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Kelly Lannoe on Building Wealth Beyond Your W2 · The Academy Presents podcast

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  Did you know that 90 % of the world's millionaires
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  invest in real estate? Well, I'm Angel with the
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  Academy Presents Real Estate Investing Rocks,
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  and I'm here to help you if you want to go for
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  your piece of that pie. Are you new? Are you
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  new to this and you just don't know where to
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  start? It's okay. Are you someone that has invested,
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  but you feel stuck, you feel like you've lost
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  momentum, you don't know where to really head
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  from here? Are you a seasoned real estate investor
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  who is doing great but maybe you just want to
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  hone a few skills here and there? This is the
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  place for you. The Academy Presents Real Estate
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  Investing Rocks podcast will connect you with
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  industry experts so that you can save time, avoid
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  costly mistakes, and begin living the life you've
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  dreamed of all through real estate investing.
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  You're already taking the first step. just by
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  joining us here today. Yes, absolutely. We talked,
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  you mentioned we talked beforehand. I don't have
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  that option with my pension. I'm very fortunate
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  that I do get a pension. I don't have that option.
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  But what I did have was during COVID, my husband
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  was furloughed for 14 months. So we were able
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  to take money out of our 401ks, which of course,
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  every financial planner, and my parents, if I
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  would have asked them, would have said, do not
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  touch your 401ks. That's your retirement money.
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  But because of our experience and working in
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  real estate and investing in real estate, I could
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  understand the value of real estate and pulling
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  some of that capital off the stock market roller
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  coaster, where I do not have any control over
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  any of the investments that I'm making. I have
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  no control over the companies I'm investing in.
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  I have no visibility, really, outside of what
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  you get in your quarterly earnings reports, which
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  quite frankly are, you know, They're basically
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  they're why like it's a sales thing. They're
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  driving the quarterly reports the annual reports
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  there. Yeah, I mean, I don't know Right because
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  at the end of the day it's about shareholder
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  value and it's about the perspective of the analyst
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  on Wall Street And so we made a very strategic
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  decision that we pulled 100 ,000 out of our 401ks
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  and we put it in real estate. We didn't pull
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  it out and go spend it on a new Mercedes Benz
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  or a bigger house or any liability like that.
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  We took that money and we reallocated it into
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  real estate. And what I get from that building
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  that we put that in, I get more today in cashflow.
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  then I'll get from my pension in 15 years. Because
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  you pulled it out, you actually get to experience
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  the cash flow because if it was still in 401,
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  it would have to go back in the 401. So I don't
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  remember if we took those options or not. I know
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  that at one point we had Jason had an inherited
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  IRA that we turned into some oil and gas, which
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  may not be doing great today, but man, the past
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  year has been amazing. So yeah, I know one of
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  the things that allowed for me to leave in 2020
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  from the whole W -2 scene was that we had replaced
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  my income many, many years before that. Now,
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  Jason was making substantially more with the
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  doctorate in engineering. So it took quite a
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  bit more to replace his income. And I'm not going
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  to say we were there or that we are there. But
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  he was off in June of this past summer. So he
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  still does. But the reality is. Sorry to interrupt.
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  The reality is you don't need to replace your
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  income. It's not your income you're looking to
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  replace. It's your expenses that you're looking
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  to cover. And if you're living well below your
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  means and you're investing a fair amount of your
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  income, that number is much lower. We were saving
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  at one year, we saved 56 % of our income, which
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  meant we didn't need to make as much money as
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  we were making. We could have both got jobs that
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  paid half of what we paid. and still been able
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  to cover our expenses. And that's, that's what
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  has given us the opportunity or media opportunity
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  really to step away from that W -2 job. And it
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  because, you know, it goes back to your point
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  of like moonlighting. We, I was able to moonlight
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  in order to get to a point where I could quit
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  my corporate role. Yeah. Well, that was like
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  the whole residential, our whole residential
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  portfolio was built while we were in school.
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  We got our first house in 2003 and Jason didn't
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  finish his doctorate until 2006. And so I was
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  the breadwinner with my little private school
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  job at $15 ,000 a year. I was literally bringing
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  home a hundred, no, $1 ,001 a month. It was horrendous.
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  I went to work in public school in May 31, doubled
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  my income. But I was the breadwinner during all
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  of that. And so I sit back and I think I'm like,
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  how in the world do we make it on my 30 ,000?
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  I mean, he was working too. He had a TA job,
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  but that was mostly just to pay for his college.
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  So it was, It was kind of insane to sit back
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  and think back on that. And now I'm like, even
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  with just our son, with his medical needs, it's
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  like, we're paying 5 ,000, 6 ,000 a month just
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  to a credit card because that's what we have
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  all of the subscribe and save on for Amazon.
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  And so it's like, wow, how far have we fallen
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  from that 30 ,000 a year? Well, and I think that
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  also makes I mean, like that's a really good
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  point because there's people today that make
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  that kind of money or maybe a little bit more
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  because you've got inflation, of course, over
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  the time that are struggling to save and invest.
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  But Jeff, they're saving and they're investing
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  in their what they have access to and what they've
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  basically what they've been told and what they've
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  always heard they need to invest in through their
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  401ks in the stock market. And you and I both
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  know when we look at the one the risk adjusted
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  returns of real estate, your returns are far,
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  are far better, especially when you're looking
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  at value add projects where you can really force
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  the appreciation. You have control over this
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  asset and you have control over the ability to
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  grow that capital. Where in the stock market,
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  you just don't have that level of control. Now
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  everybody will argue, right? Investing in your
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  401k is really tax efficient. You can do it with
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  pre -tax dollars or you can do it in your, you
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  know, your Roth one of the two, whichever way
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  that goes. But what we don't talk about is all
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  the tax efficiencies in real estate which quite
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  frankly is Even better over the long term than
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  what you have in the 401k, but it's just it's
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  not the it's not mainstream It's not it's not
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  what we've been told. It's not where You know
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  the street has to make money and they make the
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  money by preaching What we need to invest in
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  in the 401ks or through the stocks? Yeah, the
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  last time that Chris Galizio was on here and
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  he talked a lot about how it's really crazy because
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  really we're financing those companies. It's
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  not because of actual value. It's because we're
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  financing them and it's not because they're making
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  these stellar profits or like it's not how it
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  used to be. It used to be stocks had value because
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  their companies were making profits and that
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  was being passed on through dividends and all
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  these things are going on. And then there's been
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  this movement where companies are being rewarded
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  for becoming more leveraged. It's just kind of
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  insane. And so I don't, I don't play stocks.
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  I, let's say I don't, I've got this little, what
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  is it? Acorns or whatever. I put like 25 bucks
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  a month in it. It just sits there. At some point
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  it will maybe be a few thousand dollars. You
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  know, I never thought about it as financing these
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  companies. but you're right. You're financing
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  the debt for these, you're financing these companies.
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  I never thought about it from that perspective.
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  Yeah. And I mean, that's when they have like,
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  you know, whenever they do like their IPOs or
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  whatever, but it's still, they're being rewarded
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  for how they're making that money work. And it
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  was just a really neat way to look at it. And
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  he's got, he's actually got a movie coming out.
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  and it's going to be talking about those kinds
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  of things, and I want to say it's coming out
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  on Netflix, but I could be wrong. But it's Chris
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  Galizio, and he was on the Econ panel last summit,
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  and he's a really awesome guy and very, very,
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  very knowledgeable about that whole scene of
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  things. I am very interested to see that when
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  that comes out. Yeah, it's going to be called
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  Money Game. Money Game. I'm glad that there's
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  more content coming out on this because we need
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  to talk about it more. This needs to be, this
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  needs to not be taboo. I was very fortunate.
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  I grew up in a family where we did talk about
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  money and I saw my mom balancing the checkbook.
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  I got my first credit card. I got it like 14
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  years old because my parents understood it was
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  a tool to build credit. And granted, I wasn't
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  allowed to just go spend on it, but I learned
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  it as a tool to learn credit. And I learned about,
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  you know, again, I got the, I got the whole invest
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  in your 401k, get a good job, but pension like
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  that was the narrative I was taught, but at least
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  I was taught to spend less than I earned and
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  invest the difference. And that got me on a decent
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  path, but every, we need everybody to be talking
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  about this. And unfortunately, if it's not going
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  to be taught really well in the school system,
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  then we need parents to be talking about this
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  at home, which also means parents need to get
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  themselves in a position where they're more comfortable
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  talking about it with their children because
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  they're themselves are on a better path. Yeah.
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  Well, and I don't, I'm not screaming multifamily
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  everyone either, because multifamily is scary.
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  Um, residential and residential used to be hard.
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  And then as we got into multifamily, it was like
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  residential became very simple. And we're not
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  against residential. If a house fell under our
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  laps, we would absolutely buy it. If it was a
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  good price, we'd buy it. And even if Jason was
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  on a trip or something like he was last summer
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  with my oldest, if a house had fallen into my
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  lap, even if a small portfolio had fallen into
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  my lap while he was gone, I think I have enough
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  connections and enough people that I know that
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  I could have taken care of that and gotten it
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  underway so that when he got back we had some
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  more cash flow. It's really crazy to think that
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  because 20 years ago, no way. It's scary, right?
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  Yeah, I didn't even know how to do another loan.
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  Where the heck am I going to come up with 20%,
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  25 %? How am I going to do this? And now it's
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  like... Well, like I told you, there was, we
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  bought a small portfolio and walked away from
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  title with money and not a small chunk. I'm like,
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  not small change, like a sizable amount of money,
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  almost $20 ,000. And so it's like, it's, the
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  game is different. Once you learn how to play
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  it, the game gets different. And I think that's
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  why it's really important. If you're thinking
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  about getting into it. And I'm not going to say
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  like what you were saying, you don't have to
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  replace your income, but like Maurice villages
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  says, it's like cover your expenses. Once you've
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  covered your expenses, you can go ahead and come
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  back a little bit, take some hands off and maybe
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  leave the W -2. But if it's something you really
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  love, you don't have to leave it. Absolutely.
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  Or something that still allows you to be fulfilled
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  in that W -2, but also allows you to really focus
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  on the side gig that is going to cover your needs.
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  Because if you're relying on your W -2 to cover
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  your needs, you're never going to find true wealth
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  because so long as you're trading time for money,
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  You're never going to be able to sack enough
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  away. Yeah. And it's a, it's a risky proposition
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  as well. I mean, we're in this period of time
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  where a lot of companies are, have been laying
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  off. I mean, Disney, let's talk about Disney,
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  right? From a management, the CEO changes. And
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  then just this last week announcing a 7 ,000
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  layoffs, which yes, is a very small number. It's
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  three, 3%, I think of their global employee base,
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  but at the exact same time, they're kicking up
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  dividends again for their shareholders. So when
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  you think about stability as an employee and
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  aligning with the company, the company is going
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  to fire 7 ,000 people, but at the exact same
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  time announces reinstating dividend payments.
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  It can be risky relying on one employer for an
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  income. So that's where building the multiple
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  streams of income helps diversify that and gives
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  you flexibility. And to your point, Marcia's
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  point, if you enjoy what you're doing, continue
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  to do it. You know, I was at Disney for 18 years.
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  There were plenty of roles that I enjoyed doing.
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  I worked with a lot of fabulous people. It gave
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  me a lot of opportunities. And so it's just following
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  that joy and what fulfills you. Yeah. Well, it
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  also, it gives you a network to pull from and
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  grow with. And I don't mean like in the W -2.
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  I mean, yes, you're going to live in and build
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  networks and grow in your W -2 also. I was a
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  teacher. I love being a teacher. But on the flip
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  side of that, teachers don't have a whole lot
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  to invest. Now, some of them have spouses or
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  partners that make substantially more and they're
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  able to invest that way. But I can still do a
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  506B. and let them come in for less than the
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  minimum and just get to see what it's like to
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  have their money grow. And I can help my friends
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  that way. And that's something I can choose to
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  do. And the other members of our GP team, we
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  have another teacher, his wife's still a teacher.
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  And then my sister -in -law knows that I'm a
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  teacher, she's been a teacher some. Like there's
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  a lot of us have understandings of the teacher
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  heart. So we want to be able to help our fellow
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  teachers and fellow educators. But in a job like
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  with Disney or like my husband is an engineer,
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  there is accessibility to more capital funds
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  for when you are raising. And so having that
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  network in place can be really good. So don't
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  I'm not saying, you know, I'm not like putting
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  down having a W -2 because there's a lot of great
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  things that can come from that. Oh, absolutely.
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  Has a whole like he teaches people how to start
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  investment clubs in their business. So if, you
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  know, if you want to talk to somebody that can
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  help you start an investment club or start some
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  kind of a real estate investing group within
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  your company. Daniel Homeland is the guy to talk
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  to because he's done it. I see it Intel. I think
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  he's like it Intel. So like it's a big like he
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  did it at a big company and it's a big deal and
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  so it's that's a possibility too and you can
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  grow your network out of that. My sister -in
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  -law, her husband, they work at a company they're
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  you know they're working at Saudi Aramco and
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  a lot of money is flowing through there and so
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  there's you've also got a lot of lifestyle creed.
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  So people that even making substantial amounts
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  of money are still pulling paycheck to paycheck,
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  but you're still, there's more accessibility
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  and availability and you can actually have those
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  conversations. Whereas with certain groups and
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  sectors of the population, you can't even have
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  those conversations. So nothing wrong with having
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  a W -2 and nothing wrong with having that side
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  hustle. We did it for 20 years. Yeah.