Latest / From Stuck to Scaled: Growth Strategies for SMBs / How Busy Entrepreneurs Can Build Passive Wealth Without Chasing Wall Street
Transcript
- speaker-0: Welcome to From Stuck to Scaled Growth Strategies for Small and Midsized Businesses. Your guide to navigating growth, transformation, and success in today's ever-changing business landscape. Each week, we'll dive into proven strategies, real-world case studies, and actionable insights designed to help small and mid-sized business owners scale smart, lead stronger, and grow faster. Let's get you unstuck and on the path to sustainable, scalable success. Now your host, Julio Gonzalez. Welcome back to From Stuck to Scale. Today we're exploring a fascinating journey of financial freedom. Our guest, Lane Kawaoka, made a bold transition from a corporate engineering career to building a real estate portfolio of over $2.1 billion. He's learned firsthand the pitfalls of traditional wealth-building paths and now shares his insights on creating passive income and long-term resilience through real estate and alternative investments. If you're a business owner looking to enhance your financial strategy beyond your current ventures, you won't want to miss this enlightening conversation that promises to reshape your perspective on wealth and legacy. Let's welcome Lane to the show. Lane, it's great to have you on from Select to Scale. speaker-1: Hey, thanks for having me, hulayo aloha everybody. speaker-0: Aloha. So, you know, this topic stuck struck a nerve with me because so many business owners focus on just their business when there's so many opportunities to leverage multiple streams of income. And real estate is an excellent stream. So how did you make this transition ⁓ from the corporate world? speaker-1: Yeah, I mean it it it took a while, but I bought a rental property right out of college ⁓ and then bought another ⁓ a few years later, then you know, maybe eight, nine years in. By 2015, I had eleven rental properties and then sold all those and then transferred into buying into syndications and private placements as a passive investor into these larger deals. But ⁓ you know, I talk a lot about this in my book, The Wealth Elevator. We'll be doing a deep dive into this, but You know, I would say most of the people in my community kind of align with a lot of you folks. ⁓ a lot of people have successfully sold their businesses for five, ten mil and now have switched. ⁓ they don't have a job anymore or running their own business. And they've kind of switched to a capital allocator mode, right? Because they want to do a little bit better than just sticking that 10 million dollars into T bills and you know, get what do you get from that 300, 400 grand per year these days. And pay but they pay a lot of taxes. So they want to do it from a tax efficient standpoint too. speaker-0: Yes, certainly a lot of ⁓ opportunities there. And, you know, when I first got into real estate, ⁓ it was, you know, let me buy a property kind of thing. And somebody said, you know, when you buy your first one, your second one just comes right along. And I said, ⁓ it's never gonna happen. And in under a year, my second one came along and then the third and the fourth. so you know, how can business owners get started? Right. So they can recapitalize their business. There's There's a number of different options. How do you ⁓ speak to business owners about getting started? speaker-1: Yeah. So I guess the first thing for business owners, assuming, you know, you make over a million dollars in revenue, buying little rental properties is gonna be a complete waste of time and high liability. ⁓ i in my book, The Wealth Elevator, I have ⁓ different floors of the wealth building journey. I mean, when I was in my twenties and was under a million dollars net worth, buying little rental properties until buying eleven was what I did to build my net worth. At some point the game changes. ⁓ in 2016, I personally kind of made that transition myself and started to interact with a lot of other accredited investors who, yeah, they had the pedigree of owning a whole bunch of rental properties, but they were transitioning to selling those off for bigger deals, ⁓ being an LP in bigger deals where they weren't the operating partner. ⁓ and this allowed them to focus as On what they brought them the most hourly rate. ⁓ for you guys, obviously that's your businesses. Some people it might be a doctor or dentist, right? You know, it it it obviously your hourly rate is gonna be a lot higher than you playing landlord on your laptop with your handful of rental properties. So, you know, I think this is ⁓ you know, that's a that's the first thing right I'm big on, right? And I've realized this there's a whole bunch of financial advice out there, but it mainly depends on where you're at, like what your net worth is, what you categorate. is essentially. And just speaking to very roughly and and and kind of caveating this whole podcast. I'm not giving any financial advice here. I'm not a financial planner. Can't sell you marketable securities apparently. But you know, this is all my my experience share and what I've kind of done. ⁓ but yeah it's just if I'm speaking to the right audience out there of people with successful businesses, you know, the answers lie beyond that beginning stages of People flipping houses, wholesaling houses and getting a whole bunch of little rental properties, which I know you've probably been, it sounds like you've you've gone through them, been there, done that, right? speaker-0: Been there, done that, yeah. ⁓ yeah, and and luckily in my case, I have a property manager, so I don't have to worry about that. but I I've been eyeing that transition point to go from you know individual properties to something at a larger scale. So this ⁓ this very much applies to me. so what mistakes do you see ⁓ you know, busy professionals, business owners when trying to to start down the path of building passive income? speaker-1: Yeah, so I think one of the biggest things that I all home and I had when I first started buying rental properties was the returns when you're doing it on your own is a lot higher, right? I mean, you guys are business owners, you guys understand this premise, right? When you cut out the middleman, there's a whole bunch of extra returns there or better profits. No different in the investment world. ⁓ I mean, it's probably one of the biggest in investment complexes out there where Most people when they invest, they invest through the secondary market, right? Or what I call sloppy seconds. So this is what's always frustrated me, right? My parents, you know, they worked really hard, they invested in the 401k, and they didn't have very much to show for. I mean, they had million plus, I'm sure, but you know, not much to show for 40 years later. But very early on, when I had my own rental property and I was the direct owner, cut out all the middlemen, I was making much, much higher than my 401k. So this is the same premise. When you invest directly with the deal operator, syndicator, general partner, managing partner, whatever you want to call it, it's all kind of the same thing. And you're cutting out all these layers of middlemen that, you know, how else does Wall Street have all these big buildings out there? And essentially you're kind of going, you know, maybe ⁓ people understand that the concept of wholesale, right? You're kind of going directly to the source, you're you're better able to capture most of those returns. ⁓ of course, you know, this is not for everybody. You'd have to do your due diligence and get around the right people, which is, you know, kind of why my company, we do a lot of events. We are big on community, right? Getting around the right people over credit investors to kind of get educated and vet the right people on the right deals and understand how to vet the right deals. But ⁓ you know, I've I've kind of realized that very quietly there's a lot of wealthy individuals out there, especially those beyond the five, 10 million dollar net worth threshold. that now they have the personal database and the network to be able to vet other people through their network. speaker-0: And is there you know a a target minimum ⁓ for a business owner to get started? speaker-1: Yeah, I mean, roughly speaking, you know, fifty to a hundred thousand dollar minimums is what you gotta be thinking to get into these types of deals. ⁓ I mean, some some operators out there on the institutional side, you know, the big guys, they they want they want to see check sizes from their investors bigger than a million dollars. You know, that's probably that's probably a little bit too rich even for us here listening, right? I mean, it certainly doesn't I mean, one of my rules is you never wanna have More than 5% of your net worth into any one thing. That's why I don't like the idea of the whole 1031 exchange because you're taking one property, getting a bigger one, getting a bigger one, bigger, getting a bigger one. And what ends up happening and people have a huge concentration of their net worth into this one real estate asset, maybe even 20%. I think that's just too much. ⁓ And this is where now, you know, this allows you to get exposure directly into a lot of these types of individual deals. And it also allows you to transcend outside of real estate. You know, we've done some private funds investing in business owners, buying in online businesses, for example, in the B2P space. Right. You can use this format to invest in any vertical or asset class that you like directly with the operator who's doing the business. so yeah, like at the small end, you know, you see these crowdfunding websites out there and these smaller operators. Like I tell a lot of my folks. Be wary of people who've done less than a billion dollars of deals, you know, in the real estate apartment world, that probably equates to a few dozen deals. you know, maybe try and stay away from that. But if you're looking for, you know, good operators and are in the middle market, done at least a billion dollars of past deals, you know, your typically your minimums you're looking at are at least fifty to a hundred thousand dollars. speaker-0: And you mentioned 401k. why other than all of the management fees and and everything that goes in there, ⁓ why are those not the best for high earners versus something more direct like what we're talking about? speaker-1: Yeah, I mean I'll just look look at the returns, right? Quite frankly. ⁓ you know, and I'll just give another example here. So one thing that a lot of high income earners will do, again, I'm not a CPA, but if people need a ⁓ referral to a good CPA who actually recommends these types of things, ⁓ oil and gas investments, if people have never heard, great for people who make higher income, you know, and I would define high income as above four hundred thousand dollars per year. So I'm sure you know lot of people have are working with their CPA to create a C Corp, S Corp, and then you have all your d business deductions. But you know, hopefully you got some profits flowing to you personally, right? And that's what we're kind of talking about here. So what a lot of people will do is when they get to those higher tax bracket brackets, in particular the 24, 32% range above half a million, you know, they may take advantage of different real estate opportunities for the tax benefits, deductions there. ⁓ but one big thing, ⁓ One gas deals, right? The government wants to incentivize domestic oil production. Why? Because we don't want to rely on the Saudis out there. And what they'll do is they'll provide some tax benefits that can knock out your ordinary income. Now I say that statement. I'm not a CPA, not giving anybody tax advice. Again, if you need a referral, reach out. But you know, this is a situation where you can invest in ⁓ these types of oil product. production projects and not only get the oil production revenue, but you can also get the tax benefits to help you out in that very year. ⁓ you know, people, but people are like, ⁓ yeah, it makes sense. Invest in oil. You know, you can ⁓ you can invest in Chevron, Exxon, and typically we're in the same projects as those big guys, but you're investing in the stock of their company. So you don't get any of those tax event benefits. You need to actually invest in the actual project this well, right? ⁓ you know, of course you want to be in a fund with, you know, many, many dozens and dozens, or maybe not hundreds of wells to you get diversification. But unless you're actually invested in the actual project and you have exposure to the project, you know, you don't get those tax benefits. So that's an example of you have to invest directly there ⁓ to get those tax benefits. Whereas yeah, you could invest in the stock and be investing in the company, but you won't won't get those tax benefits. ⁓ And another example is like REITs real estate investment trust. So like people are like, I want to invest in real estate. I'm like, dude, real estate investment trusts are the furthest thing. Yes, it invests in the same things we'll probably invest in, but you've got so many middlemen in there and it just like gets so diluted, right? Where, you know, this is where you're able to now get access directly. Again, the primary market versus secondary market concept. speaker-0: And how do you speak to the risk averse that would say, I'd rather, you know, my money in a mutual fund? you know, again, lots of fees, but ⁓ how do you how do you help them tolerate risk a little bit more? speaker-1: Yeah, I I would say, I mean, people are business owners here, so they're typically a lot more ⁓ open minded to risk tolerances. What I would say is, you know, book a call, get to know us, hang out with us in our Hawaii, or we do other retreats out there, meet other people on the team and other investors, and you'll start to realize that this is a very common occurrence in the world that where people are investing in what's called alternative investments ⁓ off of Wall Street. And yes, there are charlatans out there and there are people that are, you know, not the best operators out there. ⁓ but if you're able to come at it from like, you know, essentially the way we operate is as a multifamily office. So we take in a lot of deals, some a lot of operators. We've been operators ourselves, you know, operated over a billion dollars of deals. So we know what we're looking for, and we're able to use our network to find the best operators out there to work with, and then obviously vet those individual deals. Right. And this is what I kind of teach and advocate other people do is go out and be your own advocate, find your own deal flow, and choose to invest in it. And now it's not going to take overnight, but this is the creation of your own family office. This is the next generation. And then hopefully the next generation if your kids, kids don't blow it at that point. But you know, this is the concept of at this point, you've been trading time for money, you have a successful business, and you're in this capital allocation or capital accumulation mode. And you're transferring into capital allocation. You need to have your money work harder for you. And to me, once you've crested over in the book, I call this the third floor of the wealth elevator, four or five million dollars net worth. You know, I know I know some of the business owners out there. I mean, I'm an EO and vestige. We like to have fun and we know how to spend our money, right? ⁓ so maybe you might bump that up to five, ten million dollars net worth is what you you really need, but Once you get to this critical mass number, you're kind of at this point where the money could just, you ⁓ know, 10% ⁓ on 10 millions, a million dollars a year. Now, maybe for some people that may not be enough, but for a lot of people that is, right? And ⁓ you know, just using those numbers, right? I mean, in reality, you probably should use like a four percent to be conservative rule, but you know. The other idea is like metaphorically, it's kind of like a a spaceship, right, la launching out to space. You get enough speed, you break the atmosphere, you go zero gravity. I mean, that's what financial independence leading off at the top, right, of the podcast. That's we're all searching for. speaker-0: So walk us through the wealth elevator. speaker-1: Yeah, so we we broke things up into different floors and I kind of just told my own journey going through these things ⁓ over the last couple of decades myself. I mean, I was lucky I I was never homeless or anything like that. I came I went to good schools, I went to college, got a master's, but ⁓ so I was never in the what's called the basement, right? ⁓ basement is, you know, I think predicated for most people out there who are in credit card debt, don't make any money. This is what they kind of push the house flippers and the wholes real estate wholesalers into. And to me, that's just a lot of wasted time and high liability. Most people here will kind of resonate where I started was the first floor of the wealth elevator. You're not to million dollars net worth. So what do you do? You buy little rental properties. Now I think the most of the listeners here are probably on that second floor of the wealth elevator, where you know, in finding good deals, getting to know the operators personally. Right. Get to know your fund managers personally and invest more directly with the sponsors to cut out all these middlemen. You may you're probably not gonna do this with your entire portfolio, right? I mean, I do I kind of do. Right. I don't really have stocks and bonds, but you know, again, I'm not giving any financial advice here. Everybody can do their own thing. But what I would say surround yourself with other like minded accredited investors and try to understand how the wealthy have good exposure to alternative investments, not only for the better returns, but also ⁓ the tax benefits, right? Because, you know, take that $10 million. ⁓ you know, if you're making, you're putting in T bills at what, 3%, that's $300,000 a year, you got to pay taxes on that. But what if you put it in life insurance, a whole life insurance where it's tax-free at 5%? You know, that's that's almost like six, seven percent in reality, right? ⁓ so It's also not not how much you make, it's also how much you save or net after taxes too. so that's the third floor of the wealth elevator. And then there once you are in this world for a few years, you get a little more confident. You now now becomes fun. You start investing in other people's businesses, you know, some of your colleagues or your, you know, people you you built businesses alongside with, you may want to invest in their projects. You may want to start up again, right? I mean, this is you know, you This is going beyond real estate. ⁓ you know, you're using the power of capital ⁓ creation to, you know, magnify. You know, money magnifies things, right? And good business is is what you try to find. ⁓ whether that's a real estate buying a 300 unit apartment complex and just being one little investor in there, or you're, you know, you you your buddies expanding. Three more franchises, they have a very repeatable model, and you're just giving them the capital to make the acquisition to buy out the the other person or buy out the other person's list. You know, the the the possibilities are endless. And, you know, I just want to put that out there that this is kind of where it gets the the wheels turning, especially for entrepreneurs who've been successful to a certain point, but there's a game after the game, and this is where you get to the fourth floor of the wealth elevator and beyond as you're creating your family office. ⁓ hopefully you're bringing your kids into this. ⁓ I know I said, you know, rental properties are a real pain and you probably should skip over, but I mean, I have young kids and I've always kind of contemplated myself and you know, maybe I should buy my rental property so they learn a lot of those things that you were laughing about in in initially, you know, those hardships because it is somewhat valuable, you know, valuable experience. speaker-0: It it is 'cause, you know, if they've not gone through it, if it if it's just, you know, money money magically happening, ⁓ you know, they won't appreciate it and they won't understand how it works. So that that is a a very valuable exercise for them. speaker-1: Yeah. I'll give another example. ⁓ you know, most of my clients, they're business owners or entrepreneur minded, but some are like, you know, doctors, dentists, which are about the opposite you can be get in personality. and, you know, like one thing that we always get to is like, hey, you know, these guys, they they might have paid off their entire house, right, by age forty. And we kind of realize like, well, you know, you're making like one percent or two percent there. ⁓ know, why not just put in a T bill and take a lot less a lot more return for a lot less risk ⁓ for starters. But, you know, then we're like, okay, well, okay, I get it. Now I gotta redeploy the money, but I gotta take a HELOC, right? And then I gotta, you know, especially today, like seven percent, right? Or, you know, people have lines of credit, right? Same concept. But, you know, this is kind of where like in my world, like, you know, we try to kind of hold people by the hand and you know, talk to them. Yeah. it won't always go well. Like these investments are not guaranteed. And there's gonna be a feeling of uncomfortableness. And we all know that diagram, right? What happens outside your your comfort zone and uncertainty. You know, unfortunately our kids will never have to feel that stuff, right? Like they're never gonna have to sweat at the balls taking lines of credit against something they work their ass off. You know, ⁓ I don't know. Good and bad things about that, right? speaker-0: Yeah. So you're listening to from Stuck to Scale, then we're speaking with Lane Kawaoka on finding alternative revenue streams for business owners who can ⁓ maybe recapitalize their business or ⁓ tap on other forms of ⁓ savings to reapply to real estate ⁓ and long term other types of investments. ⁓ so Lane, what was your tipping point? You know, you you said you think your first property was twenty seven. What drove you to that and ⁓ and then going big from there? speaker-1: Yeah. So in twenty fifteen I had about eleven rental properties and ⁓ I still working my my day job, my engineering job at the time. And I was bringing in maybe a few hundred dollars per property, which is not much, but it was great for me at the time, right? I mean, I was on the path right to get out of that day job. And but you know, with eleven rental properties, I had maybe an eviction or two every single year, some kind of big attachment that happened every quarter. I too had professional property management. I don't know how you do it without it to do all your dirty work and your nonsense work so I could focus on being an engineer is my day job. But I quickly realized like, you know, this just wasn't scalable, right? To most of my clients want ten to fifteen thousand dollars of passive income a month. And to do that with that old model of rental properties, I would have needed like thirty or forty properties. So magnify the exception rate by like three or four. And I would just be going bonkers with an eviction. Like pretty much every other month or pretty much every month, right? And so so then I got it, you know, got involved in these large syndications of private placements. And I started to realize like, wow, there's a lot of economies of scale when you're buying, you know, these larger apartments. So you as a passive investor are getting involved with that. The first one being when you get above 50, 60 units, now you're able to have a full-time property manager in there. What a lot of people don't realize though the property managers in the residential world are very unsophisticated. They're glorify, or actually they're they're they're just real estate agents who can't sell houses, or maybe they're not as pretty. I don't know. But the like but it's not their fault, right? Like because they it, they they're trying to manage a hundred homes and a hundred unsophisticated landlords. And most of their time is just spent driving to all these damn things all over town. Whereas, like, that's the big advantage. You have one property manager dealing with all the tents who come into one place and One of the big parts of rental property ownership in terms of multifamily is just the leasing and and sales process. So the tenant comes in, you size them up, you you show them the units and you you try and sell them, right? I mean as business owners, it's blocking and tackling right here. So that makes that part very ⁓ scalable, right? The next big, big thing is when you get above a hundred unit apartment complex, now you can it's enough scale to hire your own handyman and You know, so if you're a landlord, you guys know how you get killed and abused by all these little plumbing fixes for like five hundred thousand dollars unclog up toilet. Why? Because for the plumber to be profitable, they have to charge their time driving to the damn place. And when you have, you know, that much scale, now we just knock it out on the salary, right? Before the guys for smoke break. And then some you know, we get these guys HVAC certified so now they can take care of those expanded scope items to eliminate even more third party repairs. So you're starting to see the economy as a scale of why you want to be into these larger assets. ⁓ and and yeah, that was for me like you know, starting to see that face to face. And you know, like for example, ⁓ another big thing in 2021, I think, you know, we had apartments in Houston where and I think we had like at least a thousand or two thousand units. But if people recall, that was the ice storm time in Texas. And everybody and their mother around a property owners, landlords are looking for Mar and Luigi because all the pipes burst, right? Because nobody knows what the heck happens when things get cold out there in Texas. But ⁓ you know, we have these guys on staff. So Mar and Luigi work for us. and you know, we didn't really have to rely on third party to make those repairs. So, you know, I think that's that's kind of the the benefits to ⁓ apartments or commercial properties in general. speaker-0: So what should someone look for when they begin ⁓ evaluating a passive real estate investment or syndication? speaker-1: Yeah, I mean, you wanna look for market, you wanna look for business plan. I mean, we typically look for, I mean, the the long term investment thesis that I personally like, again, people can argue with me if they want, but I believe the rich are getting richer and the poor are getting poorer. And the population, especially in this lower middle class, is expanding. You can call it immigration or the people who are middle class that may or may not work for you guys, they gotta live in apartments. Like nine hundred dollars to fourteen hundred dollars a month. So the way I look at it, you know, that's the demand. And I think demand is going up. ⁓ where, you know, we were talking about this in my last ⁓ CEO group, you know, like population in general in America isn't as bullish as it once was. So you can't just rely on the old two percent. ⁓ but I do believe and why I put my money where my mouth is. in this lower middle class sector, this workforce housing, there is a a growing demand in that. ⁓ right now, you know, you know, in the in the like one to three year time horizon, there's always spikes and dips in terms of supply and demand. But I always tell people like, take all that stuff out, like look what you're gonna invest in 10 years plus or what's gonna be around on that longer time horizon. Right. Like like I can't estimate who's gonna win open AI, anthropic So I could care less, right? Like somebody's gonna win there, but I don't wanna bet on that. So I try and find things where there's a a fundamental demand, scarcity. And I think ⁓ you know, this type of investments work. You know, we also invest in things outside of real estate, you know, like infrastructure. ⁓ obviously the oil and gas play plays along with energy needs, with the AI growing demand in that. So You know, as investors, you're always trying to see where the puck is going, where's the demand going, ⁓ but try and trying to play those waves. And then the next thing, so you're trying to figure out which where the haystacks, which haystack do you want to invest in? And then once you figure out, yeah, I want to invest in this haystack, multifamily apartments, for example, ⁓ you you dive into the haystack and you try and figure out which needle you want to invest in. And of course you diversify into many, many needles, right? But you know, that's You know, then you get into trying to analyze the D. And this is where we have a lot of curriculum on my website, the wealth elevator slash syndication, where people can, you know, learn for free, like how to do due the due diligence on an apartment complex. ⁓ some of the things that move the needle on the spreadsheet in particular, the reversion cap rate on a deal, what are they assuming for full occupancy? ⁓ you know, how much the rent increases are every single year. These are some of the big fudge factors that operators will do to kind of Promote the deal, make it look better than it really is. So as an investor, you need to get educated, surround yourself with a community, and that's like we kind of provide. speaker-0: And without getting into details, do you look at specific cities ⁓ experiencing trends? You mentioned, you know, like worker housing. ⁓ you know, how do you pick some of these investments? speaker-1: Yeah, I mean it changes like, you know, every few years, right? But I'll just give you a snapshot right now. Like I certainly wouldn't want to invest in Phoenix or Austin right now. ⁓ they're experiencing negative rent growth. It should change in next few years, though I think long term I'm pretty bullish. But I think some things I would stay away from are markets that are very small. So like we rank markets from we call them primary markets, secondary, and tertiary. So primary markets are your big cities, your New York's, your Los Angeles's your Seattle, ⁓ Miami might be one. I know you're around there. But you know, these are just I I think they're a little overpriced for what you're getting in terms of rent coming back at the end of the day. ⁓ you know, if and people can do this at home with their Zillow. If you take the monthly rents that you're getting from a property and you divide it by the purchase price, you're looking for something around one percent or higher. You know, like y y you take a place in ⁓ Los Angeles that's half a million dollars that rents for two fifty, that's half a percent. No banal, that's not gonna work. ⁓ so that leads us to like these more secondary markets or less sexy markets. So like a Houston or like ⁓ you know, like a Dallas, places like that, or like Jacksonville, you know, for example. ⁓ that's kind of I wanna be in a more robust type of market. I the tertiary markets, like I've gotten lucky with that. Like I invested in Huntsville, Alabama, ⁓ before when the population was less than Birmingham, for example, in Alabama. ⁓ but you know those are a little bit hit and miss. You just gotta be careful of investing in smaller markets. I would say not nothing under half a million people, if not their tertiary markets, I would call it. But you know ⁓ I I mean this is your investment thesis, right? Like I like to invest off like have a be a strong market too, as opposed to like I don't like military towns because if the military changes something, you're screwed. I don't like being a college ⁓ student housing and be reliant on a on a college, especially D one college. For D two, D three schools, I would be a little bit more flexible. ⁓ but I like to just invest off of the the major slow moving trends. ⁓ so that's just what is the average dude who works a blue collar job, where where is he working? What are the the industries? There should be a diverse amount of industries. And ⁓ you know, that's that's that's, you know, like like Houston, for example, I think it's gotten a bad name over the last decade or two that was just oil and gas. But if you really looked under the hood, it's a very diverse amount of industries in that city. speaker-0: Yeah, I mean Texas, you know, very much high concentration of oil and gas, but there's a lot more to Texas than just speaker-1: ⁓ I will say another thing too, and you'll like this, ⁓ since you're a man of Florida. ⁓ try and stay away from the blue states. Not not the same thing politically. I mean I live in a very blue state myself, ⁓ but when you're the landlord, it it makes sense to be in a red state. speaker-0: Interesting and and what's the driver there? speaker-1: ⁓ you're trying to pull it out of me. I mean typically in red states they they say like, Hey, if you're not paying your rent, you know, that you got thirty to sixty days and you gotta be out of there in blue states it there's a lot bigger bounds for people to play games. Got it. I mean, the way I grew up, if you can't pay, you can't stay. speaker-0: Without getting political. Okay. speaker-1: But hey, we're all business owners out there, right? We employ people. So I think we all think in the same way too without saying. speaker-0: Yeah, yeah, yeah. We you've got to. ⁓ so how do you balance risk and return when balancing when scaling up a portfolio? speaker-1: ⁓ you know, I mentioned the early diversification. You don't want to really have a huge concentration of your net worth into any one particular asset. That's why I think, you know, a lot of mama landlords who scale their portfolios up on their own, they kind of disobey this law. ⁓ but yeah, you never know when there could be a peak of the market, right? Like, I mean, I had a lot of my net worth in this commercial real estate. At the peak of the commercial real estate market in 2021, 2022. if you haven't heard about this, ⁓ I wouldn't blame you because unless something happens with residential real estate, people don't really talk about it. But here recently, you can buy properties on 20 to 30 percent discount off the peaks of 2021 in commercial real estate. So now's a great time to get involved in this world, especially if you're an investor who ⁓ says, all right. What's what asset class is on discount right now? Well, it's commercial real estate, especially apartments. ⁓ it's office too, but I don't I personally think office has gone through a fundamental change, right? Again, going back to the in 10 years, will people go to the office as much as it once did? I don't know. ⁓ but yeah, like I I think unfortunately most investors and the way the stock market goes goes off recency bias. So they're gonna look at what's what's been on fire the last five years. And that's all your SP 500 because it's all AI stocks. But we don't know when there's an AI bubble gonna happen, right? So ⁓ again, you know, I'm I'm gonna recognize my bounds. I am not a financial planner, so I cannot give investment advice. ⁓ this is just merely how I invest. speaker-0: Yeah. So Lane, I know that a lot of ⁓ individuals also use life insurance ⁓ as an investment mechanism ⁓ beyond, you know, a whole life policy or whatever. So ⁓ how does life insurance play into this conversation? speaker-1: Yeah, I mean I we you know, we I got a whole section in my book written on this and people want to go to the wealthelevator.com slash bank. ⁓ got a full video on there. I don't do life insurance, so I'm not a agent. ⁓ people need a referral or they can let me know. But, you know, I personally use this very heavily myself. So I'm just speaking from experience. ⁓ some people will use this to pay off debt, do different tools, but I think like speaking as an entrepreneur myself, ⁓ I keep the cash value in my policy as kind of the ready day fund, right? In particular like payroll or like reserves for the business. ⁓ so that's how I kind of use it. ⁓ I also use it as a deployment fund for to to have money just pool there and sit and make a nice interest ⁓ and before deploying it out. So ⁓ you know, I I would say if people are interested in that, you know, check out that resource or check out the the term infinite banking. It's kind of a ubiquitous term. ⁓ depends on how much your the agent wants to charge in fees, essentially what it is. ⁓ but it's it's a I think it's a nice tactic, right? Along the stuff that we what I've realized is best practices and investing in alternate investments. ⁓ and then the tax benefits of doing that, and then other tax strategies that the wealthy do, and then running things through an infinite banking policy, life insurance. And I think that trifecta's extremely powerful. speaker-0: So you've mentioned either directly or indirectly a couple of times really the planning aspects of all of this. I know a lot of on the lower end business owners, you know, they've got a CPA, but they don't have a wealth advisor and they don't have, you know, really a tax planner. So there's there's a lot of education, I think, that goes behind this. So, you know, what do you see as that education play ⁓ for ⁓ for these business owners? Yeah, you mentioned earlier you've got, you know, the free training ⁓ on your website. ⁓ what else how else should in ⁓ business owners ⁓ educate themselves on on all of speaker-1: Yeah, I would say like to concisely put it, I mean, check out my book, The Wealth Elevator, on Amazon. ⁓ people write a nice review, take a screenshot, email at the team at the wealthelevator.com. We'll hook you up with the PDF version so you can ask your little questions, personalized questions in there. ⁓ and then I'll give you the MP3 so I can just read it to you if you're like me and can't read too well. But yeah, you know, it's it's not for everybody though, right? I mean, that's why. We tell people, well, build a relationship whether you work with us or anybody else, build a relationship, get to know other people. ⁓ but it is, you know, for people above ten million dollars net worth who, especially for those who built their fortune themselves as the first generation, not the inheritors. ⁓ or what we what I call like the ⁓ the wealth immigrants, right? If you're the first generation, you're the wealth immigrant. So like having money isn't should be new to you, should be feeling weird. ⁓ as it does for me, right? Like like you gotta get around other people that are similar pedigree. ⁓ so I would say check out the book. If you're feeling unwary wary about it, you know, you're not you're normal. Right. Like it's kinda sounds crazy a lot of this this stuff. ⁓ so then I'd say get around other like minded people and then kind of ⁓ you know learn through a community basis that we do. speaker-0: So I I definitely need to do your your training course because as I mentioned earlier, I'm on that tipping point with my four properties. So ⁓ I need to look at ⁓ at my next steps. ⁓ if you were to give our listeners, you know, one thing to focus on ⁓ coming out of this, what would that be? speaker-1: ⁓ You know, I'll just I'll just give you a little bit of feedback. I mean, if you've paid down your mortgages, you're probably making like one percent on your rental properties at this point. Like, why? Like you might as well be in a T bill for that much headache. ⁓ but it's like every every dollar you have should be making you money, right? It could be making you zero dollars, one percent. It could be making you ten percent or twenty percent, right? It doesn't need to make that much, right? But I think the concept that I teach is like look at your portfolio, look at every single dollar and look for the stuff that's making the least amount of money or lazy money, right? If you have four children, figure out which of the four kids is doing the least amount of stuff and focus on that person, right? ⁓ so that's it, that's my thing is like figure out which your laziest money or maybe in the highest risk stuff and reallocate it slowly to things that you think is more better fit. ⁓ you know, we're not looking for wholesale changes here. But I think if people did that, they at the end of the day, it's not much, it's not, you know, it's not how much money you can create in your business, but if you can get this $10 million working at 5% as opposed to 2%, you know, that's how you create financial independence and that's how you expand things. ⁓ some people in our community have this idea of like, all right, let me learn how to build my family office. Analyze deals, build a network with other like minded people. So especially can get more deal flow of all these little deals. And let me expand, get past eight figures, and let me grow my own family office so we can use our expertise and XYZ industry and then now go invest in other companies or other vendors. And this is the next chapter of your family's wealth building. speaker-0: Lane, how can our listeners find you? speaker-1: ⁓ if you're on a credit investor ⁓ or million dollar net worth or greater, shoot me an email lane at the wealthelevator.com. speaker-0: And one more time your ⁓ book. speaker-1: The wealth elevator. speaker-0: ⁓ wealth elevator available ⁓ Amazon, right? speaker-1: Yeah, yeah. And I think ⁓ you ⁓ we'll talk later, but I think you were gonna like if people email you, we might have a free giveaway for them of the book, but I don't wanna give that away. That's up to you. speaker-0: So we'll ⁓ we'll we'll have some notes on that in the show notes. Lane, thank you for coming on from Stuck to Scale today. ⁓ you know, you heard it, Lane went from a corporate engineer to successful real estate investor. And his story is a powerful reminder that building wealth doesn't have to be confined to traditional paths. For all you busy professionals and business owners, remember it's never too late to start thinking strategically about your wealth and legacy. And as Lane emphasizes, education and trust are sc are key to scaling your journey. If you enjoyed today's conversation, be sure to subscribe, leave a review, and share this episode with others who might benefit. Until next time, keep striving for growth and transformation on your journey to scaling your business and your wealth. Thank you so much, Lane. You've been listening to From Stuck to Scaled: Growth Strategies for Small and Mid-sized Businesses, produced by Opticution LLC. For more information tools and resources, check out our website, www.opticution.com slash podcast.