10 Proven Strategies for Generating Passive Income with Build-to-Rent Properties | CapAmp

You know, the real estate is a vehicle. I want to have a legendary family life since I was a kid and all. Legendary family life for me means I wanted to be able to do the things I dreamed of as a kid and the things my father not to was never able to do with his life. And he passed away last year.

One of my roles is learn from people who are doing it right now who are actively having wins, and they're the ones to trust because it means their strategies and systems are consistently working as well.

And that's what the blueprints about. You know, how do we enjoy our family? How do we get them on board? So we're building the wealth together, that we're all supportive of each other, we understand it and then get to enjoy it, you know, rhythmically, meaningfully, with, with, with the best purpose in mind.

Everyone, this is Mike Koenigs. I'm here today with my good friend Jim Shiels. Say hi, Jim.

Sh. Good to see you, Mike. Good to see everyone.

Good to see you too, my friend. So I'll get the show rolling today and just say, welcome to Capability Amplifier. I'm here with my good friend Jim Shiels, and our most popular interviews on the show involve family topics, family values, family stories. It's where I get the most comments. Now, I originally met Jim through Genius Network and Strategic Coach. And one of the things that I was most impressed with is how committed he is to family and. And how he and I never talked about business. But eventually he invited me to something called 18 summers. Now, Jim will tell you more about that in a moment. But I took my son Zach, who was 14 at the time, on a trip to Utah with some other families. And not only did we create great connections, I was able to deepen my relationship with my son. Now, through this experience, I was profoundly affected as a parent, and I know Zach was as well. I honestly thought Jim was a trust fund kid, and part of that is just because he's so articulate, he's so comfortable. But, boy, was I wrong. So when Jim and I started talking about business, I asked him what he did, and he explained to me that he doesn't have to work because he has passive income coming in from real estate investments and is a partner in a development company that focuses on the build to rent niche. Now, this summer, Jim and I were talking, and he said, it's finally time for me to build my platform because I have 5,000 lots to sell. My goal is to help other families achieve what I have with passive income coming in so they never have to work again and they can spend more time with their families and the things that matter most. And I thought, now this is something I can really get behind because the more I dug in, the more I saw a really smart system that everyone wants. Lifestyle, passive income and legacy. So today Jim will share his mindsets, principles, systems and how you can achieve passive income like he has. And full disclosure, you can. I'm going to tell you something that I'm really embarrassed to admit. I'm a great earner, but I've invested poorly. I've invested in lots of startups because that's what I knew. And very few of those have ever produced passive income and very few have produced cash flow. And I was always afraid to do what Jim is sharing with you today, which is real estate. So the majority of my investments are high risk, zero interest, angel investor loans for indefinite periods of time. And, and one of them, for example, finally paid off this past summer after 15 years. And I will have seven more that are getting close, but most are at the 10 year mark. So if I had one regret, it's not meeting Jim sooner and learning from him. So, Jim, it's great to be here with you today as usual.

Good to see you, Mike. I appreciate you having me here.

Yeah, it's, this is good. So I think the best place to begin is just to continue the initial frame. Why don't you tell us a little bit about 18 summers and why that's so important for families.

Yeah, 18 summers for me was a continuation, an ability to do after my real estate. You know, when I started real estate 25 years ago, I said a simple plan. If I could get my real estate in order, in place, then I could get to the good stuff, the important stuff, quicker and better. And that's what ended up happening. I've actually out of my real estate investments, built a family education company because I saw a lot of entrepreneurs wanted that time at home, weren't sure how to exactly accelerate, make the most. And that's how you and I became friends with that program. And none of it would have been possible without my real estate investments. That's what funded the deeper things that I really wanted to do.

And one thing I know about just being around you and seeing the way other people interact with you is because you're not talking about business, you're not talking about money. What that does is it gives people a deeper chance to just bond with you and trust you faster because they're not worried about, you know, there's a Pitch coming around the corner. I mean, you start with service first, but also with family first. And it almost throws. I knew it threw me off. I was like, I'm just waiting for it here. What's the pitch? There's no pitch. There's no sell.

I don't think you and I even spoke about my real estate investments for like five years. I mean, it was. It was years.

Yes.

And it's just not what I leave with. You know, the real estate is a vehicle. I want to have a legendary family life. Since I was a kid and all, legendary family life for me means I wanted to be able to do the things I dreamed of as a kid and the things my father not to was never able to do with his life. And he passed away last year. Right. So that's what legendary family life is for me.

Yeah, well, it makes sense. And, and it's also great because, you know, getting to know Jamie, you guys are so much on the same page. And finding someone who's completely aligned like that and, you know, it's. It's clear that you live your value system and you're congruent with it. So that leads me then to the next question. So let's get a little bit about your how and, you know, how you got involved in passive income earning in the first place, why you chose real estate, why you chose to specialize in that. Because I think that will help us make sense of the system you've developed and been able to just refine over the years as well.

Yeah, real estate. When I started, Mike, I grew up just outside of New York. So Wall street is a place where everyone ran. Didn't like, it didn't make sense to me. I'm more of a tangibility guy. And real estate right away made sense. I could feel it, I could touch it. The simple number just aligned. It was almost like there was a Tetris for me right there. And I also read a simple quote, and that was 7 out of 10 millionaires at that time in the US made their money in real estate. I liked those odds. So I wanted to have something that was income producing whether I was working or not. And that's where I started on the path of saying, how can I own real estate that will pay me to own it every month so that I can get to the more important things, the good stuff. And I tried different strategies, you know, went through ups and downs. And definitely through the last 10 to 12 years is when I really hit my stride. We're talking 24 years in. So My goal is always to shortcut people, to stand on our shoulders for what we made mistakes on that they can avoid. And we'll talk about those principles today. But how can what we're doing be replicated and done for others?

Okay, that's. That's great. And the proof is where. What do they say? The proof in the pudding. The bottom line is you're really transparent with your earnings. And I saw recently your cpa, who's actually in the studio with us right now, you actually published your passive income, your monthly passive income. So let's just talk. Start there with the proof, and then let's dig into some of the stats about your firm and what you guys have under management. Because I think, again, I think it's really important. One of my rules is learn from people who are doing it right now who are actively having wins, and they're the ones to trust because it means their strategies and systems are consistently working as well. So let's just go over some of the numbers and also your stats, the organizational stats, your personal stats.

Yeah. So we're going to go through, you know, this is 20 years of passive income. We've done over 750 million in deals, but we've simplified it down to a system for better lifestyle, better family time. So there was a Eric, Eric Thomas, really dynamic speaker. I've shared the stage with him before, and he had this saying, I don't take constructive criticism from someone who's never constructed anything. And I thought that was fair. So we were doing some project around passive income and someone asked for proof of my funds. This was just the other month. So my cpa, who you know well, was here and had to write the letter and in December, which is normally the worst collection for them for the year, my exact passive income. This is again, income I don't work directly for. This has nothing to do with the houses I build or consulting I do. This is just my passive real estate estate portfolio at $42,692.

Yep. I'm looking at it right now.

That's exactly what it was, which is great. And that number is for me and Jamie and for our family to do the things that we want to do, to give to the causes that we care about. But one thing that dwarfs this number, as proud as I am of that number, is what our company's built. With me and my building partner, we've been able to create a much bigger system to replicate what we did through our build to rent for others. So let me just give you some of the stats for our company right now, Right now we have over 637 under asset management in real estate. There's 44 million in annual recurring revenue coming in from those properties. 158 million in equity that we've created for investors through our properties. I'm sorry, we have over 1033 investors that's probably grown since the last time that I checked this last week. We've already built over 7,500 units. We're housing over 8,200 people. We have 170 plus employees and in 2021 we did 182 million in sales. So the way we figured that, with my family programs that you've been through and the real estate we've done, we know we've impacted over 375,000 families. The goal is always let's get that to a million families.

Yeah, that's super impressive. And then you also have some really exciting news since the last time we sat down. Big breakthrough, which is the acquisition. So talk about that and why that's so important.

Yeah, that was a big move. You know, sometimes you got to grow, prune the hedges to have them grow back better. And a lot of the big companies out there had been looking to get into the build to rent niche. It's very hot out there. A lot of the hedge funds are chasing it. We had some different companies looking at us, but you want to partner with someone that you really like. So we, we actually finalized a deal with Guillen Homes. Now Guillen homes is the 29th largest builder in the United States and their parent company is Sumitomo Forestry. Now this is pretty fascinating. They are a 330 year old company.

Unbelievable.

I'm going to say it again. 330 years. They started as a forestry company and worldwide they build 17,000 homes which is pretty exciting. And what excited us the most about this is they believed in build to rent and they have number systems that you wouldn't even believe. What we had to go through the analyzing that a methodical, this old of a company will go through is fascinating. And they wanted to be into our niche. And one thing that was important for us is other builders that they had acquired. And we still own a piece of ownership, but they were still at the company 10, 14 years later. They had three year buyouts but they were still there long term. And you know, both me and my building partner are young and we want to see this thing grow. And this now gives us the resources, the capital, the reach to really take this to a much bigger Level and I believe builder rent. Of all the niches that I've done, Mike, in real estate, this is the most sustainable, predictable, best longevity. It's the easiest to replicate for our investors and get the best results.

Yeah, well, it makes sense. Just people are always renting and rents are always increasing. You know, it's like if you're looking at inflation, you're always ahead of inflation. That's what's, what's impressive. So before we get into some of the rules, so you've basically broken your system down into some really easy to understand and follow. And then also your passive income indicators, which are really smart. That's how you can predict what's going to be going on in specific areas. Let's talk a little bit about.

Who your ideal clients are. Like who are buying, build to rent right now? Who's the client? The customer? And I always like asking a question like this because I want our listener or viewer to go, okay, that's me. Or it isn't me.

Sure.

But you know, it's, it's a little bit surprising because we, that's what we've been spending a ton of our time talking about from a marketing perspective. So why don't you just dig into your typical ideal client and why.

Our typical ideal client is a successful professional or business owner. They're interested in real estate. They know they should have it part of their wealth strategy. But they don't want to create a second or third job. They don't have the system set up. They might be living in an area like California. We are here. Or maybe the landlord laws aren't in their favor. It just doesn't make sense. The numbers don't pan out. So they're looking for something that they can plug into where they can grab onto coattails. If they're looking to flip a property in six months. That's not what this is for. If they're looking to get into a no money down deal, this isn't what it's for. We build a side residual income for people that are already doing pretty well. But they want to make sure that part of their wealth strategy is a strong real estate portfolio. And that's what we build small real estate, build to rent portfolios for our investors.

Yeah, and I think it's worth saying that the kinds of properties you're typically building are single family duplexes, quad plexes.

Yep. All residential real estate. So all residential. We don't go into commercial. This is easier to get it financed. It's usually in better areas. Higher demand, they're easier to resell. They have great appreciation, especially in the markets we focus on in Florida. But we stick to that little niche. And, you know, now with the track record of doing this for so long, we've been able, able to, you know, do thousands of these and see great results for our individual investors.

Okay, so I think the next place to go is let's just get into some of the strategies. You've got your build to rent passive income principles. And that's really.

How to think and, and very consistent with the Dan Sullivan mythology. He always begins everything with what are the mindsets that are important? I think driving this through the mindset because thinking right is the first step to being successful. And then there's the strategic side, which is what to buy, where to buy, and how to know where to get in where the good deals are. So let's get into the mindsets first and what again, you call your build to rent income passive income principles.

Yeah, these are absolutely key. And you can take these anywhere you go. If you're going to get into real estate and you're just not sure on this like we were talking about, you know, for things that you're doing, you know, these are principles that can be picked up and carry wherever you go. And we've really embedded on our mistakes over the last 24 years to keep us on a straight path. So the first thing we want to talk about is investing for the long term real estate. You know, if you're trying to day trade real estate or wholesale or flip that, that's great. We see it on the tv. That's not what we're about. We look long term. And the long term players in real estate have done the best, you know, I told you about, you know, big part for me is researching family history. So I went back and saw my family history in Ireland. Remaining relatives? Well, my grandfather's, my great grandfather's house is still owned by my second cousin. It's been a rental now in the, in the family for 142 years. That's called the long term. So for real estate, and that's exaggerated, but that's a, it's a real number. But you want to look long term. And if you're willing to look long term with real estate, that is absolutely the first thing that you want to do.

Okay, so what's number two?

Number two is real estate makes money in five different ways. So of course we know about cash flow. Cash flow is an important thing, Mike. You want to have cash flow. However, Most the time when you're planting seeds, cash flow is low, especially if it's a better property and it will grow in time. But cash flow is only one of the five major factors of making money in real estate. You have to look at all five of those factors because I can tell you right now, my investment career would have looked very different of where I was, what I invested, and if I only concentrated on that one thing, cash flow, and I wouldn't be anywhere near as to the level I'm at now by combining all five. And that's what you want to do, and I know people will be able to get access to that, but there's actually five ways, not just cash flow.

Okay, so let's dig into all five, and I got a couple of questions already.

Sure. Okay, well, we got cash flow, we got a rental increase, we got value increase, we got tax benefits, and we have principal reduction, you know, your tenants paying down your mortgage every month. So those are the five different ways. And if you don't look at studying the areas that should have growth, where rents should grow, values should grow, you have a good accountant with your tax benefits, you're not going to take full advantage. And different properties will have better benefits than others. So you want to always put that into your overall equation, your overall mindset. Okay, I'm going at this in five directions to make money. I want to make sure they all align.

Okay. And then, you know, one of the things that you do is, you know, focus on, you buy and then the value of the property increases. You can refi, so you can pull out cash and you can do that in tax free fashion. So you can basically take that money and buy more properties.

It's a great way.

Yeah, great way.

That's one of that. When you talk about our system, most of our successful clients will start by buying three to five properties so they have a solid portfolio. And within three to five years, as properties have gone up and they've paid them down, they'll refinance out tax free. The tenant will pay for that, and then you take that money and you dump it into the next part of your growth of your portfolio of more rental properties. That's how I grew substantially, by using the simple system. And it does snowball. And again, refinance is a wonderful way to leverage tax free. And having someone else pay that debt, I love it.

Okay, so let's get into number three.

Yeah, number three is good areas and good neighborhoods. This sounds really simplistic, but so many people overlooked it a lot of the stuff out there you're going to see, hey, get into this, you know, real cheap property in a not so great area in a not so great neighborhood. Look, this has got to be a very unemotional thing. Where I've seen the most money made for people with the most amount of ease is solid areas. And in good neighborhoods, you know, areas where there's a percentage of home ownership where that you and I would go in Saturday night at 10 o' clock and collect the rent and have no problem. Now, we don't have to do that, but we would be willing to do that.

That makes sense. So number four is actually pretty closely tied.

Avoid the fixer uppers. The shows are great, you know, and we've actually supported some of those shows out there. But it's a show, you know, surprises are not fun. Fixer uppers are not fun. When you're looking long term with your real estate. And a lot of the times if you start with deferred maintenance on a property and you buy, you're going to end up even worse. And those bills seem to get higher and higher with old fixer uppers where with the new construction we've avoided that. So that's why I hung up my rehab shoes almost 10 years ago. I had done it for 15 years. I was so proud of myself. No more. What I found is avoiding the fixer uppers and going with newer conditions. New construction properties is totally changed the ease of what I'm doing. Right.

And the same would be with the. I know when you guys are building, you include appliances and I imagine the technology, construction materials, etc, just like everything just keeps on getting better and better and lasting longer and longer as well.

Well, yeah, and we don't want to veer too much off, but we're in Florida. You want to avoid hurricanes. As you know some of our stats, we were hundreds of projects in southwest Florida and we fared fine compared to the older properties. That was a pretty major hurricane. And that's the difference of new construction. They're built to higher standards. There's different requirements now of how high you build. So it is a hedge against bigger things as well. Not just the longevity, but also natural catastrophe that you can actually see yourself through even better with new construction.

Okay, all right, what next?

You gotta let the experts manage your property, Mike. I mean you're, you're busy, you have a successful career, you're a successful professional, you're running a business. You wanted real estate to be a part of your overall wealth strategy. You want it to become your second or third job. So if you'll let experts manage the property for you, they're probably going to do a better job than you. And it's a very small cost to get a lot more freedom. And that's what I'm all about. Buying back my time for good cost.

Right? Yeah, that makes a lot of sense. And the last thing I know I'd ever want is I don't want to have anyone ever call me up and talk to me about a toilet. So I'm with you on that. All right, next one.

Well, again, with, with having the experts manage. This should be avoided. But you know, your properties are not for charity. You give a lot to charity. I love supporting charities. If I learned this a long time ago, that if I give charity in my rentals, I'll never be able to give charity anywhere else because I took a lot of experience. Excuses, Mike, when I first started 24 years ago with my rentals of things that was happening with tenants and you hear these, these stories and I bought into them and sometimes they were true, but most time they were not. And what I learned is, no matter what, at the end of the month, my mortgage is always due. I can't call bank of America and say, hey, my tenants having problems? My money still do. So I don't like to deal with tenants on that. It's not comfortable for me. I don't want to be miserly by any means. I let the experts manage it. But I'm very clear on that. I am always going to give to charity, but I'm not going to give charity to my rentals.

Yep, makes total sense. Next, number seven, landlord friendly states.

This has been a pretty big thing, you know, especially through the last few years in state to state. There's different laws and there's different laws that either protect the landlord or protect the tenant. Now, I'm not getting the politics here at all, but I'm just saying if I'm going to invest in real estate, me as a landlord want to go where it's landlord friendly laws. So I highly encourage, before you invest in any state like we're in Florida, it's known to have pretty fair landlord laws. That's where I like to invest. That's where I put my money. You want to do the same thing? I highly recommend, if you want to avoid potential issue or not being able to collect those rents which produce the passive income, make sure you're in a landlord friendly state.

Yeah. And that would be another way of saying not California, you Know, I mean.

I. I used to be here. You know, I was here for years in Bakersfield, California. And yeah, it was. It was not the friendliest. Florida was a. It was a fresh breath. Air, actually.

Yeah, for sure.

Breath of fresh air.

A fresher breath there.

Yes.

Okay, good. All right. And I, like, during the lockdown, for example, the laws. And I understand the reason behind it. You know, you want to be fair, but at the end of the day.

If you're in a place and you understand and believe in private property, you know, you don't want the government breathing down your back and creating arbitrary rules that are way, way, way stacked, not in your favor, and where you have no control over private property. It's. That definitely is a political conversation. I understand. All right, next up, number eight.

Yeah, number eight is plug into a support team. Again, I'm only thinking about our avatar. Most successful clients, they have successful careers or businesses. They. They don't want to recreate the wheel here. So make sure you're plugging into a support system. You know, there's an old saying for contractors. You know, $20 an hour, 50 if you help and keep that mindset. Because if you're plugging into a system, lean into it, lean on it. Don't try to recreate the wheel. Make sure wherever you're going, if you can get a full service system like ours, lean on it. Use it so that you, you know, you're buying back your time, you want to be with your family. You know, plug into that system right now.

That's great. Number nine.

Number nine. I mean, build to rent is a hot term. Now, you knew it before you talked and said, oh, you do build to rent. But there's a lot of questionable build to rent companies out there. And what creates credibility is referrals, references, and track record. So I tell you to only buy from someone, especially if you're doing build to rent, that has a reputation, that has a track record. And I believe if you've built less than 500 properties, you're still in startup phase, you're still figuring out the systems. You know, now we're crossing the 2,000 mark, and I feel like we're just starting to understand what we're doing. And so you just want to make sure it's not that you can't go sit with someone with a lower track record, but just know that increases risk. So you want to go with someone with a reputation and a track record.

Okay. And I think, you know, when I think about that, you want someone who's Been through a couple economic cycles as well, who's been able to adapt, negotiate, deal with banks, deal with lenders, deal with again, ups, up cycle, down cycle, and a variety of different buyers as well. And being able to help them navigate.

Yeah, absolutely.

It's not in anyone's best interest. You know, like you already said it, you, you know, your best clients start out with multiple investments and then they continue to invest over and over again over the years. That happens for a reason. So I think you'd also want to find someone who not only has a track record, you'd want to have someone who said multiple buyers who buy in at different times during different cycles. And what you find too is in up, up cycles and down cycles, even when interest rates can be high, they're still back to it because they're playing the long game. They're adhering to lesson number one.

Yeah, you don't try to time the market. Everyone talks about it. When you go long term with real estate, any way you look at it, you are a winner as long as you're not forced to exit. And the way that you're not forced to exit, Mike, this was a big lesson for 2008 because a lot of people went under. We survived, we licked some wounds. But our biggest lesson was own less of better quality with less leverage. That's why I'm saying if you're trying to force yourself into a house, zero down and it needs fix up and it's not in the grade area, I think you're putting yourself out there in the wind and you might get blown away, you know, but if you're, if you're able to get into something of better quality, you know, with money into it, you can, you can go through any short term blips down in the market. Even in 08, you would have been fine. So that's something that you really want to look for.

Okay, great. And by the way, for anyone watching, listening right now, I have lots of notes, I'm taking notes right now that are going to be in the show notes. And we also have a place where you can go and download and gain access to some additional tools that Jim and his team have put together for you. So just know that your education is going to continue beyond this interview and we'll send you a link in a little bit. So let's get into number 10.

Yeah, the last number 10 is kind of the bow on everything. Never stop learning. I mean since we've known each other 13 years, I still go to masterminds on real Estate. I'm still. Still taking courses on them, still listening to podcasts. It's a forever growth. And when you first started learning real estate. Yeah. You're going to feel like you're drinking out of that open fire hydrant, right?

Yeah.

But it does start to slow down. But you're never going to stop learning. I mean, I don't ever want to stop learning in the things I really care about. And since real estate's such an important factor in my life, I want to keep learning about it.

That's good. And I know there's a bonus number as well that's super important.

Unofficial number 11, I guess it would be. The cherry on top is make sure you get your kids in the money game. Talk about money with your kids, get them involved, let them sit in an accounting meeting. I don't hide finances from my children. I've let them know, hey, I'm going to support you. You're not guaranteed anything, but I want you to understand how money works. And if you're not getting your kids involved in the money game now, then they're going to be in their mid-20s, completely clueless. And I don't want to do that because. So the earlier the better. And it's definitely not too late. You know, talk to your children, to your spouse about money. It should be an open conversation with everyone. It shouldn't be. One person holds the gold and doesn't talk about how we're making it or how it's occurring. You know, share that, those lessons together.

Yeah. And I've met your kids, and they're definitely not only interested in this, they're getting in the game. And a couple weeks ago, we were doing a mastermind, and Christina Wise, a mutual friend of ours, her daughter Macy is 26, not only involved in her business, she's got a net worth that exceeds $600,000 already.

Good for her.

And she just bought her second property, which is amazing. And she's generating enough passive income cash flow to pay for her lifestyle. And of course, that also means that, you know, the properties are paying for themselves. Yeah, I mean, it's. That is, if there ever was an American Dream, that. That is it. So. Well, let's dig into the next segment, which are the passive income success indicators. And we've already talked a little bit about Florida, but I know that's a key element for you because that's where you focus. So let's talk about what the top five are, why, and where you see them right now with, you know, specifically where you Guys, focus on.

Yeah. So the success indicators of what initially took me 24 years ago to Bakersfield, California, we went there in the late 90s, and if you know the price, you know, that happened from late 90s insane to mid 2000s. We did really well. But there were some fundamentals we were looking at. And then Florida brought us these fundamentals as well, you know, in 14 different markets in Florida. But these are the indicators we look for for the best outcomes. Now, I want to be clear on something. I do not depend on appreciation, but damn, do I do my best to get in its way.

Yeah.

And there are some predictable factors you can look at that have been proven that you can follow. And that's what I want to talk about today. Of these five things. Right.

Let's hit them.

First one is economic growth. Are there jobs going there? Are there businesses moving there? If people have good job source, they can pay better rent. So you want to go where the economic growth is strong. And it's also varied. I never might like to invest into small Midwest towns that were based around one factory or one army base. You could do really well there. But if you. The one horse dies or goes away, man, that gets really, really ugly fast. So I want to go someplace where there's an economy of different types, and also, you know, people are able to get jobs. That's a very straightforward thing you want to look for.

Yep. And I know, for example, you know, it wasn't long ago that Austin was the bomb, and already prices are insane there and the locals can't buy any longer.

Just.

Just like in Tahoe is another good example of where things went crazy. And of course, here in San Diego, where I live.

This is a very, very difficult market unless you really, really understand a niche. And you've got what I would consider some pretty detailed insider information. For example, I know a few people who do okay, but not on a predictable level.

No. And you got to hit all five. That's what I'm talking about.

If you hit.

If you hit four of them, you're doing pretty well, but just you really should hit all five. And there's one that's key that we'll go through here and we'll get you. We'll use San Diego as an example.

All right.

Yep. Second one's population growth. This is a really easy one. If some places in their census showing lower numbers in population than they were 40 years ago, and there's areas in the US like that right now, I don't want to invest there. Sure. That's a simple, you know, number you gone. Well, if there's less people going, population shrinking, why would I want to invest? You want to go where the population's growing again. For Florida, for example, through the lockdown, we couldn't keep up with the amount of people moving there. Definitely couldn't build for it. So you want to go where the population is increasing. That's a very easy thing to look for. So the wind's at your back for your investment.

Yep. So lots of jobs, a lot of perceived freedoms, benefits, and they want to feel like they're getting good deals, which I think is number three.

Yep. Number three, affordability. Now this is the one that blows a lot of areas out of the water. Because when it's affordable, you can usually cash flow. Right. That means the average median income for a family in that area could usually afford to buy the average median home in that area. Now you look at a beautiful market like we are here in San Diego, beautiful. But the average salary is not going to pay for the average medium home. Not even close. And when the prices are that high on the median cash flow is really, really, really tough to. To get. So for sure.

Yep, that makes a ton of sense.

So you got to look for the affordable markets.

Number four, desirability.

What's drawing them there? You know, Florida is warm and by the water. Yeah. And people like that, they, they like the lifestyle there. It's drawing them there. So it sounds simplistic, but what's drawing people there? Do they want to be. Be there? Is it desirable? And desirability, you know, goes a long way.

Yeah, I know for me here in San Diego, after 22 years with still keeps me here is I know I can get outside. I can work out every single day. It's easy to live well. And the quality of. I know I can get fresh fruits and vegetables year round. It's the quality of the food, the lifestyle and the people. But in Florida it's so much less. You know, I can, I could get a home twice as good as ours for half the price for sure.

Oh, easily.

Unquestionable. Easily.

And even, even my friends from California that were saying, look, I can't invest in California and I'm looking for something with better landlord laws. Let me go to Utah. Like Salt Lake was a popular market now. Well, Salt Lake is an interesting number, I'll tell you. So Salt Lake, the average price of a home is about 580,000 now. 580,000. And the median income for a family is about 60,000. You go to Jacksonville, Florida, our first market, our hub market. You know, the average price of home is about 310, so you're $270,000 below. And guess what? Our medium family income is 60,000, the same amount. So these are the numbers you want to look for. The desirability for a family and the affordability is there, you know, compared to Salt Lake's a pretty spot or a good spot, you know, for landlord laws. But the numbers aren't really making sense anymore. So that kills the desirability at least from the landlord stance.

Right on.

All right, number five, supply and demand. We all know this one, we all hear about it in all of our entrepreneur classes. But you want to go where there's more people than houses. So again, you know, we want to go to these markets in Florida where we're in, where we haven't been able to keep up with building demand, you know, before the lockdown even happened. You know, southwest Florida, where we have a lot of presence. For example, they were showing from a report from the municipality that's like the building group there for the government that they were three years behind on needed rental inventory. So they don't have enough houses. And for smaller units, like for our duplexes houses or units 1400 square feet or lower for these starter families, it's been less than 10% of the focus for the overall building industry. So these starter homes are not available or they're old and dilapidated. That's where we come in for this supply and demand. I want to build in markets that are behind on housing and have more people, people coming. So you want to look at the supply and demand ratio.

Okay. And in your case too, the fact that you're, you have brand new construction. And we'll show plenty of pictures in the, in the video as well. If you're watching the video version of this podcast and then of course the additional content that we're going to share with you has lots of slides. You can see examples of the development. Really good looking homes, top of the line.

Appliances. I mean, you guys are really supporting supplying a high quality product. We do upgrades, they're going to get filled up faster.

Yeah, we do upgrades that most people would get if they were buying the home. You know, we could, we, and we do sell our homes retail to buyers sometimes. We like focusing with investors, that's our niche. But we build our home so that a person will walk in and want to buy it or rent it, you know, first. And so what they're called upgrades. So we give automatic upgrades Most builders would not, because we want to get the best rent and have the best resellability down the road for value. So that's a really important part of what we do.

I love it. I love it. Okay, so that's number. So the five again. Economic growth, population growth, affordability, desirability. And I added lifestyle into that in the notes, then supply and demand. So address the weather, the hurricane issue. Yeah, we've been talking about Florida. Florida, Florida. But, yeah.

So let me tell you a little story. So in 2004, Hurricane Charlie went through southwest Florida, decimating a little town called Punta Gorda that we build in. Now, my dad had a cousin there. I mean, they just got wrecked. It was a terrible situation. And when you see the devastation, it's like, wow. And we. We saw the same thing with Fort Myers just this last year with the downtown area and the older homes. But there's interesting thing, and I'm sure you'll show the video when you start to look at this video of Punta Gorda, which after 2004, they changed the building laws. They said, look, we need to build things higher and stronger. So that's why construction became more expensive. You know, we're kind of the guys being builders. Like, remember when your parents used to say, wear a seatbelt. Wear a seat belt. Yeah, yeah, yeah. And then you get in that first car accident.

Yep.

Well, that's what just happened with this hurricane. We were like, whew. Glad we wore our seatbelt. Glad we built up 14 extra feet and used the extra fasteners. And it's really cool, Mike, because you can watch this video. The day after that, hurricane, Hurricane Ian went over two parts. Fort Myers and Punta Gorda. That's the eye of the hurricane. I mean, the powerhouse of the hurricane. And when you look at downtown Punta Gorda, you're going, gosh, it looks like there was maybe some wind and rain, but doesn't look like a hurricane. And the reason why is because the standard was different. Everything that was rebuilt was newer into the new standard. So we have to follow those standards for new construction. Plus, a lot of our homes, even though we're in costa coastal areas, are still built five miles inland. And when insurance companies look at that, they analyze it for a lower insurance cost to you because they know their risk factors. So we're always trying to build in that. In fact, with about 278 projects going on in southwest Florida during Hurricane Ian, we had four. Four that needed insurance claims. Only four. And this is because they weren't finished. They Were just freestanding walls. And the strength comes from tying down the roof, roof onto it. And these walls just fell down. It was just over the 5,000 with no flooding, though. And another, you know, that's a great thing for the insurance companies saying, well, we'll keep insuring these guys. And for our investors, they said, we made it through a big one. So hurricanes are something that you want to look for. Just like in California when I was in Bakersfield, I had to understand earthquakes, which I got really used to, and now I'm used to hurricanes. And there's ways to minimize your risk towards those.

Yep. That makes. Which again goes back to working with someone experienced, who's been through hopefully some big weather cycles, not just economic cycles as well.

Yeah.

So the next thing that I asked you to do today is come prepared with some, some case studies, some real life case studies, because again, all these are great, all these concepts are great in theory, but in practice, you want to look at people who've gotten in, made money and have something to show for it. So why don't we go through a couple case studies, some real life, real people. And these are ones that I've been able to look at with you, verify them, see the numbers. So, you know, these are things that I've looked at personally and you came and I've even watched you interact with some of these clients during the, you know, preparing for this interview. So why don't you cover a few of them right now. And again, this will give us some examples of what to expect.

And I know you can't make promises. You can't show anything more than these are just examples. You're not making any financial promises whatever?

No, definitely not. But I'm just showing people that we still currently work with and are very happy. So first one, Tom to snut, former air force, ran a mortgage company. I remember first conversation our company had with Tom, he wanted to get out of his company a little bit more, have some more space for his wife. She was going into a kidney donation situation, which, as you know, I donated a kidney to my dad. So I know very few things about few things. But I knew about a kidney donation. Since I went through it, I was able to help them. We bonded. You know, he said, I'm gonna really start off right. He went into five different properties, did very well for himself. Now these five properties have created over a million dollars in equity. He went on to build a few more. He's up to $11,400 estimated every month for cash flow. And what Was really cool. The day that the adoption my youngest daughter went through, he was watching the story. We've stayed in good touch. He Facebooked me. He said, how was it? What's going on? I said, it was great. Thanks for reaching out. And he said, by the way, and you've seen the actual. I showed you the screenshot. He said, I retired from Fairway Mortgage yesterday. You were a huge part of that. Thank you. And he's living his hobbies, which I love. Like, this is about living your hobby. He was an Air Force guy. He loves flying. I've been up in the airplane with him before. And he said, my last two rental properties I bought pay the payment on his plane. So that's just. He's one of my most memorable stories because he really got out of his job position, was able to be there for his wife in a huge thing, and he's living his hobbies, which I just. I love that.

Yeah. Yeah. Well, again, that's having a great why for this is. Is really important. And your. Your big why is family, freedom, legacy, and being able to do something you were never able to do and fulfill kind of like a promise that your dad was never able to provide. We're all going to have different whys. I think mine is, is I. I want every day I ever wake up to be a want to, not a have to.

I love that.

And then I want to spend and invest all my time in the family I choose. Not necessarily the one I was born to. I get along with my siblings, but I. I think it's really important that, you know, you get to create with the people you love.

Absolutely.

And that's my big driver is I just want to make sure I'm able to make every day, let's create together day.

Love it, right? Love it. Yeah. That why is huge, you know, and the next person we'll talk about, she has a huge why I love Dr. Goodwin. Amina Goodwin. She immigrated from the Caribbean. She's now a doctor of infectious medicine in Manhattan. Met her old family. She loves what she does, but she wanted some space. She wanted to have a residual coming in for them to enjoy if she. She ever needed to step back, you know. And she's done really well for herself. She went into three properties with us right away. A quad, I believe, a single family and a duplex. And then has gone on to buy two more. Right now she's sitting at about 738,000 in equity, and she's bringing in 5,575 estimated monthly cash Flow every month. Again, that is a nice little side business that's not creating a second or third job for. She's just leaning into our system. She's able to do what she wants, travel with her family and, and we've been a big part of that, which I really am happy for.

Right. And when you start getting into that kind of passive income, there's so many things that you can do with it because obviously you can reinvest it because it's real estate. You've got ways to lower your tax liabilities considerably. So the impact is more than the cash flow. Plus you can start taking advantage of some really interesting financial strategies. Like a bank on yourself strategy, for example.

Oh yeah, we have people doctor. Yep. We've had people leverage their properties that way for sure.

Right.

So. And the best thing too is you remember the old wealth principle. I don't know if it was in Richest man in Babylon or that, you know, don't eat your seed corn. You know, you're spending the interest, not the principal. And that's what I love about real estate. You know, sometimes when I've had other investments or something in stock, you get that chunk, but then you're eating your seed corn. What I like about real estate is the seed corn stays untouched or actually continues to grow and you're just living off residual the interest, which is very nice.

Yep. And again, some other strategies of course is, you know, I call it rich man's accounting or rich women's accounting, but the notion of being able to borrow against and live on.

And continue to increase your equity, you know, your value. So there's just so much that you have available to you when, when you know, you're not living on your paycheck.

Yeah, that's great.

All right. What's another one?

Adam, Adam Hamilton. He, he's a real success story. Remember when he first came in, we became friends. He actually came and stayed. He wanted to see our market, stayed one of our short term rentals. Our wife's became good friends. I mean, I love his wife, but she asked a ton of questions, as she should. They had always owned, they'd owned a few properties in Utah, but they weren't sure they wanted to come to Florida. Well, once they came and looked at it, he went into five properties and some of them being the quads and the duplexes because he really believed in what he saw and he wanted to get in and has done really well. And he has been into some of our family programs. I've reviewed deals for him that I'm not even involved with. But I wanted to see him continue to grow. Today he's looking at 2.6 million in equity and his cash flow is over $21,000 a month. I mean he's got a young family, he's living a great lifestyle between St. Augustine, Florida and Utah. He's in the mountains and at the beach. And he used to be a mortgage corporate guy. He was so close to the deals, doing all these mortgages. That's how he learned about them. But now he's in the deals and he says it's completely revolutionized what he does. He comes to some of our family masterminds. It's just great to see this happen. I mean someone who's actually had a strong why and now they're doing the important things, the fun things, the meaningful things with what they've created.

I love that. Now one of the other things that you do is you get called in to speak to groups. You do a lot of group related things. People bring you into their masterminds. Sometimes they have you talk about 18 summers. Oftentimes that leads then to the so how do you do it? Because people, when they're inspired by your lifestyle, they want to know, just like I did. I'm like, how in the hell is this guy doing what he's doing?

I still crack up. You thought I was a trust fund kid. Not that there's anything wrong with that.

No, no, it's a compliment.

I was about on the far side of that.

Totally. We're both two, two poor kids from nowheresville. But, but I've, I've watched this. You, you work with a lot of groups. You get pulled into syndicated deals, you get pulled into again, people who are, have an audience of potential investors because there's advantages to doing that as well. You make it worth the group owners while to support this in a variety of ways. So you've got a lot of long term relationships. So I'd like you to just share maybe an example of someone who not only got involved personally, but also brought in a bunch of other investors alongside.

Yeah. So David Phelps. David Phelps has been in some masterminds with us. He's a great guy. He was introduced by Daniel Marcos, who you know, very big in the Vern Harnish world. Great guy. He's been to our retreats. That's who introduced us actually. And I didn't realize David runs a private group for high net worth dentists and doctors who invest in real estate. But they said, hey, we heard about your Family talk. So you come in and do a family talk.

Said, sure.

Seemed like a good guy. Daniel's friend go in, do that. And then all of a sudden they said, wait, what is this? Build a rent company you're a partner in? Well, long story short, all of a sudden, going from family values to real estate, they became a real solid client of ours. And now, you know, as a group of their investors, they've invested in several of our properties. You know, they're bringing in $12,000 about a month now. And their cash flow from the properties have like over two and a half million dollars in equity, which is great, you know, and that's what. They even syndicated some property, special projects with this as well, that ended up, I think it was returned about 11.2%. So they were real happy with this. But it's always been good to. For me, I think you and I talked about this. I really like to work with people in real estate that I'd like to have dinner with. Jamie and I.

Right.

Like you and Viv, any day of the week. We have so much fun together. Other people, it's like if. If I don't want to introduce them to my wife and the kids.

So the same.

I don't. I don't want to do it anymore, Mike. Yeah, I just don't. So it's. And it's nice that with, with how we're standing on our family values, we're attracting the people we want to work with in real estate.

Yeah, that's. I. I can't. I couldn't agree with you more. That's my rule now is if I don't think my wife's going to like you, I don't want to work with you. And, and that it makes light. It's like tonight, after we're done doing our content here, we're going to go out to a great restaurant. Great restaurant. We're going to head out to Javier's and, And, yeah, Vivian's coming along. But I feel exactly the same way. You just got to. You want to play with the people you're working with. And again, back to lifestyle. This is all about lifestyle. So any other syndications or partnerships we.

Did, we've done a number with, with a group called DLP Now, Don Warner, under 40. Don's pretty much a dynamo, part of Tiger 21. You know, they're worth several hundred million now. They brought me in again for the family talk. I crushed it. I mean, that's something that I can talk on with real passion and authenticity now. I've been invited back four different times. I'm an advisor for family life for him and their entire leadership council. And they've invested in over $40 million into our deals and projects. A lot of our build to rent, we built an RV resort together. But was interesting was that they said that our values spoke to them and then their wallet opened, which felt great for me. Again, this craziness, you were the. I'm going to give you credit right here. You said, why are you separating these worlds of your family values and never talking about your real estate? I mean, how, how long did you know that I clammed up? And this is an example where, where someone of, of this caliber, you know, they have 4 billion in assets under management. So you're talking a big group. But that's what opened the door. That's what built the trust. And we've been able to make them great returns on our investments together.

Yeah. Yeah. So I think this is a, a great place to talk a little bit about your playbook and your tools. So I'm gonna, I'm gonna shamelessly plug you first and then I want you to do it. Because my goal is to have you think about this for a moment, which is just to summarize how our listeners, our viewers can get to where you are, you know, reaching that. I don't care if it's 5k a month, 10, 25, 50 grand a month in passive income. That's one of the goals. But also the fact that you can come and speak to groups either on the family values and talk about 18 summers and board meetings. You can talk about making money doing passive income investing and this build a rent model. And the place to get more is to go to jjplaybook.com and we've got your blueprint, some current deals, a video webinar. It's basically a toolkit to get immersed in this and get all your questions answered, but also cover some of the biggest objections that people might have. If this doesn't answer all your questions, you can go more. And again, that's to go to JJPlaybook.com but want you to just summarize this. And if you had to start back.

All over again, knowing what you know now.

What would your. If you gave me five or 10 steps, what would they be?

Yeah. And that's what we're going to go over right here. This is literally 24 years that Jamie and I sat down and said, where have we gone that we're glad we did? Where do we wish we avoided? How can we get the straighter line or even call it the brother in law advice. Like if my brother in law was going, and again, I like my brother in law. Some of you are going, I don't like my brother in law. I love my brother in law. So if he was saying to me, hey, I'm going to finally get into real estate, what should I do? What advice do I want to give him to protect him and also hopefully give him the upside advantage. These are the five things I tried to boil it down to. As simple as possible so that there's that easier roadmap. You don't have to look at all these distractions. This is a direction you can head to get where you want to go. And that's what we'll go over.

All right? Five gold stars. Five gold stars.

Five gold stars. Number one, we just went through it. Just ensure that the deal that you're going into passes. Those passive income principles, those 10 that I went through, they're not just for fun and giggles. This will protect you. You, this will upside. You make sure it goes through. Those 10 things you follow that you're gonna have less headaches. You don't, you're taking some risks that I don't suggest. Also the success indicators. If you know those principles and those success indicators, population growth, economic growth, affordability, desirability, healthy supply and demand, and you check for those, you're putting yourself where the wind should be at your back, no matter what stage of the market we're in. Great. Now once you understand those, you got to leverage in. You cannot make money from the sideline in real estate. Now you can leverage into a system, but you got to buy. Start with three to five properties. Focus into an area where you have systems or belief or you've done your homework that can get you started. Now, again, the great thing is you're not having to pay cash. The beautiful thing is, you know, if you buy $500,000 worth of stock, you're normally paying $500,000, right? Unless there's some things you can do. But most of the time, you're coming up with the cash. $500,000 piece of real estate, well, you're only coming up with 200,000, 250,000, you know, even less. I mean, that's it. Half down. If you want to go 20% down, you're going at 100,000. So you can leverage into it. So you start with that small portfolio, get it going, make sure it's in good condition. All those principles, that's your starting seed. Corn that's going to start to sprout.

Great. What's next?

Every few years, you're going to roll your equity into new deals, refinance out. Don't buy a Rolex with it or anything like that. Be disciplined to pull equity out tax free and then dump it into your next portfolio purchase, you know, into more properties. It's a very powerful technique to start to grow that. And again, it's that snowball effect. You don't. This isn't. This is the tortoise and the hare. The hair is going to sprint out and probably run into trouble. This is the tortoise approach. Every few years, you're dumping it from forward, but that snowball really starts to get bigger.

Yep. So it's really compounding as well. And you can also start getting creative with tax benefits and start using some other financial instruments to protect your money and repurpose and reuse it. So I love that.

And that's. And that's number four, actually. Again, you got the, the ability of refinancing, Mike. The ability to refinance allows your tenants to pay for that lifestyle. And you're doing it tax free. I mean, that's pretty powerful. You know, some of you are probably going, wait, my tax rate is, wow, that's a lot of money that I'm saving that I'm not paying back. If it was earned income, you're just leveraging it off, someone else is paying for it, especially as rents normally rise. It's really, really powerful once that starts going. So make sure you use the power of a refinance.

Love it.

Okay, next one legendary family life blueprint. We are probably the only real estate people out there that include this, but it's just what we've weaved in. You know, why are people going into real estate again? They want to buy back their time. They want a legendary family life, which again, for me means doing the things I always dreamed of as a kid and I could never do. And now losing my father, you know, the life he never got to live. And this is something I'm real proud of. Until I got my real estate in place, I was able to retire my parents 15 years ago. They could finally get to the good stuff, the important things. And that's what the blueprints about. You know, how do we enjoy our family? How do we get them on board? So we're building the wealth together, that we're all supportive of each other, we understand it and then get to enjoy it, you know, rhythmically, meaningfully, with, with, with the best purpose in mind. So that's a really powerful thing that we've put together over many years. You've already been practicing some of it, but it kind of puts the bow on what really matters to us.

Yeah, for sure, for sure. Okay, so let's move on into the goodies. Why don't you talk a little bit about the passive income blueprint. Some of the current deals, the fact that people can watch the video webinar that we also put together and schedule a discovery call. If they want to talk to someone and find out if this is a right fit for them, they can go to jjplaybook.com but what can you tell us about some of the goodies and what's included?

Yeah, you get a step by step passive income blueprint list of our current deals, A video webinar that walks you through every one of our steps. How does this work? How can I actually get into real estate without all this confusion? You know, you can be a part of the process but never feel alone. That's kind of the goal. And you'd be able to get a link. You can talk to one of our sales counselors today that have helped put together dozens and dozens and dozens of successful portfolios so we can get a feel, you know, what are you wanting to do? What are you wanting to achieve? What kind of capital do you have to start to work with? And then we back into what's possible. And some people, we might not be a good, good fit. For other people, you know, it's been ham and eggs and, and it's been exactly what they're wanting. Not a second or third job, a real estate position, but with some protection and track record behind it.

Okay. And I've taken the time as well to talk to your team. So I've interviewed them and learned more about what, what kind of questions they ask. They are. There's no pressure at all. They're not going to try to squeeze you into a deal that doesn't make sense. They really take the time to get to know you and understand your specific situation. And I think it's also fair to say that, you know, some of these folks have worked for you for a long, long time. They're really long term team members. So is there anything you can say about just your team?

Yeah, I think that track record speaks very loudly. I know you and I have spoken about. I know Dan Sullivan speaks about that as well. And when someone's there 12, 14 years working with you, that says something about the service.

Yeah.

And so we have some, some real long term team members. They've invested in real estate. They see the power of gives them a nice feeling to know wow when someone like Tom is up flying his plane. I had something to do with that. You know when, when other customers of ours saying we were able to be at the family reunion or host the family reunion, hey, something happened with my health, I was able to step back. They know they're a part of that and there is some camaraderie and buy in when they can see what they're able to do to help other people do that. And that's what the business has achieved.

Yeah. And I love the fact that not only are they participating in the business, they're involved in the business and investing too, which speaks loudly because if there was anything wrong with this, they wouldn't be involved.

Yeah.

You know, so well. Thank you. I think this is a good place to wrap up and I will tell you our listener watcher right now. First of all, thank you again for listening. If you learn something, you enjoy this, you can always go to capabilityamplifier.com you can learn more. There's more links there. Inside the descriptive copy are show notes and links. Head over to jjplaybook.com download the tools and resources that Jim team and we have put together for you and thank you so much for listening and watching and we'll see you in another show soon. So let's say goodbye to everyone.

Good seeing you guys.

Thanks for watching. Bye Bye.