Latest / Beyond Fulfillment Podcast / From Engineer to Millionaire: How Lane Kawaoka Escaped the 9-to-5 With Real Estate

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From Engineer to Millionaire: How Lane Kawaoka Escaped the 9-to-5 With Real Estate · Beyond Fulfillment Podcast

• 0:05
  Wait a minute.
• 0:05
  If I just rinse, wash, repeated with this a few more times, I'd be able to, you know, fire my boss.
• 0:11
  Quit the rat race.
• 0:13
  Today we sit down with Lane Kawaoka, a civil engineer turned real estate investor, entrepreneur and founder of the Wealth Elevator.
• 0:22
  Lane's journey is inspiring.
• 0:24
  From his humble beginnings and frugal upbringing, he traded a 9 to 5 grind for a path toward financial freedom by investing in rental properties.
• 0:33
  Scaled his portfolio to 11 homes in just six years, all while working full time.
• 0:39
  Lane then leveraged his experience to help others break into real estate and alternative investments, creating a thriving community for aspiring and accredited investors alike.
• 0:51
  In today's conversation, Lane shares his full story, from buying his first home in his 20s to the pivotal lessons learned about scaling the pitfalls and strategies of rental investing and the insider secrets of building generational wealth beyond traditional
• 1:08
  Wall street offerings.
• 1:10
  Plus, he breaks down his unique Wealth Elevator framework, showing you the different stages of wealth and what it really takes to level up.
• 1:18
  If you've ever wondered how to build passive income, achieve financial independence, or simply want the blueprint for smart investing, this episode is for you.
• 1:27
  As always, if you found value from this content, please like and subscribe.
• 1:32
  All right, Lane Kawaoka, welcome to Beyond Fulfillment.
• 1:37
  Hey, thanks for having me.
• 1:37
  Aloha everybody.
• 1:39
  Appreciate you being here, Lane.
• 1:42
  So Lane, you founded the Wealth Elevator and we'll get into what that company is and does, but wanted to to start with your, your, your backst.
• 1:53
  You had a corporate career as a civil engineer and along the way you started investing in real estate and that totally transformed your life and took you in a whole other direction.
• 2:05
  So if you could just tell our audience your backstory and how that all developed, we'd certainly love to hear it.
• 2:12
  Yeah, I mean, I grew up in a family where we're taught to be really frugal, study hard, invest in the 401k.
• 2:20
  I was, I think, a little lazy early on too, where I was like, well, I don't want to get a doctorate degree or master's.
• 2:27
  So I just, you know, googled what are the highest paid degrees out there so they have to go get go for more schooling and it was all the engineering, you know, degrees.
• 2:37
  So that's what I went.
• 2:37
  I picked one of them and went with it.
• 2:40
  But as soon as I started to work, I started as a construction engineer actually, so out in the field a lot and I made good money.
• 2:48
  And again, following that whole blind path of buying a house to live in 401k stuff, I was able to Buy a house early in my 20s.
• 2:57
  And because I was single at the time and, you know, always traveling around for work, I thought it was a little silly.
• 3:01
  I'd have this big house to myself.
• 3:04
  And that was back 2009.
• 3:06
  Started to rent it out, and I got this taste of cash flow.
• 3:09
  And in the beginning, I was like, wow, this is cool, right?
• 3:12
  Like, got this beer money coming in, right?
• 3:15
  This actually delta between the.
• 3:17
  The piti or the mortgage and what the rents were coming in at.
• 3:22
  And, you know, that went on for a few months, but then I was like, wait a minute.
• 3:25
  If I just rin swash repeated with this a few more times, I'd be able to, you know, fire my boss, quit the rat race.
• 3:33
  Okay, all right, so interesting.
• 3:37
  So you started off with the degree, got a good paying job early on, bought a house in your 20s, 2009, so it's probably good time to buy, right?
• 3:47
  Right after the market, you know, the market depressed considerably.
• 3:51
  But then you have this big house, you're traveling around, you're single, so you're like, you don't really need it, so you decide to rent it out.
• 3:58
  And you see the power of.
• 4:00
  Of, you know, having rental real estate.
• 4:03
  And then that's.
• 4:04
  That's when you got this idea in your head that, wow, if I just continue to duplicate this, that could be powerful.
• 4:11
  And you.
• 4:11
  You could create financial freedom.
• 4:14
  That's correct.
• 4:15
  I mean, I think that there's a little bit of a misnomer with people are looking for all these tricks and tactics, but at the end of the day, a lot of it is just pure personal finance.
• 4:25
  Saving your money, your income is expenses.
• 4:29
  And when I first started to work, you know, I made pretty much six figures, was able to save 30 grand, 40 grand per year.
• 4:37
  But when I started to be homeless, live on the road, and rent my place out, I was clearing away.
• 4:44
  I was throwing away like 100 grand every single year.
• 4:47
  And I did that for maybe three, four years in a row, that homeless lifestyle.
• 4:52
  And I was plowing all that into investments.
• 4:55
  Now today, most of my clients, they're able to save anywhere from 30 grand per year to 100 grand per year at least.
• 5:02
  But.
• 5:02
  But you know that.
• 5:03
  That was pretty much my claim to fame, right?
• 5:05
  In my mid-20s.
• 5:06
  Able to sock away that much capital to just propel me quicker and quicker to buy more rental properties.
• 5:14
  Okay?
• 5:15
  So very much the simple kind of, you know, less.
• 5:22
  Less expenses, more income, Take that difference, invest it, right?
• 5:26
  And you're able to do that very early on.
• 5:28
  You got a good Start and then when you got this idea to really duplicate that and really SC those properties, like what happened next?
• 5:38
  You know, so I bought a duplex in Seattle after that and but I started to realize, start to get more sophisticated, started to pay more attention to this thing called the rental value ratio.
• 5:50
  You know, where you take the monthly rents divided by the purchase price and you tend to look for something around the 1% value.
• 5:57
  At this time I was buying properties in Seattle.
• 6:00
  So very expensive place, a very blue state where the landlord laws aren't all on my side and just the numbers didn't make sense, especially as properties got more expensive.
• 6:11
  So this is where I pivoted to buying remote properties that a lot of these places I haven't even been before.
• 6:16
  But I just bought, right?
• 6:18
  Birmingham, Atlanta, Indianapolis.
• 6:21
  So by the time 2015 came around, I had 11 rental properties.
• 6:25
  And all this is all while I was working my full time engineering job at the time.
• 6:31
  Okay, so you continued with a high paying job, continue to save your money and then continue to slowly build these investments over time.
• 6:40
  Right.
• 6:40
  I wasn't doing anything tricky, wasn't flipping houses, wasn't, you know, taking on risky investments.
• 6:47
  A lot of these were just turnkey right off the bat.
• 6:51
  And you know, I know we're talking to a lot of entrepreneurs out there, very capable business operators.
• 6:57
  Make no mistake, real estate is the easiest thing out there.
• 7:01
  Right.
• 7:01
  Like it's got to be.
• 7:02
  I mean you rent a damn box to people to live in and it's something where the need isn't really going to be going away anytime soon.
• 7:11
  I think the only problem is that it is capital intensive.
• 7:14
  You know, you hear a lot of these infomercials about no money down.
• 7:18
  I mean that, that wasn't the way I did it.
• 7:20
  Right.
• 7:21
  I saved my money, went down with a 20% down payment and just kept acquiring as I, I was limited to how much money I was able to save.
• 7:31
  Okay, so you, you continue to scale the properties.
• 7:34
  You did 20% down on each.
• 7:36
  You had the full time job and you had the savings each year.
• 7:40
  So you're able to, to do that.
• 7:41
  And you eventually had 11 properties by 2015 or so.
• 7:47
  You started in 09, so about six years in you had 11 properties.
• 7:50
  So more or less two, two per year.
• 7:53
  Yeah, yeah, but it wasn't like that in the beginning.
• 7:55
  I mean man, it was like watching grass grow.
• 7:57
  But that's essentially how this like passive investing lifestyle is.
• 8:02
  It is really like this hockey stick growth and it just gets stronger and stronger.
• 8:08
  2015, 16 came around and I was like, well, these single family homes, you know, they were great to get me to the credit, investor status, million dollar net worth or greater.
• 8:19
  But you know, if anybody wants to know what owning 11 rental properties is like, it's, it's a bit of a headache.
• 8:25
  And, and mind you, I, every time I would buy these properties, I would always have a professional property manager, you know, somebody you pay 10% of the monthly rents to manage it for you.
• 8:35
  Because my highest and best use was at my day job.
• 8:38
  And I think people listening out there need to understand, like, what is their highest and best use?
• 8:42
  Where is they getting their highest hourly rate?
• 8:45
  Now that may very well be likely in your business, but for me at the time, especially when I was starting out, it was just spent at my day job, you know, working my butt off to get the next
• 8:56
  promotion.
• 8:59
  Okay, all right, so you, you.
• 9:02
  It's another interesting point too where you said in the beginning it was like watching grass grow so things didn't take off very quick.
• 9:09
  Was there ever a point where, you know, you started to get impatient or you started to wonder is this worth.
• 9:17
  Or any of those kind of, you know, I guess ways of thinking kind of creeped in.
• 9:25
  Yeah, I, I suppose so.
• 9:28
  You know, I think at one time I switched the mortgage from a 30 year amortization to 15 year.
• 9:36
  You know, when you do the math, it looks like the interest is less.
• 9:39
  Right.
• 9:40
  So logically you're like, well, let me pay down my mortgages faster that way.
• 9:45
  But in reality, you talk to most sophisticated investors who use debt prudently.
• 9:52
  What you want to be doing is getting as long as a payment plan as possible, 30 year mortgage, and then not really paying it back.
• 10:00
  Right.
• 10:01
  Paying it back in its normal payment plan and then just going out there and trying to acquire as many mortgages or properties as possible.
• 10:09
  Right.
• 10:10
  But I didn't know any better.
• 10:12
  I didn't have a mentor when I first started.
• 10:14
  And that was some of the things that little slowed me down I think in the beginning.
• 10:19
  Right.
• 10:19
  Because whenever you get a mortgage or you buy or sell a property, you pay these brokers and that's just a little bit of a little loss there every time.
• 10:28
  Few percent points.
• 10:30
  Okay, so yeah, you mentioned you didn't have a mentor.
• 10:34
  You just kind of were doing this on your own and figure things out.
• 10:37
  Were there any like major mistakes you made along the way beyond, you know, just the like the mortgage thing you.
• 10:43
  Just detailed nothing really in the beginning.
• 10:46
  Right.
• 10:46
  Because again, I was just buying these things.
• 10:48
  Turnkey.
• 10:49
  I wasn't really taking on construction risks.
• 10:51
  You know, certainly when I had 11 rental properties, I had maybe an eviction or two a year.
• 10:56
  But this is just par for the course, right?
• 10:59
  And you know, maybe I had like six evictions and one out of three of those.
• 11:04
  So on two or three occasions here that you know, the tenant, the tenant would just trash the property.
• 11:10
  So like a 10, $30,000 repair bill and I'm like, well shoot, that just put me back for three properties for an entire year.
• 11:19
  Right.
• 11:20
  And this is kind of where I realized that sophisticated accredited investors, once you get past the million dollar net worth standpoint, you don't really buy rental properties.
• 11:29
  I'll say that again.
• 11:31
  You know, you can do what you want, but if you want the hardware and you don't want to scale and you want all the legal liability in your name, even if it's in your llc, you're the direct owner
• 11:41
  on title at the end of the day, right.
• 11:44
  You keep buying little rental properties.
• 11:46
  But what I realized as I was kind of making my rounds, uploving my network with other credit investors is that what these high net worth investors were doing is they were trading in, they're selling up the little single
• 11:59
  family homes and going into these syndications and private placement in syndication deals with, in apartments, private equity and you know, being more of a passive LP partner, limited partner and limited partner in terms of liability especially.
• 12:15
  Right.
• 12:16
  And this is where I undercovered this, this world of, you know, a lot of these credit investors were investing passively and into these private deals that, you know, somewhat of a country club in a way, and the suite
• 12:29
  of, you know, tax strategies and infinite banking strategies that the wealthy were doing.
• 12:34
  There's a lot of stuff I wasn't covering.
• 12:36
  And this is a lot of it.
• 12:37
  What I, what I talk about in my new book, the Wealth Elevator.
• 12:40
  Right.
• 12:41
  But I think the problem is people ask me, well, why didn't you skip there right away?
• 12:45
  It's like, well, you know, if you're not an accredited investor yet, you got to kind of start off with the small stuff by little round of properties, okay?
• 12:54
  So you get to that status, accredited investor status, and then you uncover this world where you see the wealthier people within your network aren't doing this and they're, they're kind of, you know, at different levels with it.
• 13:08
  So then what, what, what did you do next?
• 13:11
  Yeah, so I kind of pieced this together from many, many data points and what I realized is it was a, essentially the way we teach it today is this trifecta of strategies where you invest in alternative investments.
• 13:24
  Right.
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  Things off Wall Street.
• 13:26
  Right.
• 13:26
  People don't realize Wall street is the masses out there investing in very few investments where what you really want to be in is in very, very obscure investments that not a lot of people know about.
• 13:43
  And there's not that many people out there, but you get access to so many deals.
• 13:48
  Right.
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  So it's kind of the opposite.
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  And this is what's known as the private markets.
• 13:53
  And when you.
• 13:54
  What I didn't know at the time was I was kind of entering this world where, you know, I'd meet a lot of individual general partners, operators investing in, you know, apartment on one two three Main street for example.
• 14:07
  And I was able to diversify into dozens and dozens of these different apartments out there and get direct exposure.
• 14:14
  And what I mean by direct exposure, you know, most times when you invest in like a REIT or something through a Wall street product, there is so much middleman in there taking your returns at the end of the
• 14:27
  day.
• 14:29
  Okay, so and you mentioned, you know, you cover more about this in your book the Wealth Elevator.
• 14:36
  Can you just talk about those four pillars and, and kind of how that all works?
• 14:40
  Yeah.
• 14:41
  So like what I kind of realize in there, like, I mean people who are financially minded, you know, who doesn't like a good like money saving tip or financial hack, right.
• 14:52
  But what I realized is like, well, at what point did these specific techniques apply on the wealth building journey, right.
• 15:00
  I think most of the stuff out there, you know, if you read Susie Orman, Dave Ramsey, right.
• 15:05
  Great influencers, but they focus on people who don't have money, right.
• 15:11
  They're in debt.
• 15:13
  You got the rich dad, poor dad book.
• 15:15
  I think it's a great book for mindset, but to me it really applies to people who are in debt or not yet accredited investors.
• 15:23
  So what I wanted to create was the curriculum.
• 15:26
  After you're an accredited investor, what do you do when if you already have got a good financial background, you are maybe a successful entrepreneur already making quarter million per year or $1 million revenue or greater per year.
• 15:41
  Right.
• 15:42
  Nobody really was there to tell me, hey, here's these different floors of the wealth elevator, right.
• 15:48
  The, you know, the first floor is where I was when I graduated with a good engineering degree.
• 15:53
  Just buy little rental properties.
• 15:55
  And then when I became of a credit investor, that's where I stepped up to the second floor of the wealth of later.
• 16:00
  These were the type of investments and mindset that I should have had.
• 16:03
  And I also nowad, you know, surround Myself with different family office.
• 16:07
  So very ultra high net worth investors.
• 16:10
  And this is kind of where I create the curriculum for the third floor and beyond the penthouse level and beyond.
• 16:16
  But there's, the idea is that there's different paradigm shifts depending on where you're at.
• 16:22
  So what I tell a lot of investors is well, there's no one size fits all.
• 16:27
  This is all personal finance.
• 16:29
  But it generally falls on this kind of journey that we're all on.
• 16:33
  But it depends on where you're at.
• 16:35
  So you have to figure out what floor of the wealth elevator you are at first.
• 16:39
  Okay.
• 16:40
  And as you mentioned too, right, you had to go through that process of owning the smaller rental properties and kind of going, going there and you know, scaling that up before you even realize this other world existed.
• 16:54
  Do you, do you see that's the case for most people where they have to basically like you're not seeing them kind of skip levels, right.
• 17:02
  They have to go through a certain point to at least reach accredited investor status before they're even ready for, for the, you know, the curriculum that you teach.
• 17:12
  Yeah, yeah.
• 17:13
  I mean, I think when you know something two floors ahead, I certainly think it helps you where you're at.
• 17:20
  Right.
• 17:22
  Because sometimes like for example, we tell a lot of folks buying little rental properties which you know, we still have this curriculum for people, it's free on our, if they looking to buy little rental properties, there's a free
• 17:33
  E course we have for them.
• 17:34
  But one of the things that we kind of tweak for our community is, you know, because you're going to be owning these rental properties not forever, you know, likely less than five or 10 years.
• 17:44
  Right.
• 17:44
  Because you're going to progress, you're going to become a credit investor pretty quickly.
• 17:48
  The idea is, you know, don't go buy these duplexes, quad plexes because they're really difficult to sell.
• 17:53
  What you want to buy is these little single family homes that you can sell to emotional retail buyer.
• 17:58
  Right.
• 17:59
  So like a little nuance like that.
• 18:01
  Right.
• 18:02
  We're trying to get you as quick to accredit investor status and start to get you into more of those scalable investments as quickly as possible.
• 18:10
  But you know, this is kind of where a lot of this is just access and knowledge.
• 18:15
  Right.
• 18:15
  Like a lot of it I had to kind of learn on my own and I wouldn't have gotten access to these people to get the real data points.
• 18:23
  And if I myself didn't have a credit investor status to get my ticket into the dance per se.
• 18:30
  And I Think what I try to help people do is, you know, they can get a glimpse on what's beyond credit investor status and then what's beyond when you hit 5, $10 million, because a lot of that will,
• 18:42
  will help them so that maybe they can shortcut their journey or compress time learning time cycles.
• 18:49
  Okay, and so what, you know, clearly as you started to scale, you, you reached a creditor invest, started to get into these alternate investments.
• 18:58
  At what point did you decide to create this, this community with the wealth elevator?
• 19:04
  Yeah, so around 2016, I started to do my podcast, which I still do today.
• 19:10
  You know, back then I was kind of on that threshold between the first floor and the second floor of the wealth elevator.
• 19:16
  Like, you know, like one of the things I do, I, I don't talk about stuff I haven't personally done myself.
• 19:20
  Right.
• 19:20
  I try and speak from experience.
• 19:23
  So at that time I was still teaching people to buy remote rental properties because that's what I did previously, you know, from 2009 to 2015.
• 19:34
  So again, that's why it lives on our website as free resources for people getting started on that first floor of the wealth elevator.
• 19:40
  But that was a lot of what I talked about and I just kind of haphazardly built the community.
• 19:46
  Right.
• 19:46
  People were doing the same thing and were asking the same questions.
• 19:50
  They're saying, I have some very wealthy friends.
• 19:53
  They certainly don't own all these annoying single family homes.
• 19:58
  They've traded them in at some point.
• 20:00
  But for them to walk into that next step, right?
• 20:03
  And as a credit investor walking into this proverbial country club.
• 20:06
  And now you're looking at all these private syndicated deals.
• 20:10
  How do you do due diligence on them?
• 20:12
  And there's a lot of the free information that we give away of, you know, how do you vet a deal?
• 20:16
  How do you that an operator, sponsor?
• 20:19
  A lot of this is, you know, community based.
• 20:22
  Right.
• 20:22
  I mean, investing with other people, you know, like, and trust.
• 20:26
  So this is kind of how it graduated into more of a company and a business.
• 20:33
  Mind you up to maybe.
• 20:34
  I think I quit my job in 2018.
• 20:36
  You know, so after a couple years of doing the podcast, kind of went full time into, you know, creating this archive of knowledge and, and you know, community of investors.
• 20:50
  Okay, so you, you waited quite a long time and you still kept the full time job so for really like nine years into this journey before you finally left it.
• 21:01
  Yeah, I mean it was, it was pretty easy for me.
• 21:03
  Right.
• 21:04
  Because real estate is probably one of the most bonehead, you know, Passive investments out there.
• 21:11
  Right.
• 21:11
  Especially the way I did it in my first port part.
• 21:15
  You know, in 2016, we started to buy apartments and operate them as a general partner.
• 21:20
  Obviously that became more of a full time job.
• 21:22
  Right.
• 21:22
  That was kind of where things really, really picked up in terms of operation and bandwidth, necessitating the need for me to quit my day job then.
• 21:32
  But yeah, you know, I mean, that's, I guess the message there is like, you know, there are different degrees of owner operation burden.
• 21:43
  And if you run a traditional business, it is operational heavy.
• 21:47
  But real estate is one of those things that you can do passively on the side.
• 21:51
  Single family home, rental property, get a property manager in there, pay them 10%.
• 21:56
  But it allows you to again, focus on what your highest hourly rate is.
• 22:01
  You know, so you run a successful business, more than likely that's going to be where your highest and best use is, where you can scale that income the most and maybe use real estate along with all the great
• 22:13
  tax benefits.
• 22:15
  You know, you can leverage that and invest your money where it can make the most yield, say, the most taxes, but also have your focus on, you know, your business, where you can make the most income.
• 22:28
  Okay.
• 22:29
  All right.
• 22:30
  And Lane, if people want to learn more about what you teach, find your book or reach out to you to potentially become part of your community online.
• 22:38
  What's the best way that people can.
• 22:39
  Reach out to you?
• 22:40
  Yeah, they can check out my book on Amazon, the Wealth Elevator.
• 22:44
  If they pick up a copy, leave us a review, email us to team at the wealth elevator.com and we'll hook them up with the audio book and the PDF book too, there.
• 22:55
  But yeah, if they're interested in getting involved in our credit investor community can reach out Lane at the Wealth Elevator dot com.
• 23:03
  Okay.
• 23:04
  And we'll link all that in the show.
• 23:05
  Notes for everyone.
• 23:06
  All right, well, Lane, thank you so much for taking the time to be here and sharing all this valuable wisdom from your journey with our listeners.
• 23:12
  We greatly appreciate it.
• 23:14
  Thanks for having me.
• 23:15
  Aloha, everybody.