Right.

Lane Kawaoka [00:24:24]:
And I think you also grade the neighborhoods too. You have a B and C too. That’s a little bit more subjective. You know, Class A is, I would think a lot of where the listeners are living there these days. Best school district. Safe, really safe. Class B is relatively safe. You probably don’t want to be there at nighttime class.

Lane Kawaoka [00:24:45]:
Class C is, you know, you’re only going there to get the cheap good eats out there and you’re getting the hell out of there and then obviously war zone from there. But as an investor you’re not going to get the best pricing the rent to value Ratios in those class A areas and properties. You’ve got to go a little bit to the lower end. But don’t go to the war zone.

James Kademan [00:25:07]:
Right?

Lane Kawaoka [00:25:07]:
There’s a sweet spot in the middle. You know, buying B and C apartments and B or better areas. It’s kind of the idea because you can value add the property, or you can take a 1960s property, put a little lipstick on a pig and have it rent for the same as like a 1990s property.

James Kademan [00:25:25]:
Right.

James Kademan [00:25:25]:
All right, you mentioned war zone. Is that, is that your nomenclature or is that just universal between the real estate investors that like.

Lane Kawaoka [00:25:34]:
Yeah, that’s what we call it.

James Kademan [00:25:35]:
Right.

Lane Kawaoka [00:25:35]:
And then, you know, if you’re talking with a real estate broker, those guys always sandbag you and trying to get you to buy. So whatever a real estate broker says, gender rule is lower grade.

James Kademan [00:25:44]:
Right?

Lane Kawaoka [00:25:44]:
Like, hey, James, I got a great class B property. I’m like, all right, let me see this thing. This is a piece of junk in a garbage area. It’s probably a class C property. A class C area.

James Kademan [00:25:52]:
Right?

James Kademan [00:25:54]:
Got it. Tell me, when you, Layne, when you were investing on your own, you start out with your house, you rent that out, how did you get from there to doing all this, bringing on other investors and investing in businesses? Yeah, I mean, what’s the transition there?

Lane Kawaoka [00:26:12]:
It starts off like watching grass grow. And I’ll highlight, like, yeah, started to buy the first property 2009. And the way, at least the way I teach it, you’re limited to how much money you can save.

James Kademan [00:26:26]:
Right.

Lane Kawaoka [00:26:26]:
Like, I was moving along at a pretty good clip, you know, adding $100,000 every single year to the war chest buying properties. But even, even at that clip, it took me six, seven years to get to double digit properties at that point. And it took me that long to get to accredited investor status, which then I kind of parlayed that to getting into deal access and building my relationships with other people in the industry. So I would say, you know, for most part, people just need to get their net worth past the million dollar net worth threshold. And then you have to start interacting with the right people. And that’s what we kind of provide. We, you know, if you’re, if you don’t make fifty hundred thousand dollars a year, I’m probably not the guy to talk to.

James Kademan [00:27:20]:
Right?

Lane Kawaoka [00:27:21]:
There’s a lot of like, you know, fake it to the make it operators that tell you you could buy properties and the money down. I never done that. You know, whatever. I’m not the guy to follow for that but what I personally do is like, I saw an underserved community of credit investors, people who did get to a handful of rental properties and wondering, like, what’s next? Because this isn’t scalable. With 11 rental properties, I had maybe an eviction or two every single month, right? I mean, there’s 11.

James Kademan [00:27:48]:
Right.

Lane Kawaoka [00:27:48]:
Which is not bad. And some kind of big issue that happened every single quarter, like a tree falling in a house or a windstorm knocks a tree down, something like that. And with 11 properties, not too bad, right? Because I always tell everybody, get a professional property manager to do your dirty work for you. But with 11 rental properties at a few hundred dollars of cash flow per property, that’s only a few thousand dollars a month, which isn’t bad, right? I mean, I’m sure a lot of people would love to have that. And I don’t want to sound, you know, like not appreciative or anything like that, but most of my clients today aspire to, you know, five figures, 10 to $15,000 of passive income a month. And you just, you do the numbers, you need damn near 30 or 40 of those rental properties. So that’s where the switch to being more of a passive investor and more scale models come in. But you got to get to that point first.

Lane Kawaoka [00:28:39]:
But once you do, you know, that’s why we have our events of accredited investors, and this is where people kind of meet to get into the next. The next step.

James Kademan [00:28:50]:
How do you tell me about the accredited investors, getting them to invest? Because there’s multiple people or companies that are offering investment. I’m going to say products. I don’t know if that’s the nomenclature. That’s correct. How do you differentiate yourself from the other investments that are out there?

Lane Kawaoka [00:29:07]:
Yeah, I mean, you go to like, the local real estate club. You got a whole bunch of people like, hey, I got a deal, I got a deal, I got a deal, right? You know, this is kind of where we’ve, you know, I’ve invested with in my first 15 deals I went into as an investor, I would say a few of them or one out of five of them, probably like, shoot, I shouldn’t have invested with that person or that deal. I just didn’t know any better. So. But fast forward today, you know, we’ve got a pretty good process. You know, as an operator of, you know, over thousands of units myself, understand when you go into a deal, you know, there’s some lessons learned, obviously. So, you know, I’ve got a pretty good process today. Got a team, you Know, we go in and underwrite the deal, we take the PNLs, we take the rent rolls, we analyze it ourselves, stress test it.

James Kademan [00:29:56]:
Right.

Lane Kawaoka [00:29:56]:
We may not agree with certain assumptions that the operator might be making. You know, they may assume that they’re running the property at 95% occupancy. You know, I know very well that’s not going to happen.

James Kademan [00:30:07]:
Right.

Lane Kawaoka [00:30:07]:
I know they’re going to probably have 8% vacancy and another 5, 3 to 5% of economic vacancy on top of that, you know, and that’s just one of maybe a couple dozen big, big impactful things that really impact the underwriting and projections as at the end of the day and then. So that’s the number side. So, you know, on my website we teach a lot of this in our free E course. You know, people join the list, they can get access to this free content. But I think the biggest part, the other half of the, of the equation is who the heck is this person? What’s their track record? Because we’re kind of in this private world of, you know, there’s no website for these people. You know, there’s in there, they’re not institutional. So one of the rules I have is I try not to work with anybody who has done less than a billion dollars of deals in the past. You know, and you know there’s a.

James Kademan [00:31:00]:
Billion with a B.

Lane Kawaoka [00:31:01]:
Yes, 1 billion. So you have a lot of these guys running around saying, I did $300 million of deals. Like, that’s nothing. That really is nothing. In the commercial real estate world, I think once you go over four to $5 billion, you’re definitely more on the institutional level. But at that point then your, the splits and fees go more in the favor of the operator than the passive investor. So there’s a little bit of a sweet spot there in a way of being a passive investor. So there’s a big game, gamesmanship to this, as you can see, that I kind of talk about in the E course that I have, which is for free.

Lane Kawaoka [00:31:33]:
Like, look, guys, just not trying to sell anything. None of this like ridiculousness, real estate education stuff. Everything’s for free. We do charges for the network, right. Our events and our mastermind group. And that’s where you tap into interacting with people. But a lot of this content is out there. It’s very specialized knowledge, I think.

Lane Kawaoka [00:31:53]:
But I think for credit investors, it’s critical to getting out of that landlord mode and into bigger and better things. And for a lot of business owners who run successful businesses, I’m in Vistage and EO myself. Probably makes sense for them just to skip over buying little rental properties and straight to the second floor of the wealth elevator. But yeah, you know, I didn’t realize like you know there’s, as you move through the journey there’s different pivots to the strategy. You know, rental properties. I think I might have talked badly about it, but if you’re under a million dollars net worth, I think that’s the, that’s the place to play. But to know that there’s pivots around.

James Kademan [00:32:32]:
The strategy, I want to build upon your success. So it’s interesting as I’m hearing you talk, there’s people that are going to listen to this that are like I don’t have a million dollars. But you don’t necessarily need a million dollars to start. You start with your little thing with the duplex or something like that or even a single family rental. Get that going and cash flowing and stuff like that and then just build upon that.

Lane Kawaoka [00:32:55]:
Yeah, yeah, you know, 20, 30 grand down payment on $100,000 house. You’re off and rolling. I knowing the audience that you have, James, you know, because you have a lot of business owners, I would probably say that your highest ROI is not going to be in a little rental property where you’re going to make less than you know, 10 to 15%. It’s probably going to be better off taking that 20, 30 grand and hiring a employee. I guess I would pay half their salary for the year or some, I hate to say it but some meta ads or whatnot, right? Google Ads.

James Kademan [00:33:28]:
Build your existing business you’re saying.

James Kademan [00:33:30]:
Right, right.

Lane Kawaoka [00:33:30]:
Invest in yourself. But I think that’s where the contra people who are listening now, you know, like I would say half of my investors are just straight W2 employees where they, you know, they come to work hungover or bust in their butt. They’re still gonna make the same at their job.

James Kademan [00:33:48]:
Right.

Lane Kawaoka [00:33:49]:
Which is a good and bad thing. I was kind of on the lucky end of that.

James Kademan [00:33:53]:
Right.

Lane Kawaoka [00:33:54]:
Could kind of do my side gig on the side of my engineering job when I first started. But you know, I think people listening are maybe on a different predicament than than that. So you know, real estate is a capital intensive business. You need you listener and this not, I don’t know, your personal situation. Your personal situation may mean that you take that 30 grand and put it into your business to then parlay that into selling for more, you know, few million dollars, couple million dollar exit. Then you diversify and that’s kind of what I talk about in the wealth elevator book.

James Kademan [00:34:28]:
Right.

Lane Kawaoka [00:34:28]:
You have to get to these purchases. You have to get to these floors and checkpoints.

James Kademan [00:34:33]:
Tell me the property manager situation. So are you finding property managers for the different properties that you’re investing in, or do you have a property management company now?

Lane Kawaoka [00:34:45]:
Yeah, yeah. So when we buy the apartments, we’re typically in the role of the asset manager. No different than when you’re the landlord.

James Kademan [00:34:51]:
Right.

Lane Kawaoka [00:34:51]:
You’re. When you’re a landlord, you’re typically. Or at least I suggest get a property manager. Don’t dick around with this yourself.

James Kademan [00:34:59]:
Agree.

Lane Kawaoka [00:35:00]:
But on the commercial property side, we’ll typically get a property management firm that’s on the commercial side. So very different than the residential property manager. Higher quality. They have the advantage of all their units right there. When you get above 50, 60 units, you can typically have a leasing agent at the property 100% of the time. And then the cool thing that happens when you get over 80, 100 units is you can have that full, that on time. Handyman staff. So that’s.

Lane Kawaoka [00:35:25]:
I think that’s where people are landlords right now. They know that when a little plumbing repair happens, they’re getting killed with these egregious repair costs, like $800, a thousand dollars, or fix a freaking toilet. It is what it is. But when you start to get guys on salary, you know, you can have these guys knock them out for you for a fraction of the cost it would otherwise. Of course, you have. You have the volume to support that work.

James Kademan [00:35:52]:
Right.

Lane Kawaoka [00:35:53]:
But that’s where you get a lot more economies of scale once you get into the commercial properties above 100 units.

James Kademan [00:35:59]:
All right. Because they’re bouncing from broken thing to broken thing instead of just waiting for the phone to ring.

Lane Kawaoka [00:36:04]:
Yeah, yeah. But we, we tend to go through property managers quite often because at least the way we do it, you know, we’re kind of, you know, it’s kind of like renting a car in a way. Like we, we abuse that thing.

James Kademan [00:36:15]:
Right.

Lane Kawaoka [00:36:15]:
We’re not like, think about what we’re doing.

James Kademan [00:36:17]:
Right.

Lane Kawaoka [00:36:17]:
Like, we’re, we’re going through rent, renovating units or bumping rents where tenants are cycling in and out. We’re not exactly the, the most ideal lazy landlord client for these firms.

James Kademan [00:36:30]:
Right.

Lane Kawaoka [00:36:30]:
So we kind of push them for sure too.

James Kademan [00:36:34]:
Right.

Lane Kawaoka [00:36:34]:
So we tend to go in and out of property managers a bit. It’s kind of interesting occupation too.

James Kademan [00:36:42]:
Right.

Lane Kawaoka [00:36:42]:
Like, it’s hard to hire, which is why we, we use third party.

James Kademan [00:36:46]:
Right?

Lane Kawaoka [00:36:46]:
We hire third party or essentially contractors, if you think about it like that, you’re, you know, you have them be your human resources, which is a huge issue for this particular profile. You know, this profile you need somebody who is good with people can think operationally in their head, often independently by themselves. And you know, it’s a position that I think you’ll find a lot of people straight out of college do who’s got a good head on their shoulders. But once they get a little experience, they get the hell out of there, get a better job. Right. Better pay. So I think that’s what makes, that’s what makes this industry hard. It’s not like McDonald’s where you can just stick anybody in there, flip hamburgers.

Lane Kawaoka [00:37:35]:
Any idiot in there, you, you have to have somebody that’s somewhat smart. But then, you know, the pay dynamics is just difficult there.

James Kademan [00:37:45]:
Right.

Lane Kawaoka [00:37:45]:
So that’s the industry that’s the difficulty for this type of business. Every business has an issue that’s, I think that’s mainly ours.

James Kademan [00:37:53]:
Yeah, that’s one of the biggest challenges that we have with employees. One of the biggest challenges I guess is finding someone that can problem solve on their own that, that is able to think stuff through on a broader scale rather than I just need someone to tell me flip the burger kind of thing like there’s no hamburger you for every single job. So it’s one of those things that’s interesting trying to find employee that can think on their own so that you’re not having to ask or, I’m sorry, not having to answer questions that you feel like the person should know already if they know how to work a light switch kind of thing.

Lane Kawaoka [00:38:32]:
Yeah, exactly. Exactly. And maybe I’m just kind of theorizing here, but you know, with AI, AI kind of differentiates. It kind of polarizes the workforce. Your best people tend to get, you know, they use the benefits of AI can cut staff at the lower end employees and maybe even moderate mediocre employees, they’re, they’re devalued in this type of dynamic. So perhaps that helps us, I guess maybe some of the lower end white collar workers that Maybe get paid 80, $100,000 a year now they come back and work for us. I don’t know.

James Kademan [00:39:11]:
Right.

James Kademan [00:39:12]:
Yeah. It’s tough to say where the chips will end up falling at this Web 3.0, I guess with this. But yeah, it’ll be interesting. It’d be very interesting. I guess I could see AI in a business like yours actually looking at deals and maybe helping you differentiate that.

Lane Kawaoka [00:39:30]:
Way Yeah, I mean I differentiate the AI into different stages in our process.

James Kademan [00:39:36]:
Right.

Lane Kawaoka [00:39:37]:
We definitely use it to sort things and cut down a lot of the labor intensive stuff. So that definitely helps. And that helps cut down on the lower end stuff.

James Kademan [00:39:48]:
Right.

Lane Kawaoka [00:39:48]:
Kind of think about paralegal kind of work there, sorting and, and collating. But I think maybe makes the, the quality of the research better for the decision makers with the experience and then take a look at it later and. But that’s kind of where AI, that the world stops with AI for us. So I think every industry uses a little bit differently. That’s kind of my outlook.

James Kademan [00:40:13]:
Oh, absolutely.

Lane Kawaoka [00:40:14]:
Or how we use it.

James Kademan [00:40:15]:
Absolutely. Tell me about the investors that you have. I should say, let me back up. Tell me about the investments that you have. Because the. What I have seen with things like this, if I understand correctly, somebody will give. I guess I saw on your website you have so many people that I almost want to say donated. That’s not correct.

James Kademan [00:40:33]:
That they invested $50,000 or more. That $50,000 goes towards a project, real estate thing, commercial, real estate, residential, whatever it is. And then is that until it’s sold or when does the person, the investor see a return on that? How does that work with you guys?

Lane Kawaoka [00:40:52]:
So going back to that analogy of the airplane, right, Investors come on coach and they invest their amounts. And this is why predominantly it’s accredited investors, right. $50,000 is not a huge chunk of their net worth. So in theory they shouldn’t need it. And this is kind of why we definitely try and vet people coming in. If you need your $50,000 for whatever reason, we probably don’t want you on the plane.

James Kademan [00:41:21]:
Right.

Lane Kawaoka [00:41:21]:
And thinking metaphorically on the plane, once you get on a plane, there’s no getting out. This is not a ship where we can drop you off at the next port. We can’t open the airplane. We’re in illiquid investments. And that’s not, that’s not what most people are needing. Most people want to emotionally jump from one airplane to the other airplane. You know, that’s just not what we do here. You know that maybe that’s like ups, ground shipping or something like that.

Lane Kawaoka [00:41:49]:
We’re flying high in these investments that you have less liquidity.

James Kademan [00:41:54]:
Right.

Lane Kawaoka [00:41:54]:
You need, you know, we’re baking bread out here. The bread needs to stay in the oven, right. We’re renovating units. Not going to do this like overnight or in a year or two. Sometimes it takes a lot longer than that. So all good things, you know, for those who are patient for sure. But, you know, this is the way investors invest. They have a big chunk of their net worth into alternative investments off of Wall street, into these sound investments that they deem as, you know, that fits their investment criteria.

Lane Kawaoka [00:42:30]:
Now, most people out there, you know, can’t even afford a house to live in. Of course.

James Kademan [00:42:37]:
Right.

Lane Kawaoka [00:42:37]:
But most people, even with some money, should not invest in these types of investments. They should just go after the standard American 60, 40 portfolio.

James Kademan [00:42:50]:
Right.

Lane Kawaoka [00:42:51]:
What we’re talking about is the investing for the wealthy.

James Kademan [00:42:55]:
Yeah, totally understand the, the. It’s interesting because I was putting together a book on money and I have essentially a graph of money that’s liquid and then not liquid as far as investments go. And something like this I can see, like if grandma gets cancer and you need $50,000, this $50,000 that you invested with Lane, that’s not accessible. I don’t. Unless maybe you can. Can people borrow money against it? I don’t know if that’s a thing or not.

Lane Kawaoka [00:43:27]:
I’m sure they can, but. No, no, no, go away. I mean, this is like. It’s kind of one of those things where it’s like. And this is what I, I always. What I realize is like if. If you don’t know anybody in this world, you don’t even know this world exists.

James Kademan [00:43:45]:
Right?

Lane Kawaoka [00:43:45]:
You just have a guy in the cubicle next to you who’s doing his 401k or his pension if he’s old enough. I didn’t have anybody that I knew wasn’t accredited. My parents weren’t wealthy. They never had rental properties. I didn’t know this world existed. But very quietly, there’s the, you know, the wealthy whisper out there. And a lot of people are doing this, even though if it’s like.001% of the population out there, whatever it may be. What I realized that what the wealthy do is essentially three things.

Lane Kawaoka [00:44:13]:
They invest in alternative investments, better deals that are directly with the operator sponsor to cut out the middleman in doing that, like real estate, you get a lot of tax benefits. The depreciation bonus, depreciation out 100%. You pay a lot less taxes. And then they also. Do they also manipulate whole life insurance, infinite banking. You’ve probably heard the term out there. There’s different ways to configure it even under that construct. But this trifecta is essentially what the wealthy do.

Lane Kawaoka [00:44:43]:
It’s very implementable by the average person, but very counterintuitive than what we’re all taught. Like when my parents taught me that’s what I, you know, what I realize. And unless you meet other people to distill down the stories and the best practices, you know, you don’t really, you just kind of revert back to what the, what we’re all taught to do.

James Kademan [00:45:04]:
Right.

Lane Kawaoka [00:45:05]:
Which is put out there by the big brokerage companies. They want you to invest in their garbage.

James Kademan [00:45:10]:
Yeah, right.

James Kademan [00:45:11]:
Trade time for money, take that money and invest in these other companies that they can get rich and then hope.

Lane Kawaoka [00:45:18]:
Invest in their products, the derivatives that they have, high fees, hidden fees, structures and, and oh, and hopefully you like their certified financial planner.

James Kademan [00:45:29]:
Right?

Lane Kawaoka [00:45:30]:
I’m not a certified financial planner. Should have said at the start, I’m not, you know, not paid, I can’t get paid to sell marketable securities apparently. And I don’t know anything about finances.

James Kademan [00:45:39]:
Right.

Lane Kawaoka [00:45:41]:
But one thing I would say is, you know, one thing I’ve, I’ve learned is you never take financial advice from people who are not financially free. Typically those guys are just salesmen.

James Kademan [00:45:49]:
That’s perfect. Perfect. Right there. I was talking with someone about financial planners and they’re like our financial planner is this, that and the other thing. And I told them you gotta be.

Lane Kawaoka [00:46:00]:
A nice guy, right?

James Kademan [00:46:02]:
Yeah. We’ve known him for years. And I was trying to figure out, how am I gonna say this without insulting them? Because I’m like, if your financial planner really knew what they were doing, they wouldn’t be talking to you. At least they wouldn’t be talking to you about finances because they could afford to be anywhere else except for talking to you at your kitchen table about how you’re going to retire in 15 or 20 years or whatever. They don’t know what they’re doing. So that was just me from my perspective, the experience that I’ve had with.

Lane Kawaoka [00:46:31]:
Financial, I mean like, yeah, you know, in my book I’ve got like things for the people. When you get above $10 million net worth. I do think that, you know, the, some of the strategies that they employ with some closed end funds, more advanced strategies, it doesn’t make sense to bring somebody on like that for the portion of your portfolio for very specific purposes. But you know, if you’re talking somebody under $5 million net worth, typically you don’t have access to that type of practitioner.

James Kademan [00:47:03]:
Right?

James Kademan [00:47:04]:
Yes.

Lane Kawaoka [00:47:04]:
So there’s a little bit of like nuances to this.

James Kademan [00:47:08]:
Right.

Lane Kawaoka [00:47:09]:
But yeah, you know, for your average, you know, financial planner, that may be the case. But I’m not, you know, this is where I’ve always been. Like I’ve, I’VE changed my mind through a few times. Obviously. You know, at one time I thought buying little rental properties was like the best thing since sliced bread. You know, as I start I always kind of take and grow my network with people on the next level up, the next level up. And now a lot of those people are like on the family office level, multi generation wealthy. And to seeing what they do makes me feel confident that I’m heading into the right direction.

Lane Kawaoka [00:47:42]:
But there’s, you know, there’s things that I realize that the wealthy do things very differently. Like you know, just talking with our, our colleague the other day and you know, I like houses. Like this is more of a fun one. You know, I don’t, I mean maybe not good financial advice here but like the wealthy people that with 20, $50 million plus net worth, they don’t go and buy big ass mansions, you know, those are the only things that the silly athletes do. They buy $20 million house. Typically what they do is they buy, you know, very modest $5 million homes, you know, and a bunch of them so that their hierarchy, their kids can use it. And it’s diversified than to consolidate into these monstrosities of houses. And I was like, it makes sense.

Lane Kawaoka [00:48:33]:
But I would have never known.

James Kademan [00:48:34]:
Right.

Lane Kawaoka [00:48:35]:
Things like that.

James Kademan [00:48:36]:
Yeah. I remember visiting Vail with a buddy of mine, his sister lives out there. And we’re looking at these houses that are up the mountain. The houses themselves are relatively small, but you also got to figure in order for them to be built, somebody use dynamite to get into the mountain. And we’re with someone that was from there and they’re like these aren’t where people live. These are seventh houses for people. Like this is just, they’re going skiing in Vail. This is where they stay.

James Kademan [00:49:04]:
They own this house. They also have whatever five or ten other houses all across the world. Oh, I didn’t know that was the thing.

Lane Kawaoka [00:49:13]:
Yeah, the only, the only rich people I knew were, was like the athletes and you know, I saw Michael Jordan selling his $25 million house. You know, that’s the only like unless. And that’s what I’m talking about.

James Kademan [00:49:24]:
Right.

Lane Kawaoka [00:49:24]:
Like you see the loud money people that you know, obviously didn’t grow with it. But then the wealthy people are the people. There’s whispering.

James Kademan [00:49:33]:
Right.

Lane Kawaoka [00:49:34]:
Like money talks but wealth whispers is the same.

James Kademan [00:49:36]:
Right.

Lane Kawaoka [00:49:37]:
But very quietly, if you know what you’re looking for, you can see the signs of what wealthy people in there are doing.

James Kademan [00:49:43]:
I love.

Lane Kawaoka [00:49:43]:
That’s what I put in, in the book. The wealth Elevator.

James Kademan [00:49:46]:
Right.

Lane Kawaoka [00:49:47]:
Like kind of this concept of like what is it that the wealthy doing in this construct of the different levels of it. And that’s what I would, I would say, you know, take a list, take a listen to the book or read the book and you know, that’s the first step is figuring out what floor of the wealth elevator you’re at now and understanding what’s the next level and the next level above that to kind of, you know, see the path forward.

James Kademan [00:50:08]:
I love it. Tell me more about your book. Like what the inspiration.

Lane Kawaoka [00:50:15]:
It’s not a book written for the average guy.

James Kademan [00:50:17]:
Okay.

Lane Kawaoka [00:50:18]:
That’s for sure.

James Kademan [00:50:18]:
All right.

Lane Kawaoka [00:50:19]:
I always thought that there was way too many books for that. Dave Ramsey, Susie Orman, even the rich dad poor dad book, you know, it’s kind of. That one is super vague and actionless if you ask me.

James Kademan [00:50:30]:
Right. Someone use other people’s money.

James Kademan [00:50:32]:
Yeah.

James Kademan [00:50:33]:
Where is it?

Lane Kawaoka [00:50:35]:
Yeah, I mean there. Don’t get me wrong. I think the message that is said of 1,000 different ways is by assets.

James Kademan [00:50:42]:
Right.

Lane Kawaoka [00:50:42]:
Especially in an inflationary environment. Definitely thinks he goes a little bit off the deep end with all like the. I’m very non political. I think it’s a waste of time.

James Kademan [00:50:53]:
Right.

Lane Kawaoka [00:50:53]:
I like to see where the puck is going and I like, I skate, skate the puck quietly and to me you understand that what floor of the wealth elevator you’re at. If you’re under a million dollars net worth, buy little rental properties, build your net worth to get up to the plate. But just know that there is a pivot point once you become an accredited investor. And then there’s another pivot point that I think most of people get when they get to four or five million dollars net worth. @ that point it’s very critical that you make a switch to, you know, your time is more valuable than money at that point. You know, you could probably could change your portfolio completely to just put it in t bills and life insurance and you know, very low risk, low return investments and be totally fine. Whether you want to push it to eight figures, you know, wealth elevator floor and higher, that’s up to you. But you have that choice.

Lane Kawaoka [00:51:48]:
You know, great book out there, Bill Perkins, Die with Zero. I had him on my podcast. But that, that’s his whole concept is, you know, for some people out there, above a few million dollars net worth, time is more value than money. It’s not the pursuit of money anymore, but it’s the pursuit of trading in the money for the experiences is the main thing in there. But you Know, I think a lot of my curriculum is not really there quite yet. I think it touches there but like think our sweet spot is for the guys who make at least six figures at their day jobs or their businesses. And you know, you got to get on this elevator. Like you got to get on this, this, this moving platform, buying assets, ideally real estate or private equity these days because the puck keeps moving.

James Kademan [00:52:36]:
Right.

Lane Kawaoka [00:52:37]:
Like I think real estate was really great a decade ago, but the environment is changing, right. We’re not in. The Fed’s not going to lower rates under 3%. Here’s another tip. Everybody should have the Chanthom financial curve and the CME Fed watch tool bookmarked. Don’t listen to any of those garbage on YouTube on interest rates. Just monitor those twos because those are like what the pros monitor. Those are the interest rate cap providers that operators like us will, will buy when we buy loans.

Lane Kawaoka [00:53:09]:
So they’ve got skin in the game. You know, they’re like the Vegas odds people. But they’re predicting that the interest rates aren’t going to be coming under 3%. We’re talking Fed rates here, right? Not talking 10 year treasury or mortgage rates, but the Fed rate is what impacts the rest of it. They’re not predicting it to go anywhere near where it was at 0%.

James Kademan [00:53:30]:
No, no. In my mind that was an anomaly. I don’t feel like we’d ever see that again. Yeah, I mean that was just a weird, weird time. So a lot of things, a lot of things were different that you’re not like, oh, it was like that in 2020, let’s do that again. I don’t see it happening.

Lane Kawaoka [00:53:51]:
Yeah, no, real estate, Real estate is a, is a business that is very, it’s an archaic business. As I said earlier, it’s a very repeatable business. It’s probably going to be around forever. There’s good demand dynamics, as I said, with workforce housing especially. But there are like, it is dependent on interest rates and the cost of money because there is a big component to leveraging, you know, using bank loans when you’re doing it. So you know, that says that, that, that kind of puts into the overall business strategy of it. But the asset, I think the assets are sound.

James Kademan [00:54:29]:
Well, people will always need a place to live. So it’s one of those like, that’s a very, from my point of view, it’s a very safe, broad vertical to be in rather than being, I don’t know, like it. There’s probably somebody that invested in typewriters 30 years ago and they’re not doing so hot thinking, hey, people are going to have to write letters forever like that. Technology changes where houses. We got four walls, a roof and a floor. That’s, that’s kind of where we’re at from a technology point of view of where we can live.

Lane Kawaoka [00:55:03]:
So I mean, I guess warning sign for esoteric advice here. But like whenever you invest there’s always the, you know, the business need for the investment, which I think what you’re talking about there. But there’s always a macroeconomic climate that surrounds it.

James Kademan [00:55:19]:
Right.

Lane Kawaoka [00:55:20]:
That you don’t have control over. So there’s, there’s, you know, in this true, you know, high level example, there’s two big factors. There’s all, there’s obviously probably other few factors that we’re not not thinking of or unaware of. But in every investment there is unknowns and there’s risks.

James Kademan [00:55:38]:
Right.

Lane Kawaoka [00:55:38]:
But you know, I think people need to ask themselves the question, if I just keep it the status quo world will I be? And for some of you folks listening out there, you may want to just do 100% in your business and gamble on yourself. That may be your highest and you know, your best risk adjusted return. I don’t know.

James Kademan [00:55:56]:
Right.

James Kademan [00:55:57]:
But no say I always like to have diversity. I was told I feel like the smartest people that I know financially do not have all their eggs in one basket.

James Kademan [00:56:11]:
Yeah.

James Kademan [00:56:12]:
So yeah, they just spread them out. Whether that’s, I mean, well, that kinds of different ways.

Lane Kawaoka [00:56:17]:
That’s a self selecting bias.

James Kademan [00:56:19]:
Totally.

James Kademan [00:56:19]:
Right.

Lane Kawaoka [00:56:20]:
The people, the people, you know, who have already made it, which is why they’re on the other side of the downhill slope.

James Kademan [00:56:26]:
Mm.

Lane Kawaoka [00:56:27]:
And at that point, yeah, I would agree you diversify. But when you’re trying to ascend the mountain, trying to get your first million dollars or maybe even first $10 million net worth, I think that may be a different story.

James Kademan [00:56:40]:
Oh, it’s a good point.

Lane Kawaoka [00:56:41]:
A cause for concentration. I think. What I forget who’s the. I gotta get going here soon. I got another meeting. But I think it was Warren Buffett who said, or somebody said, like diversification is for idiots. I mean you can probably have AI figure out who said that one. But again, that’s the whole point of my book.

James Kademan [00:56:59]:
Right.

Lane Kawaoka [00:56:59]:
Is like there’s different checkpoints to the journey and different things apply to the journey. And this is what drives me crazy about social media and YouTube shorts and TikTok. There’s a lot of these random ass like financial dips out there. Some good, some bad. But Perhaps they’re all good at different stages of the journey. Right. There’s a lot of different, you know, medical drugs out there. You know, if you don’t, you don’t have any ailments, they’re probably the worst drugs to have try at the time.

Lane Kawaoka [00:57:25]:
Right. It all depends on your situation and where and where you are in this journey, this paradigm.

James Kademan [00:57:32]:
Very interesting.

Lane Kawaoka [00:57:33]:
The idea behind the book is, you know, really trying to define these different stages of through these floors that.

James Kademan [00:57:41]:
I love that. That’s an interesting point. Right. Just because it’s good advice. It may be good for advice for someone, but not necessarily for everyone.

James Kademan [00:57:50]:
Yeah.

James Kademan [00:57:50]:
So I like depending upon what stage you’re at. That’s interesting. I love it. Lane, where can people find you if.

Lane Kawaoka [00:57:56]:
They listen to podcasts? I got my podcasts at the Wealth Elevator. The. If you’re an accredited investor, reach out lane at the Wealth Elevator dot com. And if you want the quick foray into our world, check out the book on Amazon, the Wealth Elevator. If people pick up a copy, they send the receipt over to email team. The wealth elevator.com will hook them up with the free PDF version and then the audiobook version as a thank. Thank you. But yeah, thanks for having me, James.

James Kademan [00:58:27]:
Yeah, thanks for being on the show. Just really quick. Who did the audiobook? Who recorded it?

Lane Kawaoka [00:58:34]:
Oh, me, of course.

James Kademan [00:58:35]:
Oh, nice.

Lane Kawaoka [00:58:35]:
All my little quirks and side notes and comments that came half a year after writing the thing.

James Kademan [00:58:43]:
I love listening to audiobooks and I love them way more when it’s the author that’s reading versus some person.

Lane Kawaoka [00:58:50]:
Yeah.

James Kademan [00:58:51]:
A lot of.

Lane Kawaoka [00:58:51]:
I think now, like even on audible, there’s a function where you can have AI read it.

James Kademan [00:58:56]:
Yeah.

Lane Kawaoka [00:58:56]:
I guess with 11, 11 lapses, like the AI tool that’s on the forefront of that. It’s not bad, right? There’s.

James Kademan [00:59:02]:
Yeah, yeah.

Lane Kawaoka [00:59:03]:
Nothing. I mean, that’s why I try to add in like little quirk side sarcastic comments here.

James Kademan [00:59:10]:
I love it. I love it. I do the same thing with my books. I totally understand. Yeah, it’s cool.

Lane Kawaoka [00:59:15]:
It keeps you, keeps you from going to sleep.

James Kademan [00:59:17]:
Right?

Lane Kawaoka [00:59:17]:
Reading your own stuff.

James Kademan [00:59:19]:
Yeah. You know, it’s interesting. I picked up my book. I don’t know, I was. I got a bunch of copies to give to people and I was read reading it and I was like, yeah, this is a pretty good book. So it’s one of those like pat yourself on the back kind of thing because I know there have been some books, I’m sure business books that you’ve read where you’re just like, I don’t understand how you sold 100,000 copies of this thing. This is kind of. It’s either garbage or it could be compacted into a paragraph.

Lane Kawaoka [00:59:45]:
Yeah.

James Kademan [00:59:45]:
Like this is an essay. This is not a book spread out.

James Kademan [00:59:48]:
Right.

Lane Kawaoka [00:59:48]:
Or blog article. It’s a blog article.

James Kademan [00:59:51]:
Yeah. It’s got filler. It’s like sausage. So, Elaine, I appreciate you being on the show.

Lane Kawaoka [00:59:57]:
Yeah, thanks for having me, James.

James Kademan [01:00:00]:
Thanks. This has been Authentic Business Adventures, the business program that brings you the struggle stories and triumphant successes of business owners across the land. My name is James Kademan and Authentic Business Adventures is brought to you by Calls On Call, offering call answering and receptionist services for service businesses across the country. On the web at https://callsoncall.com and of course, the Bold Business book, a book for the entrepreneur and all of us available wherever fine books are sold. If you’re listening or watching this on the web, if you could do us a huge favor, give it a big old thumbs up. Subscribe and of course, share with your entrepreneurial friends, especially those friends that may need to know, what do we got here? What level of the elevator they’re on in their finances, where to invest as far as their business goes into themselves. And someone’s just curious about real estate investing. Lane at the Wealth Elevator has a lot of information.

James Kademan [01:00:48]:
We’d like to thank your wonderful listeners as well as a guest. Past episodes can be found morning, noon and night at the podcast link found at https://drawincustomers.com Thank you for joining us. We will see you next week. I want you to stay awesome. And if you do nothing else, enjoy your business.