Investing In Treal Estate While Raising A Family

Mark Perlberg:
Let’s start. All right. Welcome everybody. We are live, here to talk about raising a family while investing in real estate. This is a challenge for many of my clients and many people who I met, many people who I meet, and sometimes you meet people who say they’ll never get around to fulfilling their dreams and creating financial freedom and investing in real estate because they have too many obligations with raising a family and holding their day job. And I want to connect you guys with some people who have not only done this, but have successfully found a way to balance their family life, any other responsibilities and obligations, with building a portfolio that continues to grow and prosper.
And we are going to discuss how we’ve created this balance and found a way, so not only is this something that we can balance, it’s not something that compromise our goals in real estate, and reaching financial freedom is actually going to help us in enrich our lives and enriched that of those around us in our families, and can also help us with our circumstances, with creating that success and also saving money on taxes, which I know we all love to do. And we’re going to talk about all the strategies and techniques that everybody here has implemented. So welcome everybody. As you guys are tuning in, I would love it for everyone to just put your questions into the Q&A section. I’d love to see your comments. We all want to hear from you. I have some questions that I’m going to ask the audience, and we’re going to talk about everyone’s situation. And then we are going to get to the audience questions, and I’d love to hear everybody just interact, share ideas on this really important topic.
So to start off, we have our four awesome guests. We got Daniel Holmlund, who is a multi-family investor and syndicator, Rachelle Rayner, also multi-family investor and syndicator, Cam Chan, who is investing in a variety of real estate investments and also a realtor, and John Pacilio. But I want you guys to introduce yourselves and tell the audience a little bit about what you do. So let’s go. Let’s start off first, who wants to go first and give us a quick introduction of who you are and what you’re working on and what you do?
Jonathan Pacilio:
Yeah, I’ll kick it off, Mark. So I’m actually excited to hear from this panel. I’ve met Cam, I think I met you out at, were you at the Bigger Pockets conference last year? Okay, so I did meet you. Rochelle, I met you earlier this year. Daniel, excited to meet you after this and talk further. So my name is Jonathan Pacilio, I originally grew up in Northern New Jersey all my life until college and came down here to the south. So my one-minute backstory is really about growing up wanting to work on Wall Street. I kind of grew up in the ’80s and ’90s, so the movie, Wall Street and Boiler Room was kind of what set my expectations of making money, which was kind of ridiculous.
However, what I realized is that I was not probably going to actually make it to an Ivy League school to make it on Wall Street in New York City. So I did the very next best thing, which is actually come to Charlotte, North Carolina, believe it or not, which was at the time, the second biggest banking city. Went to school four years in and out, actually landed in the banking industry at Bank of America for several years, maybe almost 15. Ultimately, I’ve spent 20 years in the financial services industry. So I’ve actually been in real estate or had a real couple real estate investments for over 10 years, but very passive, not looking to grow, not actively managing it. I didn’t have the challenge of having a family, but what I realize is how passive it isn’t, and if you don’t put any effort into it, it is really not going to grow for you. But my niche now, my story about growing, and it’s a wide range of experts here, my niche at the moment is actually short-term rentals.
It’s sort of balancing real estate investing with running your own hotel business. So it gives you that fast cash flow growth potential, without a massive amount of understanding money, partners. But you’re running a business, it’s definitely not passive, and there’s more intensity to growing that, but the cash flow is there to alter any path that you want to do. I happen to have 20 years now of being a risk officer in the financial services industry, which is great because it allowed me to build a risk appetite and a risk approach to investing, which it’s a very boring part of investing, but it’s so critical to have that understanding. So to wrap that up, 20 years in the financial services industry, which I’m marching towards exiting, my niche at the moment, like Mark said, there’s a couple, I think Cam’s in a myriad of deals and a myriad of niches, if you will, in investigating those things. I’m doing the same, but my current niche to fast track my exit of my career is in the short-term rental or what you would more easily understand as the Airbnb business.
Mark Perlberg:
Great. And tell us about your kids.
Jonathan Pacilio:
Yeah, so I actually am doing more with two children. I have two young children with my beautiful wife, Kim, a three and a half year old, and a six-month-old. So time management is difficult enough, but with that chaos, it is so difficult to really manage the goals that you have that are super important to you and to prioritize things that really aren’t, and that you could start pushing to the side. I don’t have the luxury of knowing if it gets easier from a time management perspective as your kids get older, I’m actually excited to hear about these folks, but that is my biggest … Yeah. Okay. So I’m hoping the self-sufficiency helps at all, but maybe not. I get it, last night got up at 11:00 and 3:00, so I’m not sleeping at all, I’m just doing random things. But two great kids, again, it actually propelled me to be more productive, but it has been an unbelievable challenge at literally managing my 24 hours a day to accomplish my goals.
Mark Perlberg:
Great. All right. Who wants to go next?
Daniel Holmlund:
Rachelle.
Rachelle Rayner:
Hi everyone. For those of you that don’t know me, my name is Rachelle Rayner, and I actually live in Westchester, New York currently. I’m originally from Canada, the eastern side of Canada, Prince Edward Island. You probably have never heard of it, but look it up, it’s very beautiful. So I have two children and a wonderful husband. So I have an 11 year old and I have a just turned two year old, so life is very chaotic for me. On top of that, I work a full-time job in the real estate development space. I’ve done that for my entire career. Everything from construction, development, management, and now risk management. I’m also a real estate syndicator. I run a local real estate meetup group, Westchester Real Estate Investors. There’s about 1,500 people in the group. I founded that group myself, and my co-host, Adam Turco, we run that together.
And so on top of that, I’m also a podcast host of What’s the Deal? So you can look that up. So I have a lot of stuff going on. I’ve done a lot of things in the real estate investing space, from house hacking to short-term rentals. And so as I start to move through my life more, my goals and my why has certainly changed. I meet a lot of people who are entering the real estate industry and looking to invest, and they look for a means to an end. So I’ll hear them starting off in wholesaling, or they’ll start off in fix and flips, or a very active form of investing. For me, I’m looking to pull away from that and to become more passive because I see the power of investing passively and what it can do for you. And so very excited to be a part of this panel and just share some things on how I manage my time.
I think I have to give a shout out to my wonderful husband who is very, very supportive. I would not be able to be the person that I am and do all the things that I do without him. I made a comment today on a Facebook forum of a lady complaining about her boyfriend. I don’t know her, I don’t think she’s on this live stream, so I will go ahead and share this. But she was complaining that her boyfriend does not show any interest in what she does. And so I proceeded to respond and say, “My husband is not interested in discussing or learning anything about real estate investing. However, here’s a list of all the reasons why I’m okay with that. He hands over his checkbook, he hands over his credit card, he’s supportive, he cheers me on, he watches the kids so I can do these livestream events. And so without him, I could not be successful. So I owe him everything, I’m so grateful for the partnership that we have, the understanding that we have.” And so I think that the number one thing to be successful in this is having a supportive spouse.
Jonathan Pacilio:
Oh, totally.
Mark Perlberg:
How about you next, Cam?
Cam Chan:
Let’s see. I’m Cam Chan. I am a realtor here in Silicon Valley, in Northern California. This is sort of my second, third career. I started out as a business strategy specialist, I started out working for the US Embassy in China, in the commercial service section. So next time you go to China and other places like that, and you have a cup of coffee from Starbucks, you can thank our team because that’s what we did. We helped American companies to break into various markets. So that was the beginning of my career and the trajectory of where I was wanting to go, which was in the international career path.
But then I followed a boy, came back to the US and clipped my wings and settled in Silicon Valley for the last 20 years, 23 years, 22 years. Fantastic decision because we have three beautiful children, they’re older now. David is 15, and then our twins are 13, well soon to be 13. So pivoted a couple of times for the family because I came back to the US and I had graduated from school here, grew up here, and not in Northern California, in Tennessee and then Southern California. But what I found was when I came back, the first thing you do is you go into consulting, because that’s what you do as a business strategist, you do consulting work, that’s how you usually can find a quick job. And so I ended up traveling across the US, so it was great to come home and be with this great guy and start a family together, but then we never saw each other.
So I pivoted again, took a 60% pay cut, went to Stanford, where I was a finance administrative manager for various departments and whatnot, which was wonderful because we did have our kids. But when I found out that I was having twins, the cost was prohibitive for as to have the care for the kids that we wanted. And so I completely quit and started working in my passion project, which was real estate. So what happens when you kind of pivot and do something, you just kind of do it to the extreme. So I renovated a house, we moved into a new house and all of this stuff, and then started working, started a property management company while I was starting my part-time real estate career. And it wasn’t until the kids, the twins got to first grade, where they were solidly in first grade and seems to be all settled a little bit, that I really pursue my passion.
And the thing that kind of is easy and everyone tells you to do is become a salesperson, which is great because I like helping people. So I became a full-time realtor about six years, seven years ago. And that has been really wonderful, but it also helped me to allow me the freedom to have the time to devote into my passion too, which is investing in real estate and helping others to invest in real estate. So now I am pretty excited because I execute on that in the past year or so, the strategies that I’ve been learning, I’m a little conservative, so study, study, study, and then last year I pulled the trigger and started doing the work. And so I’m pretty excited about seeing some of the first turns that we’re seeing and seeing the numbers as they come in, so I’m pretty excited about that. So very, very lucky. I’m a little bit over the hump of having younger kids. I can tell you that it gets a little bit easier in some ways and harder in others, bigger kids, bigger problem. But yeah, no, I’m excited.
Mark Perlberg:
And you, Daniel.
Daniel Holmlund:
All right. Thanks for having me on, Mark. When you originally contacted me to talk about balancing family work and real estate investment, I didn’t realize you wanted us to be successful at doing that. So it is quite hard. And just a little bit about me, my name is Daniel Holmlund. I partner with investors to purchase cash flowing apartment buildings. And my business is Aalon Capital, and you can find me at the winmultifamily.com site. So I have been involved in this for about three years. Also, I work full-time at Intel, I’m a software developer trainer there. So I get to work with lots of really interesting people that are doing software. And I also run the Real Estate Investment Club at Intel. And so we got a really nice group there, a couple hundred people that are meeting every Friday on Skype, to talk about real estate. And so that’s a little bit of my background.
Mark Perlberg:
Awesome. I had a client who works at Bank of America and was starting a group like that, but he was concerned that people would give him heat for [inaudible] that alternative form of income. But I’ve met multiple people at BOA who were like, “That sounds like a great idea.”
Jonathan Pacilio:
Yeah. They have an interesting take, actually. The banks are like, they making money themselves, but they do have lots of policies and regulations on even being a realtor. I’m a licensed realtor, probably shouldn’t say this if anybody else is from Wells at this call or on this stream, but they make it really, really difficult to do your own thing. They sort of say they have leeway, but then as a company, they don’t like it. But that’s interesting.
Daniel Holmlund:
Yeah. It’s always interesting to run into different companies that have different cultures about clubs. At Intel, a lot of it was just finding out the HR people that I could work with to make sure that I really stayed within the guidelines and knew the right people in case something went wrong and just built bridges before launching something. And so far, cross my fingers, it’s worked out well.
Jonathan Pacilio:
Yeah.
Mark Perlberg:
Okay. So to keep things simple, let’s keep this order of answering questions. So we got John, then Rachelle, and then Cam, and then Daniel. Next question is going to be, what is the greatest challenge that you have found when it comes to balancing family life and investing? I have a feeling I know what you guys are going to say, but let’s hear what you guys find is the greatest challenge with trying to create that balance in all of these things going on.
Jonathan Pacilio:
Yeah. I’m first, I think, Mark?
Mark Perlberg:
Yeah.
Jonathan Pacilio:
So I’ll actually throw what I think would be not something thought of first. So I echo Rachelle’s comments about my wife being unbelievably supportive in what I want to do. I drive her nuts. Nuts. I don’t know how she’s still with me, to be honest with you. So I’m going to take a support angle because anytime you’re trying to do something like this, it’s very unconventional. You can read all the books in the world or watch late night infomercials and hear about all the success people have in real estate, but it takes an unbelievable amount of time, commitment, money, all these different things, knowledge. But quite frankly, I guess if you are on your own and completely single and have nobody that needs to rely on you, then what I’m about to say becomes a lot easier.
But when you have somebody that you’re counting on and is counting on you, your job is to not convince them of anything, it’s to make sure that they’re comfortable with why you need their support. And so time obviously is troubling, time management, the kids, of course that plays into it. But I think my answer would be about, and I struggled at it a long time, my wife and I. I remember one time, it’s funny, she’s going to get a kick out of this, but we were at a restaurant, I had it with my job. I just was like, “I’m done. I’m quitting.” So I told her, “By the way, yeah, I’m done. I’m just leaving, yeah, tomorrow.” And I was half joking, but half in about to rage quit. And she’s just like, “Yeah, it’s not how this works. I mean, you can’t do that.” She even said, “I’ll support you, but you got to show me a plan.”
So I will go that angle, I’ll keep my answer short there, because to me, all I need is her support and I’m good. I’ll do anything. And I’ve got that now, and we’re building on that. But I’ve only actually really committed this in the last two years probably, and I think the last six months even, our trust level in each other and what we’re trying to do, has flourish tremendously. And so if you’re going to do anything like this, go to your … again, I guess if you’re single, don’t worry about it, but you’re going to have to prep somebody for it, eventually. Go to that person, that partner, they’re going to be … all the money in the world, all the partners in the world, they’re not going to actually help you be successful the way the support from a partner would be, so figure out your approach with that person and don’t do what I did, which is just like, “Yeah, I’m doing this, so I hope you like it.” But that’s what I would say, that it’s really hard to get buy-in from someone who doesn’t understand it.
I think Rachelle, I think it was you maybe who was like, “They’re not interested in it.” Or you heard that person was like, “How do I get them to be interested?” Don’t get them, it’s not their thing. You need to make them feel comfortable with your decision and why you need their support. That that’s what I would say is difficult.
Mark Perlberg:
Great. And Rachelle, same question to you, greatest challenge?
Rachelle Rayner:
So I think the one of the greatest, so there’s two really big challenges that I faced and I’ve had to really overcome, and that was managing my expectations. So my expectations of my partner, just to play off of what Jonathan said, is not trying to convince them to get on board with me and listen to all the podcasts. And I went down that road. I went down the road of putting books on the coffee table and putting books in his bag and sending him Facebook posts of certain mindset things, and it ended up in huge disappointment. So managing your expectations is super important, and I think that communicating is the other aspect of that. So for me, it’s a major communication. If I’m going to have an event like this at night and I’m going to need him to watch the kids or put the kids to bed during this, so we can keep things quiet and sane, it takes communication, letting him know ahead of time, not an hour before, “Hey, are you coming home from work?”
So I had to really just be proactive and make sure that I’m being fair. And we both have full-time jobs, but this is an extracurricular thing for me, real estate, and something that I’m looking to pivot into, so I want to make it as easy for him to accept as possible, and so I think communicating with your family. I have also an 11-year-old who acts like an adult sometimes, and he gets super offended if I’m doing something that he feels I shouldn’t be doing or if I should be watching a movie with him, but instead I’m trying to answer emails or whatever. I make sure that I give him a heads-up as well. So I’ll tell him like, “Hey,” I first tell him, “I’m going to spend this time with you at this certain time, but then at this time I have to do this.” So it’s just really being just fair and being in constant communication with your family so that they understand that you’re doing this for them and you’re also spending time with them, but you have responsibilities as well.
Cam Chan:
I’m next, I guess. So I think I echo both what Rachelle and Jonathan’s saying. I think I have an amazing, amazing partner. My husband has been tremendously supportive of what I do. But I tell you, it’s not easy, marriage is not easy, kids are not easy. And then when you try to pivot and do something really, quote, unquote, “not the mainstream.” I mean, for some reason in Silicon Valley, it’s really easy for people to talk about stocks and bonds. But then when they talk about real estate investment, the numbers here in Silicon Valley, the homes, when you invest here, it’s like in the millions just for a tear down.
So to get people, including my husband, I mean, he’s an intelligent guy, he’s watched enough TV shows and he knows quite a bit about real estate because it’s his family’s work too. So it’s not like he’s a newbie, he’s definitely very, very well versed in real estate. But to do what I do is not something the norm. I buy a house, renovating it, buy a house that’s not touchable, it’s far away in a different state and it’s not in the best condition. Then renovating it and then putting tenants in there and then making that into an income, a part of a larger portfolio, is not something that is easy concept. I mean, it is an easy concept if it was right here next door, touchable. But for some reason, and I can totally understand it, it’s far away, you don’t know the market, you’re not there all the time, that type of thing. It’s a little bit of more of a challenge.
So getting that bigger leap to pivot, to do something that is so in the wheelhouse of what he and I both know, but that is so different, it’s a little bit challenging. And so what I did was at some point in your life you have a million reasons why you can’t do it or shouldn’t do it, or challenging to do, and then maybe a handful of reasons why you should. And I think that I pivoted and kind of tuned off a little bit of the negative talk because you can talk yourself out of doing something new all the time. It’s really easy because those are weightier and heavier and more scary than it is to do something that you really want to do, even if you’ve researched it for years, if you’ve studied the market, if you know your numbers inside and out. So at some point you just have to turn it off and kind of trust that you have a plan, and maybe the plan didn’t go perfectly-
Cam Chan:
You have a plan and maybe the plan didn’t go perfectly because it didn’t for me. My first couple of properties had problems. But at some point, you have to learn just to trust yourself and your numbers and just kind of turn it off and just go with what you know is a plan. So while I think it’s really great to echo, and Albert is an amazing, amazing partner, and I can’t ask for a better partner, I think part of it, most of it is really about me and whether or not I trust myself enough to do it and to get the guts to do it. I [inaudible]… you guys, you men out there, you kind of know that this is something that I think women struggle, in general, is that at least, for me, is that I can study and know and it’s harder for me to execute when it is about myself. It’s easy for me to kind of look at the bigger picture for other people, but for me to execute on myself, I think I have a little bit of that trouble. And so for me, that was the biggest problem and it was the biggest thing I had to overcome. Not anybody else. It wasn’t the family. It wasn’t the husband. It wasn’t the support from the family because I can’t tell you how amazing my structure is. I’m very, very lucky to have that. The biggest problem was me. And so I turned that off about a year ago and kind of just like, “Okay, I’m doing it.” And so that’s what I did and I think I’m super happy with it and I think everyone is super happy with it, including my husband, because I’m actually happier.
PART 1 OF 4 ENDS [00:26:04]
Mark Perlberg:
Great. All right, Daniel. You’re next.
Daniel Holmlund:
All right. And I also have a wonderful wife and three wonderful kids. My daughter’s 11. My sons are nine and seven, and it’s definitely difficult to balancing working in real estate and family. And one thing that I know really helped us was that my wife and I, we’re different. We like different things. And one of the things that helped us is just making sure that we knew how we can make each other feel loved and appreciated and being able to do that while also having busy lives. So for instance, I kind of feel like if I can give myself selflessly to my wife and make sure that she’s happy and that I’m spending time with her and she also will turn around and show interest in what I’m doing, if we can fill each other’s cups up and be really intentional about doing that as we’re going through our busy lives.
And I think a lot of intention is really key, so one of the things that I was able to do that got her excited about real estate, actually, was that she’s very much a people person. And so part of multi-family investing is building teams. There’s way too much work in a property for one person to do. So you have to go out there. You have to meet new people. Some people talk to brokers and some people coordinate renovations and some people talk to investors. And we just sat down and we started Zoom calling with people and she really loved the experience of getting to know new people. And that was one way that I can rope her in and show her what I was doing. And then, once work hours are done and I’ve spent some time on networking and real estate, also making sure… it’s been kind of a blessing during a hard time to be at home.
And we all have lunch together right now since we’re all at home. My kids are at home. I’m working at home. We’re intentional about taking some time and just all having lunch together every day, of making sure that at some point during the day, we set aside all the work and we just pay attention to each other. My wife likes playing cards and board games and so we do that a lot and just making sure that we’re intentional about each other and not going our separate ways in a busy life.
And the same with my kids. Luckily enough, my boys are young enough that just running out in between meetings and tickling them is enough to fill their cups up. But my daughter, definitely, she’s a quality time person. She wants you to stay there with her. And we’ve done a couple of projects together and built a few things together. And so, she really is enjoying that.
And one thing that we’re taking on next year, we’re looking and planning and trying to figure out how to homeschool our three children. We’ve made the decision that we’re going to homeschool our three children and my wife is lucky enough that she’s going to be the main person there doing that, but I’m going to be there supporting her all the way and getting in on some of the teaching while mixing that in with my work at home. So it’s going to be a very, very busy time.
And the other thing, too, and just from a practical standpoint is that it’s forced me to be pretty disciplined about my time. I sit down in the morning and plan my day out and hopefully, my week out each Monday as well. So just having really good time management has really helped as well.
Mark Perlberg:
Awesome. Some of the things I want to throw in there, because I got to talk about taxes every now and then, is when we think about our relationships with our spouses, a fantastic tax strategy that some of you are well aware of is the real estate professional tax status. And when we think about trying to find a way where we think about compromises in time, I know that the time commitment is challenging, but when we have that real estate professional tax status and when I was thinking about what Cam was talking about about going out on her own and thinking about how that impacts family picture, we can see with the real estate professional tax status, combined with some other strategies, such as cost segregation, where we accelerate the depreciation on these properties and we recognize the write-offs and depreciate those properties up front, creating massive write-offs where we purchase the properties, we will find that even if these properties are cash flow positive, the net result on the tax returns will result in tax refunds.
So not only are we bringing in that passive income that we can grow and expand over time and create a nest egg to eventually retire and have more time for our families, that we can also create refunds that can be put back into whatever we want to do, whether that’s our child’s education or our own retirement or whatever we want to do, so that helps with the decision-making as well.
And also, like Daniel, you talk about teaming up with your wife. If you only need one spouse to get that status, it applies to both of you. So if you’re investing, but you work full-time, if your wife can become a real estate agent. She just needs 750 hours and more than half the time is into working on that real estate trader business. We get that tax status and we can use that for your investments. And you can also have business meetings with your spouse. So if we can find a way to do something that we love and go to our favorite restaurants and have a business meeting with our spouse, sorry, we can write off the travel and the meals, wherever those meals are going to be. Just some things to think about.
Also, I see we now have 18 attendees and I want to see some questions in the Q&A section because we’re going to dive deep in and let’s challenge our guests to some good questions about what they’re doing. So I want to see some of those populate as we go through these questions. Next question is going to be-
Daniel Holmlund:
I was going to say, I also like to hear where people are from. So if you want to put down in the chat box where you live and where you’re coming from, that’d be awesome.
Mark Perlberg:
… yeah, definitely. Definitely.
Next topic is how… and you can answer this in a number of ways, but when I said it… so we did some preparation about how would we manage our budget and our finances. Obviously, we could take… if we are in the position to create overall tax refunds from our activity, that’s fantastic, but let’s talk about how we’ve thought about this in our personal finances and managing our budgets along with our real estate investments for us and our families.
John, you want to go first?
Jonathan Pacilio:
Yeah, yeah. Well, I got to give you a lot of credit. So when we met last year and you implemented some strategies for me, it led to a pretty sizable refund by implementing some cost segregation strategies. So when I was typically used to a standard accountant or CPA that just kind of pushed paper and did your general accounting structures or tax structures, my wife and I, both working, usually led to almost always owing money. In this case, we got a significant amount of money back, which is great, right, but you have to have a plan for it. And in our case, and I’ll talk about the budgeting in a little bit, but it is a big win here because we literally just went under contract today for a eight-bedroom cabin in Gatlinburg that was officially accepted.
Rachelle Rayner:
Congrats.
Jonathan Pacilio:
So perhaps, I think I want to say… yeah, it’s pretty cool. We’re going to see it. That market’s very heated, but the revenue, especially now during COVID, I mean, people just want to travel. The mountains are perfect, but we decided to go all in on an eight-bedroom and bypass one, two, three, four, five, six, seven. So it’s like, “Let’s just try an eight-bedroom. See what happens, right? What’s the worst that can happen,” right? But it’s expensive. So if we didn’t… it’s just an example that that money has been reinvested.
We also went under contract and finally got the approval this week for a local, almost like a mother-daughter’s cottage combo, which is very unique, with aging parents and stuff, we’re going to short-term rent it, but there’s opportunity to have long-term plans as well should the short-term rental, vacation rental market kind of slow down like it did for a short period of time. But I’m bringing that up because by having very specific strategic tax goals… and it is very boring for a lot of us. Are getting money or do we have to pay, but you love it.
But by talking to you about that, it allowed us to get money that would’ve been allocated to either the government or just maybe we even break even and I wouldn’t have been able to reinvest that money the very next year into these deals. And so I have a goal in mind. I’m trying to expedite the pivoting that everybody here is talking about. They’re working very hard. They’re asking sacrifice… a lot from their family to sacrifice. But if this can expedite by having a very clear strategic tax strategy that gets money back that I can, instead of doing one deal a year, two deals a year. Again, this is all personal, so I need as much capital as I can get until maybe I pivot into multi-family. I’m syndicating, raising other people’s money. But for me, this niche, if done properly and quick enough, can expedite my pivot of generating my feet right out the door of the company I work for faster. And it’s really important that we work with someone like yourself and not think that strategy doesn’t work.
I’ll end on just the budget piece, which is for me, it’s very easy. My wife and I have very specific consumerism ideals, right? We don’t spend a lot of money on things. So if I say, “Hey, I’d like to take $50,000 or $100,000” and Cam, to your point, right, “invest in something out of state.” You can’t touch it. You can’t feel it. You can’t see it. Even if you say, but it’ll return $2,000 a month, it gets very boring versus hey, I wanted that new Ford Explorer or just something, right? So if you have to compete with your partner from a budget standpoint that isn’t aligned and you have to…. there’s a little bit of give and take which, again, wife is very supportive and we’re on the same wavelength, that can be a significant challenge in your budget to say, “I need X amount of dollars to go invest in something,” especially if you’re not into it that once I tell you that the positive outcome of it, you get bored pretty quickly if you’re not into it versus, “Hey, I can have immediate gratification by spending that money elsewhere or even investing in something else.”
So the budgeting for us is simple, but it’s a significant challenge for others because you’re asking someone else who worked very hard in most cases to contribute that pile of cash or capital to move it into another vehicle versus maybe something else they want to do with it. So I’ll leave it there.
Mark Perlberg:
I just want to chime in for one second and talk about a wonderful opportunity that we were able to take advantage of. So Jon did not have the real estate professional tax status for him or his wife. But one thing that we could do is with short-term rentals… and that’s why short-term rentals can be one of the most effective and fastest ways to get out of the rat race and really start off in real estate. Not only do we have a great cash on cash return, but under certain circumstances, if you analyze it properly and you understand the tax code and you plan effectively, we can treat that investment activity as active. And when we treat it as active and we have enough of an investment we can take advantage of the things that we talked about, I was just talking about earlier with cost segregation and bonus depreciation. Create those losses that are active losses and deduct them against other sources of active income, which would, in this case would be your W-2 income.
And that’s why you want to plan in advance. You don’t want to create a management entity for your short-term rentals unless you know you were going to have that positive. We can’t create positive losses, but there are fantastic opportunities with short-term rentals under certain circumstances that we were able to capitalize on. It really helped out with growing this portfolio as quickly as possible. So yeah.
Rachelle.
Rachelle Rayner:
So I’ve implemented a method called stop, start, and continue and if you listen to Rob Dial, who is the Mindset Mentor, he has a great podcast, just really amazing. So if you don’t listen to him, you should definitely get on that. But stop, start, and continue is basically looking at whatever aspect of your life and saying, “What do I need to start doing? What have I not been doing over the past six months that I need to start doing to get to my goal? What have I been doing over the last six months that I need to stop doing to get to my goal? What do I need to continue doing to get to my goal,” right? So if you use this method, it’s really great because especially for the finance side.
I like to shop. I like to go out and to eat at restaurants, to go have drinks. There’s a lot of things I like to do, but is that getting me closer to my goal? So it is just really about just checks and balances and just making sure that you are continuing to move forward. Not that you can’t have fun, not that you can’t go shopping and do those things, but just really checking yourself because we’ve been through a lot with this pandemic and there’s a lot of emotions and sometimes, emotional things can kind of lead to emotional shopping, emotional eating, and emotional buying things and just getting you off track.
So a great app to just budget that’s free is mint.com. I use that. I’ve really kind of started to become a little stricter with myself and just really going through my bank statements and looking to see what am I spending money on and just is this contributing… is what I’m spending money on getting me closer to my goal or further away from my goal? So that’s just simple questions and just some checks and balances, but stop, start, and continue is one of my favorite things to consider when it comes to budget.
Mark Perlberg:
Fantastic.
Cam Chan:
So my husband and I, we use Wealthfront. So we don’t use mint.com, but I think a lot of these online systems now have a way for you to put in your information so that both partners can see the information, which I think is very, very helpful because it helps to alleviate the stress.
I think the other thing, too, is just being able… I have a Google Doc that my husband and I share and being able to share that and showing him exactly what I’m doing, he might not know all the numbers and what it means to me, but I put a lot of what I’m doing in terms of our portfolio on there. I update it regularly, the month end when we see what the numbers look like. After recollection and stuff like that, then I put it on there and it shows him to see… it gives him visibility into what I’m doing, which I think is very, very helpful because I definitely see, I have visibility into what he’s doing because he brings home a paycheck, right? So I think that’s really, really helpful. The other thing that I… going back to what Mark was saying, the reason why I started in real estate 17 years ago was because of the professional real estate status, right? I was looking for something to do because I was going to be a mom and a full-time mom, which was something that I wasn’t looking to plan out my life doing. Luckily, I got addicted and am now really addicted. But it was something that got started and it helped us with our tax planning and our tax strategies. But have to admit, we’ve kind of ramped it up in the last two years by doing a lot more investments in terms of the tax laws and using the current tax law that is forwarded to real estate investors and using that to help us speed it up a little bit in terms of what we’re doing. So I just am pretty lucky to have found that path.
But I think the other advice I would say, to piggyback on what Mark was saying and Rachelle too, is I think it is worth it to get a really good tax strategist and planner. We’ve had CPAs over the last number of years and Jonathan talks about this where they do the taxes for you, but oftentimes, by the end, it’s too late. By the time you do the taxes the year after, it’s too late. And so I think the biggest aha for me in terms of being able to maximize and actually utilizing or accelerating what we were doing, one of the best thing is actually to find someone like Mark who knows about how to put in place plans so that at the end of the year, you know how your tax outcome will be and how you are maximizing it. I think that’s something, if I had to do it all over again, I would pay the money to get that advice earlier on because you get the money back. Yeah, so I completely agree.
Jonathan Pacilio:
Hey, Mark, I know it’s [inaudible]. Sorry, I just want to jump in real quick on that point. This was the… sorry, Daniel. This was the pivotal moment for me. I think it was about two years ago and I don’t know if I’d call him a controversial figure, but he’s a ostentatious personality, Grant Cardone, a really great marketer and all that stuff. But I remember he did a video a couple years ago and in my mind, this is what I was always thinking anybody you hire should be doing. But in this case, it happened to be about a strategist and he said my… it was November, Thanksgiving, December and my CPA or my tax strategist called me and he said, “We have a problem. I need you to spend $50 million,” right? And again, these are big numbers so I understand, but it was… he’s like, “Okay, why?”
And he went through like, “Hey, if you don’t invest that or buy something or whatever, we’re going to be hit.” And so he bought a plane and that was, for him, it was a personal goal. He always wanted to have a G2050, whatever they call them, Gulf Stream. But I thought to myself, to your point, Cam, “You came to me before the year was over and you were analyzing shit the whole year and at the end of the year, you said, ‘We have a problem. I need you to do this. And if you didn’t do that, you’re going to get hit with something problematic.'”
And when I would go to my CPAs in February or March, they’d be like, “So what do you got for me? What do you need me to do?” And I’m like, “Are you kidding me?” So it was like, ” I need someone else.” And this is how I take that approach to legal advice, agents, real estate agents, anybody. If you’re not proactively coming to me with something, then you’re probably not earning anything. And I don’t mean that to be mean, but that was my pivotal moment when I heard that story. Even at a high scale of a plane, it makes sense. It could be a hundred bucks. Doesn’t matter. So anyway, I love that point, Cam. Sorry, Daniel.
Daniel Holmlund:
No, that was a great way of underscoring the point because I was going to say you have a better story than I do, but I was going to say the same thing. Building a team of people that know their job better than you know that particular job because CPA is going to know how to work accounting numbers better than you do. Tax accountants is going to do taxes better than you do. Your lawyer’s going to do it better than you do. So having all of those people, the property managers, if you’re renting out rental homes or short-term Airbnbs, all of those people are people you need to have on your team. And real estate is a team sport.
So I like Christine’s question over here. She says that RE investors are the most ambitious and hardworking people that I know. How do you draw the line to balance getting more deals and passive income with your family? How do you know when to stop? Does it ever get too stressful?
So that’s actually a pretty big problem for me. Both my wife and I are, we’re both kind of workaholics and it makes it hard for us sometimes to stop. And the other thing is, too, I actually didn’t realize… this was four years ago. I didn’t realize that I was getting really stressed out and I noticed that I don’t notice that about myself until I get to the point where I’m just about ready to crash. So like this particular year, I went until August or September and never took a single day break. And I didn’t even hardly realize that that had happened. And I just got to a point where my work productivity just fell off a cliff. And that’s when I realized that taking breaks, taking vacations, we all got to do that just to keep work life balanced, to keep ourselves emotionally healthy, to keep stress down. Taking care of yourself is really important and you’ve got to be intentional about it.
So in terms of getting more deals, one of the things that I do is I partner with people. So I’ve got a full-time job. So my partners do the work that has to be done during the day. And I do a lot of things that can be done later, such as writing investor newsletters or emailing or talking on Facebook, things I can do after hours. So in my particular case, I partner with people and Mark, we actually, this year, decided not to pursue the 750 hours that we needed in order to get the investor dealer status. And that was simply because my kids came home from school and we suddenly had to educate them and that was definitely hard. We looked at it and we went, “I don’t think we’re going to make it this year and probably not next year either.” So there’s definitely times where, you have to look at the work-life balance and say, “This is something that would be great to do, but family’s more important.” And so yeah, you got to keep that in mind. And we would’ve got a lot of tax write-offs doing that. It would’ve been very nice, but it didn’t happen.
Mark Perlberg:
Yeah. And just to add on that, so the real estate professional tax says you need at least 750 hours, which is about 15 hours a week. But in addition, you also have to be putting more than 50% of your working hours into that real estate trader business, so if you also have a W-2 income, it’s going to be really hard. It’s…
Mark Perlberg:
… also have a W-2 income, it’s going to be really hard. I’ve tried to do it with some of my clients.
PART 2 OF 4 ENDS [00:52:04]
Rachelle Rayner:
How do you track that, Mark?
Mark Perlberg:
Okay, I tried it once. And John, we can talk. So John’s one of my clients. And John had a nice paternal leave. And I was thinking to myself, “Oh, this is great. We’ve got three months, and we’re going to work nights and weekends.” Four months paternal leave. So I was like, “We might be able to swing it.” We document all our hours at your day job, and your real estate investments, we might be able to push it into that over 50%. And then we shift all our expenses into that year. That’s the year that you buy the Dodge Ram and everything else.
So I always think about these things. And I knew about this because this comes back to the point of thinking ahead of time. I knew when John’s baby was due and I had Operation Baby Tax Plan. And we were going to try to utilize that paternal leave to get him that real estate tax status. It’s been very challenging, but the point that I want to touch on is that you want a CPA who is on top of things, who stays in touch with you as opposed to a lot of traditional accountants, who are the bearer of bad news and tell you what you owe.
Hopefully that amount is even accurate on April 14th. So great stuff. Let’s talk about the next topic, is how you… we talked about this a little bit. And I want to give a shout out to some of you guys. I’ve met your spouses. I want to give a shout out to some of the spouses in the audience right now, some wonderful people that I’ve met. And let’s talk about this question of how you coordinate and communicate with your spouse to make all of this happen. John, let’s hear from you first.
Jonathan Pacilio:
Sorry, I was on a meeting. Yeah, so my wife Kim needs to see… we argue about this all the time but she’s right. My wife wants to see a plan about what I’m trying to accomplish, whether it’s… like two weeks ago I decided to just try to be a lender and be a bank, just to try it out. Lend to a partner. Daniel, talked about partnering with people. I thought, “Okay, I trust everything about them as a human so let me try the passive route.” Like Rachelle, you mentioned earlier. We’ve got to think a little bit more about, Rachelle, a passive investing. Running an Airbnb business is not super passive. So I said, “Let me try lending while I’m building out my niche of short-term rentals.”
And so every time I want to try to do something different with a different vehicle, I approach my wife. And naturally it’s like, “Okay, well this is new. So what do you want to do this time?” And she needs to understand with a plan, a visual plan, the goal and the actual steps that showcase that you put some thought behind it. And then it helps. Not that she doesn’t trust me, but it’s, I need to understand it. And when you talk to me, you’re a talker, I don’t understand. So I need to just see something simple. Or put a plan together.
And so I always react like, ” Ugh, it’s just more work. I already have enough work to do and now you want me to put together a plan.” But the bottom line is when I do that and I sit down and I write it down and I convince myself with an actual plan, it helps her get on board with what we’re trying to accomplish. So I think that you need to be very intentional with what you’re doing. Writing goals down and trying to essentially document what you’re trying to do helps you anyway, even if you’re like me and you don’t like doing that. You’re doing yourself a disservice. But I think for her and her needs, it actually brings the best out of me, understanding what I’m trying to accomplish. And it helps her feel much more comfortable. So that’s really helped our communication.
Mark Perlberg:
Great. Rachelle? Can we-
Rachelle Rayner:
Yes. Yeah. We try to be as much… like I said earlier, we try to communicate as much as possible. We started doing something at the beginning of the year which we’ve really found very beneficial for us as a family, is we started having Sunday evening meetings. So we just take some time and we sit down together and we just talk about our goals. And what are we going to do this week to get closer to our overall goal?
And we both, at the end of the day, even though we may not be on the same page with the same vehicles of how we get there… in terms of real estate investing, he’s a lot more passive in real estate. The idea of it, he’s a lot more passive than I am, but we still have the same end goal in mind. And so for us, that is to be retired and living our life the way that we want. Having time freedom.
And so we’re not looking to become more active in things. We’re looking to for ways to become more passive, to get to those goals. So really just coming together and reiterating what we have to do, helping each other. And when there are things like networking events that I have to go to, just giving him a heads up on that. And just making sure that he didn’t have something planned or he’s not going to be late from work. So really just communicating to try to make sure that we’re on the same page.
Mark Perlberg:
Right. Big thing is just keeping things open and communicating. And I love the idea of the meetings.
Rachelle Rayner:
You would be surprised if just misunderstandings, how that can really just set your week back. And when things are not right with your spouse, I don’t know about the rest of you, but it sets the tenor of the whole week or the whole weekend. And so just doing those little things, the things that are easy to do, they’re also easy not to do. And so you just have to be very conscious. And like Daniel said about being intentional about the things that you do.
Mark Perlberg:
Wonderful.
Cam Chan:
I think the other thing that works for me and Albert is that I give him enough time so that it’s not a new thing. He has time to digest, also to look up the data himself. Not just what I present to him. He’s super duper analytical to begin with. A scientist at heart. And so he likes numbers and he likes to see things, and he wants to be able to read the articles himself, do his own research, and whatnot. And so for me, whenever I venture into doing something new like a new market or a new type of asset, he definitely wants to have the time.
And you have to give him or your partner the time to catch up with you. So I think that’s been really helpful. But along with all the other stuff that everyone is talking about, I think that’s the other thing that you can do, is just put it out there. Do the research, show your business plan, but also give them time to digest and not have a knee jerk reaction. And, “Hey, we have to do this today.” That doesn’t work too well.
Rachelle Rayner:
Yeah.
Mark Perlberg:
It sounds like some of you guys may have had to learn that through trial and error. Now, I’m taking notes in case I ever settle down. I’m going to give you guys all a call if that happens. Another idea, communication with your CPA is important. And another idea: when we think about we have these active sources of income like Airbnb rentals, or let’s say you’re doing property management and you’re trying to delegate time. From a tax perspective, it helps out as well because we perhaps have… if we can create systems, and more and more systems where we are providing services and we can facilitate those service to other people, we have the potential to turn more sources of active income into passive income. Not only does that help us out with scaling and growing with these efficient systems, but now we can create… when we classify it as passive income, the IRS will not hit us with that payroll tax, which can be pretty brutal as well. Daniel, let’s hear from you.
Daniel Holmlund:
The tip that I was going to give is that we actually take one day a week and totally disconnect, and that has been really helpful for us. Making sure that we’re on the same page. So we take one day on the weekend usually. And it’s just family time. We don’t do our regular work. We don’t analyze deals. We often don’t use computerized devices. We just hang out with each other, and that way we connect with each other so that when the week comes back around we can hit the ground running and we’re all still strong and relaxed. And so it’s really helped me. So take a sabbath day.
Cam Chan:
That’s so much more easy said than done.
Daniel Holmlund:
I know. I’m still on my phone. I try.
Cam Chan:
It’s so hard, especially for those of you who have tech families like we are. It’s really, really hard. But it’s something that I think everybody is trying really hard to do. And now luckily we can.
Mark Perlberg:
Wonderful. So the next topic is, I know that we all have obligations outside of our real estate investments. So not only do we have to thrive and succeed in our investments, but a lot of us have things that we do during the day. And that can be really challenging, when we have these dreams and ambitions and then we have our family life. So when we think about our time here, so we’ve got our day jobs, we have our families, and we have our investing. And we’ve kind of touched upon this, but I would love to hear your thoughts on some of the strategies we’ve found to manage our time as effectively as possible to make everything work. Let’s start with you, John.
Jonathan Pacilio:
Yeah. I almost feel like I’m in the Twilight Zone trying to accomplish this, and it’s just because we have such young children. Rachelle talked about a strategy that we tried to implement, and it actually went really well earlier, about having business meetings. And so before our second daughter was born earlier this year in February, middle of last year. I think our daughter was two and a half, and she was sleeping pretty well. And so my wife and I would get up at around 5:00, 5:30 and we’d have business meetings in my office. And it would go really well. We would bookmark out on my whiteboard exactly what we wanted to talk about for the business, and make decisions. And it was great because we’d get up. But we were sleeping. My daughter was sleeping. And that’s why I talk about the Twilight Zone, is because shortly after we were getting so much done. And then I could… once Kim and I would make decisions, she’d go downstairs. She’d do her thing and prep for her day. But then shortly after, my daughter regressed out of nowhere. And so we’d either get up in the middle of the night or she’d come in the bed, or whatever. And so that stopped. And then all of a sudden February came around this year and then we had a newborn. And so we literally couldn’t get back. But we were so productive. So I want to make sure I’m hammering the point of, I think early morning meetings and dedicated time to prep for the day as well as accomplish and make decisions, even if it’s two a day, it is so valuable. It was valuable. And I think I actually experienced how valuable it is more than everybody who consistently was able to do it because it was ripped away very quickly.
And I haven’t been able to get back to that with Kim because of the newborn. And we’re waiting for when normalcy comes again and we can implement that again because we were making decisions and we were getting things done. Maybe I could get in the shower, we could get stuff done. Same with her. And it was 7:00 and then our daughter would get up. It was awesome. And I think Rachelle, you already touched on that. It sounds like, what do you mean a business meeting as a family? That would be the one thing. If I could have back and continue to implement and only have one thing, it would be that because you’d be wildly successful just on that alone. And the whole point was your question was around balancing work. This is before everything. Before the kids, before getting ready, before taking a shower, before eating, before work. That could set you up for success alone, if you just implemented early morning meetings with your spouse.
Rachelle Rayner:
John, I do want to just tell you that I have an 11 year old and a two year old, so I can totally relate to where you’re at right now. And for about a year and a half my daughter did not sleep through the night, and it was horrendous. I struggled with that so bad because having an 11 year old, you kind of forget. Because I was definitely not into real estate or all the things that I do now when my son was an infant.
And so it was just like literally getting kicked in the stomach. It was just like all the things that I had going on, I couldn’t do it because I couldn’t function. I could barely do my day job and get through my day job with the little sleep that I had gotten. My husband was exhausted. We were fighting. I’m just being real. It was a tough time to get through. And so give yourself the grace when you’re raising a family, when you have little children, that basically just surviving.
And so I think that being on these webinars, networking, and doing the little things that you can that you’re doing right now is great. So commend yourself. I commend you for doing that. It is tough. And so try to just look at it that this too shall pass. Because she’s two now, and it is becoming a little bit easier. And it definitely does get a lot easier, the older they get. You don’t have them screaming in the background, or you’re sleeping better and you know can actually complete a full sentence. So this is a tough stage that you’re going through, and a lot of us, probably, on this webinar can relate to that. Another thing I want to talk about just with this topic, I think it’s important. I believe in having your cake and eating it too, but I only focus on the things that are important to me. So if there’s something that I don’t enjoy doing or that I don’t like or that I don’t really see it contributing to my future goals, I don’t do it. I try not to get distracted and sidetracked with tons of things that may or may not work out. So I stick to the things that are important.
My day job is certainly my priority, so I give my all to that. That’s what pays the bills, that’s what funds my investments, and all that. So that is number one priority at the moment. And then my day kind of looks… just to give you kind of a snapshot of what my day looks like. I get up about 5:00, 5:30 in the morning. I do my morning routine, have a little exercise, drink some coffee. Just have some quiet time just before the kids wake up. The kids wake up around 7:00 and then we’re getting ready for the day. Getting breakfast, getting them out the door.
My daughter goes to daycare, and then I’m actually working from home with this pandemic, and probably will be for the next year. So drop her at daycare. Then come home, take care of my work. And the evening time is spent networking, sending out emails. And I try to save a little time for getting the kids ready for bed and reading them books, or playing with them. So I do keep a schedule. I always try to cook dinner. That’s one of the things I feel like I can give to my family, is nutritious meals.
So these are very specific things that I do on a daily basis to just show love to my family and show that I’m still engaged and I’m putting them first. And then usually business things come later, after the kids are gone to bed. And then weekends, Saturday is an errands and work day for me for all of my business endeavors. I do podcasting as well, so I’ll record a bunch of podcasts. I’ll do 30 minute interviews and have a bunch of them so that I can release one on a weekly basis.
And then Sunday, like Daniel said, Sunday is our day to just kind of relax. We usually go somewhere as a family, or we stay at home, or we kind of just unplug from the world. And that’s just a day that we don’t do any work. We are church-going people, so we usually will either attend services. Right now we’re doing Zoom services. But we’re people of faith and so we believe that’s important. So that’s pretty much what our week looks like. And if there’s anything in between, my husband and I usually coordinate with each other and try to help each other.
Mark Perlberg:
Great. So Daniel, it sounds like you’ve got to head out pretty soon.
Daniel Holmlund:
Here’s an example of work-life balance. I need to go downstairs and have dinner with the family. So I wanted to thank you, everyone, for this opportunity to come and talk to you. And it’s great to meet everybody on this call. This is the first time I’ve met all of you. So again, my name is Daniel Holmlund. I invest in multi-family properties with investors. We split the cashflow and equity. And my website is aaloncapital.com. My podcast is the WIN Multifamily Show and you can find us at winmultifamily.com. All of it’s down in the chat box. So thank you very much, everyone. Have a great day.
Rachelle Rayner:
Nice to meet you.
Mark Perlberg:
Awesome. Cam?
Cam Chan:
I think everyone is pretty knowledgeable in this field. You have [inaudible]. It’s an ongoing struggle. I think whatever you put in place is always going to be an ongoing struggle. Our kids are older. They’re in junior high and high school now. And especially with the twins, when they were younger, when they were newborns, as two year olds, those years are a blur me, even though I knew I worked at the time as well as having kids because I was running my own real estate and property management company.
So those years are a little much of a blur. The struggle that I’m dealing with now is more or less time management. And I think I want to be a part of my kids’ life, so pretty involved with their schools. I want to be involved in my community, so I sit on a couple of nonprofit projects and boards. And I definitely want to be a part of my family unit. So we do stuff for families outside of our little unit too because we want to be connected to the rest of the families. And so now with COVID we have more time, but it also requires us to be more proactive in a lot of the things that we do.
So Zoom calls with family members, that didn’t exist before, now has to take priority and stuff. So learning how to say no is something I’m working on because I always want to be helpful. And learning to prioritize is an ongoing struggle. I think if you’re a parent, you kind of know that. So I’m not quite sure. Planners. I’m working on that. It’s an ongoing process for me. I’m not quite sure that I’m the best poster child for success. But I think planning, getting things on the calendar, making sure that you know what your goal is and your priorities are helps to focus. But I would be lying to say if I thought I was successful at it. It’s an ongoing thing for me.
Mark Perlberg:
Yeah, it sounds like a challenge. I know it’s getting late in the evening for some of you, or some of you might be… Cam, you might be getting ready for dinner time. So we’re going to do some rapid fire questions from the audience if we can ask them real quick. And we’ll get through some of these, and then we’ll do the call to action. Does anybody here recommend any time management ideas, strategies, and tools? We talked about some of them. One of my favorites is just using your calendar and scheduling things in. And I’m in a mentor program for practice owners. And we deliberately delegate time throughout the week. Everything is planned, so we don’t have to think about it as much. I also love the Calendly app. It takes away so much of this back and forth when you want to meet with people. Does anyone else have any other time-saving and management tools that we haven’t mentioned?
Cam Chan:
I do. What’s been really helpful for me is using the Google suite of products since I live inside my mailbox, which is a Google email. Google Sheets is where I keep all of the Zoom call, LinkedIn, the link to all the Zoom calls that are happening on a regular basis, Team meetings, all of that. So I’m not running around looking for that data. That was a simple one that someone told me. I’m like, “Ah, brilliant.” Now I’m not running around. So all the Airbnb links that we happen to have. I’ve been a seven year host of Airbnb, both in the property management company that I ran and also now. We have Airbnb in our portfolio.
And so to be able to have that link always available so that I could just cut and paste is really great. And the other thing, too, is I try to use text more. And if you’re not using WhatsApp or one of those applications to connect with the people that you need to connect with on a regular basis, it’s much easier to use WhatsApp and going back and tracking photos and emails and stuff like that than it is to… and links and documents, than it’s to use the regular text on your phone. So I think if you look into some of those time-saving strategies, I think it’s very helpful. I would highly recommend WhatsApp. It’s much more secure, too.
Mark Perlberg:
Wonderful. Anybody else want to chime in on this topic?
Rachelle Rayner:
I see Samari asks a question. Does everyone have a budget and share accounts with spouse? Actually I was wondering if I should share mine because it’s not as conventional as what a lot of husbands and wives do. We have a different arrangement. My husband and I, we both have separate accounts, our own checking accounts. And we’ve been together for 10 years but married for three. Living together for four. And so we’ve never merged bank accounts. So what we do, our arrangement, and it works for us, is we split the bills down the middle. So we say, “You take this, you take that,” and we just basically divide and conquer.
And so when it comes to mortgage or whatever, I just send him. He usually pays that. So I just send him my portion, and that’s the way we work. We just split everything. And our accounts are separate. Our savings account are separate. And when it comes to any property or anything, we just contribute 50/50, we split everything 50/50. And that’s what works for us. There’s a lot of people who do things together. There’s a lot of people who have accounts that are separate and have a savings account together. So it’s really just what works for you and your family.
Mark Perlberg:
Awesome.
Jonathan Pacilio:
Yeah, I concur with that. Same thing. We have everything separate, with the exception of a couple of joint accounts. But we talk about our monetary situation probably 37 times a day based on what we did today, literally.
Jonathan Pacilio:
… probably 37 times a day based on what we did today, literally it could be today, right? We could have sold something and made a $50 profit on eBay and we’re like, “Good. That is just a hair towards this goal.” And so-
PART 3 OF 4 ENDS [01:18:04]
Rachelle Rayner:
Right. Mm-hmm.
Jonathan Pacilio:
We’re spot on with what we do, but we do keep everything separate. I don’t know, it was so easy for us, but I just want to respect that question to how hard it can be for some people because it’s important. I wish I had a better answer that maybe I struggle with my spouse or something. That’s a very tough question for some people to implement the right way because either sometimes, it’s not secretive in a bad way. It’s just tough to-
Rachelle Rayner:
Privacy.
Jonathan Pacilio:
… give that information over. All right. Go ahead, Rachelle. What were you going to say?
Rachelle Rayner:
No, I feel like it’s about privacy too and it’s not about being secret. It’s about allowing someone to have their privacy and I’m very transparent with my husband. My husband’s very transparent with me, so there’s never been a reason for me to doubt him or for him to doubt me. So I feel like it just really works for us. And maybe if it wasn’t, we didn’t have that kind of a relationship, then there might be, maybe there would be some doubts.
Jonathan Pacilio:
Right. And I have some colleagues, friends that they have a great relationship with everything but the money and it’s not even… One of the hardest things for certain people is if I have this spending habit, and I don’t even mean it’s terrible, but if it’s a habit that I just don’t want to give up, but if I communicate it to you and it doesn’t fit in with what we agreed upon, they find ways to keep it sort of hidden and unexplainable.
And that’s why that question is so valuable to get on the same page with your spouse first. I wish I knew how to do it in a challenging situation, but I never had that problem. But that is such a respectable question because it can be very hard if you have that problem.
Rachelle Rayner:
Yeah.
Cam Chan:
So I think for us, we work the opposite way in our family. I mean we have every account together as joint with the exception of my investment portfolio. And that is just to save Albert the headache of understanding, “Okay, yes, it’s going to freak you out, but I just paid $15,000 on that foundation work, but it was a part of a bigger strategy.” And for him to see something like that on a regular basis or not a regular basis, it’s just now we have to go through the back channel and try to understand and work out the details of that particular transaction because it’s a large one, it makes him uncomfortable.
So now I have to, and he doesn’t necessarily have to go down to that we level. So I think for me that was more of a protection of his time. He has absolute visibility in what I’m doing if he wants, but just to protect his time and his mental space. He doesn’t need to be in the weeds with every single transaction that goes on.
And as you’re building out your portfolio, these items do come in much more frequent. If you are doing your job as an asset manager, you going to have to… He doesn’t need to know that we negotiated a different nightly rent for someone on the SDR that we have here or that or there did what kind of refrigerator we’re buying for X or Y, Z or whatever.
So I think for us, the reason why I’m doing the accounting for the investment portion of for our income portfolio is really to protect his time, but otherwise everything we do is very transparent.
Mark Perlberg:
Awesome. So on the topic of protecting people’s time, one of the questions we have from Brian S is, “What is the best source of deals?” And we can have a five-hour-long discussion on where to find deals, but maybe in three seconds or less, can you guys each give us maybe just a quick tidbit of where you’re finding your deals, just so we can jump in real quickly into that without going down the many rabbit holes we can on that topic.
Jonathan Pacilio:
Yeah, I’ll throw in real quick. So just join a local well respected real estate group in your area and find the top five people that either comment the most, have positive interactions the most, and they tend to be the most trustworthy to at least run by your plans and goals. Most of them will help you out to at least if it’s not going to be a partner or point you in the right direction, they’ll give you somebody who can. Local real estate, a well-respected local real estate group. You’ll find deals there or find someone who can help you find deals.
Rachelle Rayner:
Yeah. So without knowing what kind of deals you’re looking for, I would have to go with, my short answer would be getting yourself a good real estate, real realtor. You will spend a lot of time and effort and money looking for deals on your own. And if you have that kind of time, all the more power to you. But my suggestion is to definitely hook up, link up with a realtor that is specific to that area that you’re looking to invest.
If you are looking in Florida, don’t find a realtor in Tampa when you’re looking in Orlando. You want to find someone that knows the streets really well, has good deal flow and just link up with them. Another thing is to be very, very specific with your criteria. So if you say, “Just send me anything,” you will literally get anything. But if you say, “I want a three bedroom, two bathroom, 2100 square feet, turnkey,” be as specific as possible and then you’re going to get the specific deals and really great deals coming into your inbox and not, as Mark said, protecting, and Cam protecting your time and not having to sort through all of that stuff.
Mark Perlberg:
Yeah and I also want to give us acknowledge the wonderful community that Rochelle has created. She created this Westchester real estate investor meetup group. It has a couple hundred, how many members do you have in the group now?
Rachelle Rayner:
In the group, I think there’s close to four, in the Facebook group, 400, but in our meetup group there’s about 1500.
Mark Perlberg:
And she’s been an incredible resource and she’s also been a facilitator of connecting so many wonderful people, so if you don’t have that community and where ever you live, you can take that initiative and really be a facilitator and that opens up a lot of doors too, as Rachelle has done. And it’s just been wonderful what she’s been able to do as far as connecting with great people and also helping other people out. Cam?
Cam Chan:
Yes, real quickly. I am a realtor and so I think that using a realtor and a broker and/or broker in the area that you are looking for is very, very key. Even though I can do the deals on my own, every single one of my deals when its remote has been through a realtor. I believe in having one throat to choke. So someone who helps you with the deal and got paid for it has a little bit more skin in the game to help you when there’s issues that come up and there will be issues. And I have to admit, I tried it a couple times on my own and I’ve been really burned because you really don’t know until the issues come up. And so that commission that you pay for the realtor or the broker is going to pay dividends when you actually have issues.
And I think that the same way that you would have to have a good lawyer, all of that, I think a real, really good real estate professional, whether it’s a broker or realtor in the area that you’re looking at is really key.
The other thing too is I would also caution, I mean I belong to quite a few online groups and stuff like that and have to say, be very, very careful on who you do business with in-person on the internet in groups. Just do your due diligence because real estate is real numbers.
Rachelle Rayner:
Yeah. And if you focus on building a relationship with someone rather than the transaction, you’re less likely to get burned. So that’s one of the things I’ve, just a little side tip on that. Relationships over transactions always and then you’re going to mitigate your risk.
Cam Chan:
Exactly.
Mark Perlberg:
Great ideas. Rachelle, I know that you’ve been saying, you had a really great idea that you told me a few weeks ago. I was hoping you could tell it. Before we get to our call of actions I know you said that you wanted your son, you were going to do something with your son, getting him in the game. Can you tell us a little more about the details of that?
Rachelle Rayner:
Yeah, so my son is 11 and I have been putting aside some money for him to do his first flip when he is 16. So since he was five years old, he wanted to be a police officer and then he wanted be a doctor and then he wanted be a veterinarian then he wanted to be a biologist, all kinds of stuff. And I said to him, “You can be anything you want in the world, but the first thing you’re going to be is you’re going to be a real estate investor because that will give you the freedom to do anything that you want to do in life and you can change as you grow and whatnot,” but being a real estate investor, and so the plan is for him to do his first flip and I will help him and mentor him through that. And then to be able to use that capital on his flip to be able to start to build a passive portfolio and throughout college so that he can fund basically his life.
Mark Perlberg:
Wonderful. And Cam, you had a really great idea as well about purchasing rental properties as a way to build some equity that can be used for college. And I think it may be John, with your newborn, you might be able to use one as well. Can you fill us in what you were talking to me about?
Cam Chan:
It’s a strategy I wish I had implemented when our kids were born instead of investing in 529 plans, which we do and hoping that it would cover all of the college tuition, one of the things that, but in a 529, you can’t really leverage. Right? It’s the money is investing and whatever that money grows, but in real estate you can leverage and actually safely leverage.
And so all the young parents out there, Jonathan and Rochelle, you guys, your kids are young enough to actually do this. We know that real estate doubles every seven to 10 years in a normal market. And if you pick your right market, you should look for, I’m investing in income property, so we want to make sure that there’s steady income, but I’m trying to pick markets that also is on the way up and appreciating. So again, if you pick the right market, the right location, you should be a combination of both.
Even though I’m focused on staying more on the income piece, I’m also after the equity too. So if you actually buy a property, say $100,000, you actually really are just investing $20,000 and you are leveraging and then you let it grow until they get to college, which could be 18 years or something like that and you sell it and then that’s the money that you use to pay for their college. And I think that had really thought about it and really could have executed on that a lot faster for college.
And so now that I’m having kids that are reaching the college age, and that’s coming up really quickly for us, boy, I kind of, yeah, do the 529 plans, but really we should have just put out the extra effort and done a couple more income properties with the goal of earmarking that for their college funding.
Mark Perlberg:
Here’s also some really cool ideas that you can do. And this just became available in the CARES Act and I’m going to recommend it to some of you guys because you guys are all my clients and we’ll work on this. So as of March 2020, an employer can reimburse an employee for their student loans. So you get the students to take out the loans, your children, and that deduction is a write-off for the employer and is non-taxable to the person receiving that reimbursement up to $5,250 per year. So that can be something along the lines of, let’s just say you’re at a 30% state and federal tax rate, that can be $1,500 a year that you save in taxes.
Another idea is the American Opportunity Tax Credit, that’s a $2,500 hundred dollar tax credit that gets put back. It is a dollar, it’s not a deduction, it’s a tax credit of money back in your pocket if you spend that money on qualified educational expenses. Now if your AGI is over $180,000, so if you are the parent purchasing, spending these qualified educational expenses for your child, you will not qualify. So you have the child use these educational expenses and that child applies for the educational tax credit. That’s another $2,500 per year back into the family pot.
So these are all great ideas. I really appreciate everybody’s time. The last thing before we go is the call of action that I would love to hear from everybody. So we’ll go in the same order and then before I close out with my call of action, I’d love to hear just a call of action of what you would love to get from the host, and what you can provide, where to find you and all that great stuff. And if anybody wants contact information, you could find me anywhere and I will respond quickly with anyone’s contact info and you can also type your best resource or email into the chat as well. So let’s start with you, John.
Jonathan Pacilio:
Sorry, what’s the request here? Make sure I’m clear on…
Mark Perlberg:
Call to action. Sorry-
Jonathan Pacilio:
What’s the call to action?
What’s call to action?
Mark Perlberg:
Yes.
Jonathan Pacilio:
So what I’m offering or what I want the guests to do? Sorry, I just want to be clear. What do you need me to-
Mark Perlberg:
Yeah. Just anything. What you would like to offer or provide or receive from the guest.
Jonathan Pacilio:
Oh, gotcha. Yeah, yeah, yeah. Yeah.
Mark Perlberg:
Where to follow you and all that-
Jonathan Pacilio:
Yeah, I mean, honestly I think anybody who goes to either re-visits this or was part of this, because I know our participant list has dropped here in the last little bit, but I’m a huge fan of short-term rentals, real estate investing. But honestly, the power right now with this massively growing industry is that I feel like if anybody can afford to just get their hands on just one moderately successful short-term rental and manage it, it’s so easy and put 12, 13, $1,400 back in your pocket a month. I know that amount of money for your average family or average junior investor would be gigantic.
So I challenge people to in at least investigate that. And obviously you’re talking about multi-family or a big long-term rental portfolio. I get all that. Absolutely. I did the power to immediately start running a small business, but get major cash flow versus the average single family home just to get your feet wet and realize I’m only walking away with 150, 200, whatever.
Your moderately successful short-term rental is a little bit more work. But the cash flow multiplier to just get you to see the power of real estate is incredible. And forget even your tax strategies that we talked about earlier. It’s like the one home project that I want to start pushing on people that are interested in real estate.
If they reach out to me, I’d be glad to help you find a small, moderate, single family home that you can turn into a short-term rental in many, many markets that you wouldn’t even think would be successful. Doesn’t have to be the beach or the mountains. It could be even just a regular growing market. You’d be surprised how well it would do. But I will put my company, my management company in here in case anybody wants further questions or consulting.
Mark Perlberg:
Yep. And once you get that first rental property, now you’re a business owner. Now we can create a ton of write-offs. That’s all I’m going to say. Rachelle.
Rachelle Rayner:
So first I just want to say thank you, Mark, for having me on. Thank you for organizing this. This has been really great. I had some great takeaways and so if you’re listening in and you have not connected with Mark as a tax strategist, you need to do that right after we get off this call. He is amazing. He works with me on stuff and just having him to be able to call, text, send an email on any questions that I have, or just keeping him updated of my life so that he can help me to plan, it’s just really invaluable. And I’ve really never met anyone like Mark.
In this space. I think he’s just such a value add to really any real estate business that you’re looking to get into or that you’re starting. So yeah, so definitely check it out. So if you are interested in getting into real estate on a passive level, I help people with that.
We have a deal flow where we help people get into syndications and we are offering deals that are more the 506B having relationships. And so minimum investments are $50,000. So reach out to me. Like I said, I’m a big relationship person. I have to have relationships with people before I do business on any level. But I’m happy to educate you on what the power of passive investing can do for you. So I did drop my email in the comments, so reach out if you have any questions at all for that. Happy to help you. Thank you again, everyone.
Mark Perlberg:
Thank you very much. And, Cam.
Cam Chan:
Well, the first thing is that I’m a realtor here in Silicon Valley, so I would any of your referrals, if you have anyone who’s moving and coming to Stanford or working at one of the tech companies that are here in Silicon Valley, I hope that you can reach out to me and I can help with that.
But I’m also a big supporter of helping women in terms of moms and women who we’ve pivoted. I’ve done that path. I’m on my third and fourth career, and in doing so, I think I’ve found my happy medium where I can work on my own time doing the things that I love in an industry that I love. And I think that real estate provides a lot of freedom for that.
I’ve done SDRs, the short-term vacation rentals. I’ve done international properties for short-term vacation rentals. I’ve managed property management here. I’ve owned a property management company for seven years before selling it and I’ve done development, so if that’s something that I can help you with, let me know.
Otherwise, if you come across a deal that you would like to partner with, do give me a call because I am looking and I have a clientele that’s also looking to invest passively. So we are actively looking for projects to partner with folks, especially in some of the states that I’m focused on. It’s Georgia, North Carolina, Texas, the tech states, since we’re coming from tech, the tech states that are going out there. So reach out to me if you have any deals that you would like a second partner with or someone to sell it to. Give me a call.
Mark Perlberg:
Awesome. So my call to action, I want to talk about first, my next webinar, which I’m really excited about, and this is on quitting your day job to go full-time into real estate and how we can create financial freedom. We’re going to talk about that real estate professional tax status and all sorts of things that become available once you become a full-time self- employed hustler and some tax strategies and business strategies, create that shortcut and help you give that perspective and make that plan really excited because a lot of people I know are looking to get there and here are some ideas we can help you accelerate that process.
Also, I provide free tax assessments. So if you have any questions on your prior returns, I evaluate them for free and see if there are any missed opportunities. And it’s just to give a general high level introductory assessment of what is going on and what opportunities are available based on your goals. And that is free. So if you’re interested in having that, we can talk.
And the last thing that I want to talk, I just want to thank everybody here for coming and also Daniel for when he was here because I think that we talk a lot about building relationships and adding value. And it’s been a absolute pleasure working with all of you here and connecting with you through my abnormally strong obsession with taxes and tax strategy.
And thanks for listening to me talk about strategy for all these hours with you and letting me into your lives and letting me contribute to all of your businesses and personal finances. And thanks for being a host tonight, and I just appreciate everything. So thanks, everybody. And just close it out, just I’m going to be posting this all over YouTube and LinkedIn-
PART 4 OF 4 ENDS [01:40:58]