#54 - The Inner Game of Real Estate with Leka Devatha

[00:00:00] Hey, welcome back to Passive Income Pilots. Everyone Tait Duryea here on another beautiful

[00:00:04] week with Ryan Gibson. What's up, Ryan? Good afternoon, Tait. How are you? Or good morning

[00:00:09] to you in Hawaii? Good morning. That is true. We're a three hour time difference now. Not that I

[00:00:15] always love that two hour time change to the West Coast during the winter. It's wonderful.

[00:00:20] We just switched back. But what's new with you? Not much. Just I'm excited. Sometimes real

[00:00:25] estate goes well. Sometimes it goes bad, but right now we're in our spring leasing season,

[00:00:29] meaning that storage typically does really well. March through, call it August, September time frame

[00:00:36] when people are really on the move and going and it's fun watching these facilities fill up.

[00:00:40] And it's always fun to be in leasing season. I'm in good spirits and the sun is shining here

[00:00:44] and going to get out and walk around the lake later on this afternoon. So super excited.

[00:00:48] Excellent. Yeah, we are just having a blast. Lots of things going on at Turbine. It's just

[00:00:54] a great year to buy. Interest rates are high. We're seeing deals. It's fantastic.

[00:00:58] And I'm going to Sydney tomorrow instead of what I've been doing for the last six years,

[00:01:03] teaching IOEs, IOE to new hires and doing minrest overnight on the West Coast. I'm doing a four

[00:01:09] day Sydney trip with an old buddy of mine back in the right seat. The only thing that's weird

[00:01:13] is the right seat is just it's not as comfortable. I don't know if they make it out of a

[00:01:18] different material or something, but man, it's just... We'll have to write an airbus for you.

[00:01:22] I'm going to have my buddy write that up. Exactly. Cool. Today we've got Leica DeVita,

[00:01:29] who's a dear friend of mine for the past decade. She has a multi-faceted role in real estate,

[00:01:35] to say the least. She's done everything. Flips, rentals, multifamily, building daddos, which is

[00:01:41] a detached accessory dwelling unit in Seattle. It's a big thing. Buy a single family lot,

[00:01:45] build a second home in your backyard. She's done that. She's hosted meetups.

[00:01:49] She's got a huge Instagram following. At the end of the day, she has flipped over,

[00:01:53] done over 200 deals and really gotten kicked in the teeth, punched in the face, but her attitude

[00:01:59] is just insane. She's always got an upbeat attitude. She's always got a smile. She's

[00:02:04] always got to wave through things, which is why we wanted to bring her on the show.

[00:02:08] Specifically, she's a one woman army that does everything from flipping homes to passive

[00:02:13] income. She helps investors, retail buyers. She's a licensed real estate agents,

[00:02:17] transacted numerous homes. She's an advisor on a board of an upcoming real estate startup.

[00:02:23] I know she sits on the board of a real estate private lending fund and just an awesome person

[00:02:29] all around. Might sound unrelatable because that's so far ahead of where you might be.

[00:02:34] We talk a lot about how to get started and what it takes to go from zero to one.

[00:02:38] So, I think people will have a lot of actionable insights from the episode.

[00:02:42] Yeah, so with that, let's get to the show.

[00:02:54] Welcome to passive income pilots where pilots upgrade their money. This is the definitive

[00:03:00] source for personal finance and investment tactics for aviators. We interview world-renowned

[00:03:06] experts and share these lessons with the flying community. So, if you're ready for practical

[00:03:11] knowledge and insights, let's roll. Lekha, welcome to the show. Really excited to have you on.

[00:03:16] Thanks, Ryan. We were just talking about how long we've known each other and it's just been,

[00:03:21] it's been so fun having some really good friends in the industry to talk about

[00:03:26] deals and just cry on each other's shoulders and then also pat each other on the back

[00:03:32] sometimes. So, thank you for having me. Yeah, so I think your story is so interesting,

[00:03:37] but just to start top level, I feel like you're the person in real estate that I know that is the

[00:03:44] most fearless, has gotten punched in the face, but still has an amazing attitude around investing

[00:03:51] in real estate. And those are like the chops you need to have to be a successful active

[00:03:56] real estate investor. But I think what you do so well is you really just help

[00:04:01] people take their first step and also really connect people well in a real estate networking

[00:04:06] group. I know you have the real estate at work, and you get NFL football players, you get people that

[00:04:12] are huge in the mortgage industry, huge in the real estate industry show up to your meet-up

[00:04:16] and you pack the room with hundreds of people and just provide a really great conduit so that.

[00:04:21] So anyway, go ahead and just kick us off with just some of how you got into real estate

[00:04:25] and sort of a little bit about your background. Sure. Yeah, I actually grew up in India

[00:04:30] and moved here about 17 years ago. I used to work for Nordstrom Corp. in their brand merchandise

[00:04:38] strategy division. And then one day I had this realization that I can't do this anymore. I can't

[00:04:44] work for someone else. I'm too much of an entrepreneur for that. And actually, that was 10

[00:04:48] years ago. So 10 years ago, I started my company investing in real estate. Also just

[00:04:53] happened to be by chance that I found this. I heard an ad on a radio show for this thing

[00:05:00] called Slipping Homes. And I was like, what is that? Because when I grew up, you don't slip homes,

[00:05:05] you just raise the home and then bent from scratch. So I was just fascinated by the whole concept.

[00:05:11] And so I started digging deep. And then within a couple months of that, I started to just educate

[00:05:18] myself and surround myself by other investors that were actually doing this. I quit my W2 and

[00:05:24] go into investing full time. And at that point, I said to myself, I'm just like, okay, if this

[00:05:31] thing is or if I don't succeed, I can always go back to a corporate job. But this is something

[00:05:36] I don't want to let this moment pass and say, wow, I regret not having done this before.

[00:05:42] That's what got me into real estate. And I started flipping homes and now it's been

[00:05:47] 10 years and over 100 homes flip. Oh, yeah. And this is like real, like some people say,

[00:05:54] oh, I flipped 100 homes like they've wholesale or whatever. But like you've been on the ground

[00:05:58] on all hundred of these homes, like you have bought them on the work yourself, you found the deal.

[00:06:03] I still like last week, I spent my whole Saturday, the wholesale landscaping factory,

[00:06:08] like buying plants for my new project, I still do all my trim, I still design on my homes.

[00:06:14] None of my homes are cosmetic like lipstick. They're all full that renovations like

[00:06:19] engineering structural, seismic retrofit Seattle has some old homes. So we just take it all down

[00:06:25] to the studs and rebuild from scratch. So much harder than new construction because I just did one

[00:06:30] side by side. I built a brand new home and then I flipped a house so much harder to flip a house.

[00:06:37] Yeah, I can imagine. So I've got a question for you. So for someone who's never bought a piece

[00:06:43] of real estate in their life, and they're like, who to this seems like this unscalable wall,

[00:06:48] bit of overwhelm. Can you talk about what was the scariest moment when you first got into this?

[00:06:53] What was your first deal? Was there any like gut punch moment when you thought maybe I shouldn't

[00:06:58] have done this? Yeah, within a month of so I went on a contract on my first deal

[00:07:03] and I bought it sight unseen. And I believe someone else when they said that the rehab

[00:07:09] budget was only 60k. And then when I walked it, I realized it was more like 150k. So that

[00:07:15] was like a gut punch time stand. And it started there and till now it hasn't ended. I wish I could say

[00:07:23] wow, I live this fate in life now and I just live off my passive income and life is rosy.

[00:07:30] It's not the case like every project comes with its own ups and downs. Yes, you stand to make a

[00:07:36] lot of money but also it takes an enormous amount of mountains to push to get there.

[00:07:45] Right. Talk about a story where you've failed epically and how

[00:07:51] right? Easy, easy. We're not in here to talk about all the successes, right? I just when

[00:07:57] you swing the bat 100 times and do 100 deals, right, you're going to fail and you've got to get

[00:08:03] through that. And sometimes people like hit the ball perfectly the first 10 swings and they

[00:08:09] think that it's always going to be that way. And some people swing the bat and miss the ball

[00:08:14] the first 10 times and think they just can't do this. So is there anything that was there one deal

[00:08:19] that really course corrected your success trajectory of where we are today? Yeah, I

[00:08:24] feel like every deal has a moment or two that course corrects you. But believe it or not,

[00:08:31] like deal number 70, no 95 taught me something that I'm like, oh my God, I never expected that.

[00:08:41] So you think you're so like cheated from all of your past experiences, your life experiences to say

[00:08:48] I'm never going to fail again. And so I bought this house with my brother because I wanted to

[00:08:55] teach him how to flip homes. And so I ended up buying a house in Raleigh, North Carolina,

[00:09:00] which is all the way across the country. And I figured I would manage this project

[00:09:05] every listie out of state. And he was boots on the ground and we I actually flew down there. And

[00:09:11] it was a 35 hundred square foot massive renovation and met with 15 different contractors,

[00:09:17] picked the contractor that was most expensive, because he was able to show us like actually

[00:09:22] drive us through his other properties. We saw how well he had fixed those up or like perfect

[00:09:28] the other, the perfect question to teach my brother how to do this. And then I'm hiring him.

[00:09:33] And he just stopped showing up to work like he took everything down to the studs,

[00:09:37] he touched things he wasn't supposed to touch. He put in beans he wasn't supposed to put in.

[00:09:42] And then when he stops showing up to work, we realize he hadn't pulled the permits he said

[00:09:47] he had pulled he hadn't done any of the engineering. And here we were back to square

[00:09:52] one. Now the house had significantly depreciated because it was all bones. And we had to reconstruct

[00:09:59] and we just didn't have the budget. So we started off this project with a 300k profit spread.

[00:10:04] Massive deal, one of the best neighborhoods in Raleigh called Cary. And it's like where all

[00:10:09] the tech is it's what could go wrong. So we started off at the 300k profit spread

[00:10:14] and ended up losing 120k. Now the good thing for me was my two partners on this were my sister

[00:10:23] and my brother. And so I was like, this is thank God because the amazing thing is I've raised

[00:10:30] millions of dollars and I've never lost anyone, any money. I have a super clean track record

[00:10:36] because I always pay my debt and I make sure that everyone's made whole, even if I have to

[00:10:41] make a loss. And so on this project, I was like, okay, I'm going to take all the losses.

[00:10:46] I'm not taking a loss from my I'm not making my brother and sister lose their money ever. But

[00:10:51] I'm like, I'm going to pay you guys. I'm going to take all the losses 120k.

[00:10:55] But the thing that actually showed me that it was such a gut punch, right? But the thing is

[00:11:03] my brother got like a master's degree in flipping homes. He now knows how to tackle

[00:11:09] every situation. He is exactly like me, like he shows up to work, he has been energy,

[00:11:14] knows how to deal with contractors, knows how to get work done. And when things are rough and

[00:11:19] tough, like he shows out. And that was the silver lining in all this is I discovered my brother

[00:11:27] in a way and he discovered this amazing world of real estate investing and how hard it can

[00:11:33] be and how much it can only get better. So I think that was a great learning experience.

[00:11:40] And I feel right, I feel like all that wasn't my fault. I still feel

[00:11:45] Yeah. And if you think about it 125,000, yeah, it's a lot of money, but that's a college

[00:11:49] education on flipping houses. So you go on the flip hundreds, thousands of houses.

[00:11:54] And yeah, he paid the price or maybe you did it.

[00:11:56] It was the first one, but lesson learned me teach a man to fish. And

[00:12:00] I think that's really great. And I think it's important that I love this and I love this story

[00:12:06] because you're like, wasn't my first time? It was my 95th time. And it's like pilots,

[00:12:11] we can relate to that where it doesn't matter how many years you've been flying like complacency

[00:12:15] is what kills us, right? That's it creates an accident. And so we have to be sharp and we

[00:12:20] have to stay sharp. And just because we're flying with somebody who's really well experienced

[00:12:24] and has gone through a lot doesn't mean that something won't come up on that flight.

[00:12:27] That's different, right? And you did all the right things. 15 contractors. I don't think I've

[00:12:31] ever vetted 15 contractors, right? You got eyes on the property, you picked the best one,

[00:12:37] you didn't necessarily go with the cheapest, right sound familiar? This sounds like a best

[00:12:40] practice. And it's still messed up, right? So like you, I think the takeaway there is

[00:12:46] you've got to have grit and sort of determination to get through this and be willing to walk

[00:12:51] away with a loss. And I think that's reality in every project you do, whether it is active

[00:12:55] or passive in this case. Okay, so before we dive deeper, if someone's thinking man,

[00:13:00] this sounds awful, I'm never going to flip a house. Can you share your biggest win?

[00:13:05] We could build some excitement around around what's possible.

[00:13:08] Yeah, absolutely. So this is in no means the biggest financial win, but this is typically

[00:13:15] how my projects go. I buy a house to flip. I have an amazing general contracting team.

[00:13:21] I have an amazing listing team. So I buy a house, I design it, I let them take it away.

[00:13:27] And then they finish all the construction, electrical plumbing, insulation, drywall,

[00:13:32] that's when I come back in. I pick all of the finish work like the tile, the trim,

[00:13:36] the cabinets, colors, exterior paint colors, what the landscaping looks like.

[00:13:41] I put my touch on it and they complete it. And then we sell it and we get 200k over ask.

[00:13:47] And then I just end up making 100 to 300k profit from this one small deal that I maybe spent

[00:13:55] three or four weeks on. So that's typically, I would say 60 to 65% of my work. So it is doable.

[00:14:04] If you find a system that works and you can repeat that system, yes, it's absolutely doable.

[00:14:11] Sometimes there's issues like with permitting or crazy contractors or just a dull market.

[00:14:16] But that's par for the course. I know many people that are one man bands, right? And I'm gonna don't

[00:14:22] take this the wrong way. But that's what's impressive about you. Like you don't have an

[00:14:26] office with 100 people working for you or whatever. Like you have mastered the efficiency of being

[00:14:33] able to reduce the time that you spend on a project and have an outsourced team that knocks

[00:14:39] this down. If you could give one tip on that, like what is your one sage advice on,

[00:14:45] right? Because I've never really met anybody on your team, but I know you're doing all this

[00:14:49] really great stuff and very successful at it. How do you do that? It's magic.

[00:14:54] This industry is perfect for that because you can 1099 everyone. My consultants are 1099,

[00:14:59] my underwriters 1099. Everyone gets paid really well, but they're also really good at what they

[00:15:06] do. My wholesaler is best in the business. My contractor is best in the business. But

[00:15:10] do they work for me solely? No. But do they like working for me best? Yes. And that's because of

[00:15:17] I just have to have an energy. You have to be positive and times are tough, but also you

[00:15:22] have to take care of your people. I make sure to be my people really well. Like when they

[00:15:26] ask to get paid, they get paid. There's no ifs ands or whats. And if they're charging me more

[00:15:32] for something and I know that's the case, I still let it pass because I'm like, look,

[00:15:37] people need to feel like they're winning too. And if they don't feel like they're winning,

[00:15:42] then you're not winning. And then the other thing too is you just do what you say you're going

[00:15:47] to do. So if I say, hey, send me this deal. I'll underwrite it, tell you in five minutes to them

[00:15:51] to buy it or not. And then you send me a deal and I sit on it for 15 days. I'm not your best

[00:15:57] client. And so just by doing that and by strategically picking the people I want to

[00:16:03] work with, like I have the same S-Bow company for 10 years, same stage I use for 10 years,

[00:16:08] wholesalers, amazing companies that I work with, that I worked with for 10 years. And that's hard

[00:16:15] to do in an industry where everything is so fluid. Like I've done about 40 deals with my

[00:16:21] current contractors. They're also my private lenders on most deals. And that just takes

[00:16:26] time to build and these relationships go a long way. And it makes you have to spend

[00:16:32] less time in your business. Yeah, that's such a great point. When I was buying more physical

[00:16:37] properties, one of the things that I really focused on was having a clear buy box in terms

[00:16:44] of what I wanted, right? Because there's nothing that'll drive a real estate agent or a broker

[00:16:48] nuts more than someone that says, I want to buy some real estate. Okay, what's your price

[00:16:52] range? What neighborhood do you want it in? It's like saying, let's go get ice cream. What

[00:16:56] flavor do you want? The guy standing there, what do you want? So getting clear on what exactly

[00:17:02] is your criteria is really important because otherwise you're just going to drive your service

[00:17:07] provider's nuts. Nuts, yeah, stacking. Yeah, you've always instruct me as a type of person that

[00:17:13] knows how to analyze a deal. You have your underwriter, you have your data, but I feel

[00:17:18] like you have a immense amount of intuition, right, these opportunities. Yeah, like you

[00:17:25] can see through, I think you have a digital business card, which we'll throw in the show notes,

[00:17:30] we'll resurrect that your ability to see through walls. And I know that we're using an analogy here,

[00:17:34] but our figure of speech, but you've got a good intuition till just know when it's a good and

[00:17:39] know when it's bad and know where you can step in and add value. Can you share an

[00:17:44] instance where you use that intuition or that gut feeling and it turned out really

[00:17:50] successfully in a real estate deal? Yes. Oh my gosh, do 100 or 200 deals, you have to walk

[00:17:58] a thousand properties. When you walk a thousand properties, that intuition becomes a muscle memory.

[00:18:06] It's not even intuition anymore. It's just like you didn't walk it like yesterday, I walked

[00:18:09] this property, posted on one, it's 678K. And then he said it was 100K rehab.

[00:18:16] It was a 250K rehab. And I wouldn't even touch the property over 500K, but they have 50 people

[00:18:24] walking it today and some supper is going to buy it. Totally. And go through the process of feeling

[00:18:30] or succeeding or whatever it is, right? It's their story. But I just, I don't even know if it's

[00:18:35] intuition anymore. I just feel like I have all these other parameters like that I just know

[00:18:41] what works and what doesn't. I know how to look at something from a buyer's perspective or a

[00:18:46] tenant's perspective, but okay. So one example is I used to hang my license at Keller Williams.

[00:18:53] And what was great about that was they're all GPL agents. I was like literally the only investor

[00:18:59] broker. And so someone found an off market for flex and Auburn and did not know what to do

[00:19:04] with it. It was one of his clients that brought him this deal and she had moved out of state

[00:19:08] to California. She bought this for flex. It was under both for me and now she's, I don't know what

[00:19:13] to do with it. I don't want it. So he sold it to me and he charged me an assigned in 50K. I was happy

[00:19:19] to pay it because I love the project. Did not know where Auburn was. I didn't know if it's

[00:19:23] North, South, East, West, looked at it on a map, but I just liked the numbers and that was a

[00:19:28] gut feeling like this was going to be a good project. Fast forward to after the renovations

[00:19:34] and refinance. It appraised for twice as much as I'd bought it. So I got paid to actually own this deal

[00:19:40] and now we make about three grand in monthly cash flow on that one property and I've owned it

[00:19:44] since 2020 and it has obviously appreciated like crazy, but also it's like hiding the right

[00:19:50] property management team, hiding the right contractors go do the work and then you

[00:19:55] can really turn these profits and these deals. So just, I don't know, like just knowing what

[00:20:00] to look for really helps and that only comes from practice. Yeah, how does somebody find a good

[00:20:06] property manager and a good contractor? A good contractor. So this is such a hack. I have found

[00:20:13] contractors everywhere. I've gone to home people and kitchen and bath stores early in the morning

[00:20:17] at 7am, see who's coming in, who has a nice contractor jacket on that's branding themselves

[00:20:23] and that's showing up to work great. Then I found contractors and meetup groups terrible,

[00:20:29] awful because people like really pump themselves up and talk themselves up.

[00:20:34] They have nothing to show for it at the end that contractors. So best way is if you have a

[00:20:40] subcontractor that you work with, it could just be someone came to fix something in your house,

[00:20:45] electrical plumber and then you go ask them who are the contractors you work with that pays

[00:20:51] you on time, that does good work, that actually shows up for the client every single

[00:20:55] time that communicates. And then if they can give you a list of names, those are the best bet.

[00:21:01] And then if you can get them to give you referrals for people in your industry that you know,

[00:21:07] that's just a bonus. And then how do you find good property managers? I have hired the worst

[00:21:13] property managers and then ended up knowing what to look for in the bad ones and knowing

[00:21:20] what to look for good ones. And then you feed them one property at a time like I have at

[00:21:26] our 10 or something buildings and 30 or 40 units and on the city, I'm lost count, but I just I

[00:21:33] didn't give him all of it at once. I had to see your four different property managers.

[00:21:37] And then I started feeding my property manager my own units. And today he's a tenant of mine

[00:21:43] at my desktop property, but also he manages all of my other units.

[00:21:47] I think that's so inspiring for anybody listening. You hear her saying, I lost count of

[00:21:51] how many buildings I own and how many units I own. It's so cool when someone hasn't touched

[00:21:56] real estate before and it's this big scary wall, it can be completely overwhelming and intimidating,

[00:22:01] but you know, you're out there doing it. And I just love that. I love that.

[00:22:06] Yeah. And I also want to capture though, it started probably with some intuition, right?

[00:22:10] Like where's Auburn is a north, south, east, west, or is there the number,

[00:22:13] but you had mastered the numbers, right? You had analytical skills that set you up for at

[00:22:20] least knowing that part of it. And that came probably through practice. Like you underwrote

[00:22:25] a handful of properties and you probably took some kind of a class or grab somebody's

[00:22:29] spreadsheet. You weren't just willy nilly, right? But as far as the intuition was, hey,

[00:22:35] the numbers work on this deal. I want to move forward with it and buy it.

[00:22:39] I may not know where Auburn is on a map, but I know that the numbers work. So you took that like,

[00:22:46] that analytical step mixed with some intuition. And now of course, you can walk any property and

[00:22:52] I'm the same way, right? You just get onto it. You step foot onto a property and you're like,

[00:22:56] yep, this is not a deal. Or, hey, we've got something here. I think it really,

[00:23:00] that approach helps aviators or pilots looking to get into this stuff.

[00:23:04] You just get part of it down at least and take small bites out of that. And eventually,

[00:23:09] you'll know what Wright looks like when you find it. So I think that's really good.

[00:23:13] Switching gears a little bit, let's talk about like you do flips, you do multi-family,

[00:23:18] you do rentals, you're in Raleigh, you're in West Seattle, I know, you're all over the place.

[00:23:22] And I know that you have a pretty diverse bench of not only investments, but professionals that

[00:23:27] help you drive success in what you do. Can you talk to how those have opened up new doors

[00:23:34] to possibilities? I know it's like, for an example, when I was looking for my first self-storage facility,

[00:23:39] it actually landed me in an RV park, right? Because the guy said, hey, I got this park for sale. And so

[00:23:45] it opened up a new door and then I got into that market. So can you talk about how

[00:23:49] that's played a role in doing different things? Opening up new ones?

[00:23:52] The first three years that I was in the business, all I did was flip homes because I

[00:23:57] wanted to just get really good at flipping homes and find a method to the madness.

[00:24:03] And so that's all I did. And then in your four, I said, oh, I should become a real estate broker.

[00:24:08] So a lot of people look at me and say, are you a broker? And I was like,

[00:24:12] I forget that I'm a broker sometimes because I only did that as just to add another tool,

[00:24:17] get the toolbox to the tool to the toolbox. And so when I became a real estate broker,

[00:24:24] I realized, oh, wow, this is actually really fun. I like to negotiate deals. I like to

[00:24:29] help buyers and sellers. And then on a whim, just as a hobby sold about 40 million in real estate.

[00:24:36] But that's not even like marketing. Like, you never find myself,

[00:24:39] find me marketing myself as a real estate broker. I should, but I don't because I forget.

[00:24:44] But then I, so one of the houses that I flipped or that I bought to flip,

[00:24:49] what happened was I had, I don't know, some networking event that I went through and

[00:24:54] the speaker was like, look, always have to look at the, look at multiple exits on the deal.

[00:25:00] I was like, huh, that's interesting because I never did that before. And I've lost

[00:25:04] some millions of dollars not doing that. So I had this property. It was a single-family house

[00:25:09] on a large lot, like almost a neighbor. And I was like, this is interesting. What can I do with

[00:25:15] this? So fast forward four years later, I hit some divided the lot and sold and I had

[00:25:21] flipped the existing home was able to get two more lots on this one lot. So I ended up selling

[00:25:27] that house and then creating these two lots and selling the lots of stuff as you're making a million

[00:25:31] dollar profit. And I would have never done that if I hadn't looked at it from a different angle.

[00:25:38] So then that got me thinking like, what else can I do? So then I bought another house to

[00:25:43] slip ended up holding it, putting an addition and 12 months for the addition, bought it for

[00:25:48] five, six dates today were through me and then it's seen part of my dad's a portfolio. And so I just

[00:25:53] started to look at things differently and saying, okay, what else can I do? Where else can I go?

[00:25:58] Over COVID because we're all stuck at home. I was on LinkedIn a lot. And my LinkedIn network wasn't

[00:26:04] on what flipping wrongs. Everyone's talking about some patients, emotional deals, buying

[00:26:08] multi-family apartment buildings, office buildings. And so it's like, okay, it would be

[00:26:12] really fun to go do something in that space. So then I had lunch with my friend Ryan Gibson

[00:26:18] and said, oh, you should have you should do a fund of funds. I was like, huh, what is that?

[00:26:23] So then I went and researched it and ended up doing a fund of funds for an operator out of

[00:26:29] Florida. And now I'm part of a $30 million project. We have 160 units in maintenance

[00:26:34] Florida. And I got some amazing investors on it. And that was my funds fund of funds.

[00:26:41] And then I said, okay, what if I actually operated and did a whole syndication myself?

[00:26:46] So that's when I bought that property in West Seattle. It's just a five unit and giving Joe

[00:26:52] fearless is one of my investors, my ideas on that. So just really fun thing that puts me out

[00:26:58] in the world. And then I like to share my story and just educate people. And that brings more

[00:27:03] opportunities. So then I just, and I never thought about holding a passive income portfolio

[00:27:09] because I was like, ah, that just sounds like work. It is a lot of work. It's nothing

[00:27:14] passive of our passive income. But that led me to start holding ventures. And so that's why I bought

[00:27:20] those units is I just make some money on slips and then go buy them for properties are just

[00:27:25] accidentally like old mentors. And so yes, it just you branch out in so many different ways.

[00:27:31] So the point where now I've done roaming houses, Airbnb is events based his adult family

[00:27:37] homes, when I really do a houseboat at some point, but that's so great. Yeah.

[00:27:44] Here's the thing I'm just saying that everything works and nothing works like you got to get out

[00:27:47] there in the world and you got to meet people and you got to be open minded and listen to what

[00:27:51] other people are doing because then it leads to so many different other things. And I think

[00:27:55] that's the point here is if you keep yourself diversified with who you talk to, who you

[00:28:00] meet where you go, what markets you're in your investment strategy, how you've accumulate

[00:28:05] capital and invest it. It's really neat all the different things you can do.

[00:28:09] Other thing, the one thing that I like to that is you can go in all these different directions,

[00:28:14] but you have to have a core competency that you can always hold back on it all ends

[00:28:19] fit. And that for me is flipping distress properties. I got so good at renovating

[00:28:25] the stress properties that no matter where I go, what I do in my life, I can always do that.

[00:28:30] So I still flip on somewhere like, Oh, I don't flip on Denmark. I still flip on

[00:28:34] because why am I leaving a million dollars a year from three wheels when I can still do

[00:28:43] all this other stuff and just flip poems passively. Like I flip poems passively and it's more

[00:28:49] passive income than owning a passive rental portfolio. Yeah, just remember if you're

[00:28:53] listening and you've never flipped the house, it's not a passive activity.

[00:28:59] Unless you've done 100 of them. Yeah, you do 100. Then it comes a little bit more

[00:29:03] programmatic or otherwise it's just insanity. But no, that's the one thing I want to note

[00:29:09] for anybody that's thinking about flipping houses and I think it's important to call

[00:29:12] attention to is the tax treatment of flips. Can we just very briefly touch on that versus

[00:29:18] holding flipping a house and then holding it as long term rental versus flipping it?

[00:29:22] Yeah, that's treated tax wise.

[00:29:25] Yeah, so flipping houses basically you have to pay like short term capital gains,

[00:29:31] painful. And so if you can counter that with owning a passive income portfolio,

[00:29:36] you can always take depreciation on your mental properties to mask that with your

[00:29:42] active income because if you're making active income, like a lot of active income on

[00:29:48] short term capital gains, then you have to have something to fall back on to reduce your gross

[00:29:55] income. Otherwise you're just going to spend everything on.

[00:29:58] Remember though, just remember, Laker is a real estate professional.

[00:30:03] Real estate professional, exactly.

[00:30:04] A difference, right? So if you're a pilot thinking, oh, I'm going to flip three houses

[00:30:07] a year like Laker someday and make a million dollars and you're not real,

[00:30:12] you are probably still not a real estate professional.

[00:30:16] I don't know, check with your CPA. We're not giving tax legal investment advice.

[00:30:18] It takes some number of hours you have to spend on your real estate portfolio every week.

[00:30:23] 750 hours a year and more hours than you're spending in your W2, which we talked about this

[00:30:28] on other episodes so you can go back and listen to those. But I just want to call that out because

[00:30:33] if you're a pilot who's making $500,000, $600,000 a year and you're like, okay,

[00:30:37] I'm going to go flip this house and you flip it in six months, the IRS considers inventory.

[00:30:43] It is not long term capital gains. It's a flip. And so that's going to be

[00:30:47] quite painful when you get the tax bill for that. I want to quickly talk about

[00:30:50] education versus action because I think that those two things really go hand in hand when

[00:30:56] you're talking about doing, following in Laker's footsteps here and going out and getting your

[00:31:01] hands dirty. I think there's an equal need to educate yourself and find those resources to learn

[00:31:08] the ropes and then also take action, be willing to break stuff and make it happen. Can you

[00:31:13] give some insight into where people can find this education? Like what resources did you

[00:31:19] trace down and consume prior to flipping your first house? Sadly, like when I was,

[00:31:25] this was 10 years ago. There was no bigger pockets. There was no social media. There was no

[00:31:30] Facebook, no Instagram. So it was really hard to find any of these educational sources. So

[00:31:36] I actually joined a company called Fortune Builders and they actually provided a lot of

[00:31:41] education for those investors, laid out that what different kinds of investments looked like,

[00:31:47] how many different kinds of investments you could do, what was available to you, taxes,

[00:31:51] hiding the right contractors, analyzing numbers, putting together a scope of work. So I just got

[00:31:57] a lot from that. They also had a really good system of having coaching called with a coach

[00:32:03] every week and you could pay different kinds of coaches. Is it someone that knows how to race

[00:32:08] capital? Someone that knows taxes? Someone that knows how to set up a company? So

[00:32:13] I basically did a call with a different coach every week just to understand different aspects

[00:32:18] of investing because there's a lot. Sorry, can I ask you how much you paid for that?

[00:32:25] Back then it was 25 grand. I think today it's about 50 or 75. I don't know. Important for people

[00:32:33] to see that, that she made an investment in herself. A lot of times when people say,

[00:32:37] hey, I have my first $25,000. Should I put it into a syndication deal? I say,

[00:32:42] no, you should spend it on education and people are so hesitant to spend $25,000 or $50,000 on

[00:32:49] some sort of mastermind or course, not a seminar. Don't go to CCC, some guru, but a coaching program.

[00:32:54] The other thing too is that was a lot of money for me back then. It still is a lot of money

[00:32:59] and when you spend that kind of money, you have to take action. And so I had a W2

[00:33:05] and I was spending that and that was like, I don't know, it was a third of my W2 that I was getting

[00:33:10] paid for probably never. Then so I was like, okay, if I'm spending all of this money and

[00:33:16] don't take action, that's like a huge waste. Like I have to burn the boat and that helped me do that.

[00:33:23] I really want to hang on that for a second because like I think a lot of people

[00:33:27] spend the money to go find the motivation and then the motivation wanes and they're

[00:33:31] like, you got to be motivated. It's like money, motivation, time commitment,

[00:33:36] let's go where I think a lot of people in these coaching classes are like lacking motivation and

[00:33:40] it's like they spend all this money and they take all this education and it's not education for

[00:33:44] effective action. It's just education to get inspired and that's not the point of the education.

[00:33:50] And so that's the second part of my question is okay. So education plus action, right? So at

[00:33:55] what point because you can consume bigger pot, the bigger progress podcast, which is fantastic

[00:34:00] if you've never listened to it, you want to get into real estate actively, you can get a PhD in

[00:34:03] real estate just by listening to the thousand episodes of bigger pockets that are out there.

[00:34:07] I mean, but also look at your podcast, right? It is so educational and it's not just for parades.

[00:34:13] Is anyone listening to you? It is mindset, it's inspiration, it's education, it's

[00:34:18] hardcore facts and actionable items like just findings like true operators that are waiting

[00:34:24] to take the time to report podcasts and put it out there in the universe. Like how much do

[00:34:28] you even charge for this? Zero. No, it's just public. If I had this, I wouldn't maybe necessarily

[00:34:34] invest the 25k because today like there's so much free education, but you have to also know

[00:34:40] who is putting that education out and then pick accurately. And so at what point because

[00:34:47] you can consume educational content for years, but if you don't do anything with it, like

[00:34:51] you said, nothing is ever going to happen, right? So at what point, what advice would you have

[00:34:56] for people? It's okay, how much educational content do you need to consume? And then when do

[00:35:01] you need to jump out of the nest? I think your education has to go hand in hand with taking

[00:35:06] action. So if I just sat there and I did all these courses, spoke to all these coaches

[00:35:11] and didn't take any action, then all that education of no use. So I ended up within

[00:35:18] three months of putting my job, I was under contact with my first fixing it.

[00:35:22] And it really helped that I had this coaching platform and all these coaches,

[00:35:28] along with my first project, because then I could play them hand in hand and be like, okay,

[00:35:32] practically this is what I'm doing. Whereas theoretically this is all the education that

[00:35:37] goes with it. So I almost feel like action has to be the first step. And then once you jump

[00:35:44] off that tip, you can open your parachute. You know what I love about it?

[00:35:47] Look or I annotate and say come pick me up. But yeah, exactly.

[00:35:49] The first step. You know what I love about that? That's how we learn how to fly.

[00:35:53] You walk into a flight school on day one, it's like, all right, let's go get in the plane.

[00:35:57] I think that's, I don't think I would have lasted as a pilot if it wasn't that way because

[00:36:01] that's what makes it fun. Like, what did it?

[00:36:04] Wait, it reminds me Ryan. I have to say this. So Ryan made me fly his Cessna.

[00:36:09] He gave me the steering wheel and he said, okay, it's all yours. Fly.

[00:36:13] And I was like, wait, what? Yeah, we're going to pass. But I was able to fly that Cessna

[00:36:20] of course with his training, he's sitting right next to me.

[00:36:23] But that was something I never thought I could do. And until like,

[00:36:27] Ryan hadn't put his bait in me, I wouldn't have been able to do it.

[00:36:31] Yeah. And you know, that, yeah, by the way, that was a whole,

[00:36:34] there was a charity flight that we gave away and Leica was the winning bid.

[00:36:38] And we flew to a development that we did. We built 217 manufacturing at home

[00:36:43] community in North, in the Northwest. We flew up there and actually met up with another

[00:36:48] pilot that lives at the airport and has an RV that he built in this garage,

[00:36:52] an amazing plane. We did some formation flying over the project.

[00:36:56] And so that was like the coolest day ever. But

[00:36:59] Leica, real quick on these classes, what didn't that class teach you?

[00:37:03] What, maybe we have to do a whole episode on that, but what can teach you?

[00:37:07] So while the classes are really good, like podcast books, everything's really good at

[00:37:12] laying out to you the different aspects of an investment property or

[00:37:18] making an investment or talking about networking and talking about putting yourself

[00:37:22] out there in events, right? But until you're actually there, until your

[00:37:26] asset event and speaking to that person, like you don't know what the outcome is going to be.

[00:37:32] And then each outcome is so different than what someone else's experience was.

[00:37:36] So it's about how you then take action on those outcomes.

[00:37:40] And I always say real estate has no roadmap, right?

[00:37:43] Lion, like you didn't say 10 years ago, this is where I'm going to be or I'm going to build this

[00:37:48] amazing facility in Black Diamond. Like that was just something that you were able to discover

[00:37:54] and then you took action to do that. So my journey and your journey is so different.

[00:38:00] So I'm like, you have to take your own roadmap and no book, no education platform can teach

[00:38:05] you that. Yeah, I think that's so important. Being willing to, I call it being willing

[00:38:09] to break stuff. In my early in my career, I read so many books and listened to podcasts

[00:38:14] and it's like the end of the day, you got to go out there and fail. If you're going to do it

[00:38:17] actively, you got to be willing to go out there and hire the wrong contractor

[00:38:21] and hire the wrong property manager and fix it and fix it because that's the only way

[00:38:25] you're going to learn. It's like solo flight. Our first solo cross countries,

[00:38:29] we took off, you're the only person in the airplane, you missed it, ATC calls,

[00:38:34] you might have landed on the wrong runway somewhere. Hey, but that's how you learn.

[00:38:38] Hopefully it was an untowered airport. But my flight instructor did for solos is if you're in

[00:38:42] Michigan, you'll be very familiar with the thumb on the hand. So what he did was he found an airport

[00:38:47] at the tip of the thumb so you couldn't screw it up. Like you couldn't miss the airport because

[00:38:50] it was, you just flew towards the end of the thumb and then you hit the airport. I was in LA,

[00:38:54] dodging class B airspace, but oh, wow, that's a little different. Little different.

[00:38:59] Lekha, this has been really great having you on the show. What's one thing in the last

[00:39:04] six months that you've learned on all your wisdom and hundreds of flips?

[00:39:10] What's one new thing that you've learned in the six months, in the previous six months

[00:39:13] that maybe you haven't shared with anybody? I mean, this is what Tate said. Things are

[00:39:17] going to fail and you have to be willing to fix things. And in the last six months,

[00:39:22] I have taken on projects I've never done before. I built a dad who I am doing a renovation

[00:39:27] that is going to cost me a half a million bucks on a house, a small family house.

[00:39:32] Things I've not done before, but I just feel like every opportunity comes with new learnings and

[00:39:39] new parts. And there's so many things that can fail. The market can be horrendous,

[00:39:45] interesting. It's high. It's just how do you keep

[00:39:49] subbing along? And in the last six months, I felt it more than I felt it in my entire

[00:39:54] career before. But also in the last six months, I can tell you that I've got this

[00:40:00] because the last time this happened to me, maybe four or five years ago, I had no

[00:40:05] net worth to back up my losses. Today, I'm like a $2 billion loss, bring it on. Like,

[00:40:12] I can handle that. So to be able to get there, it took a lot of hard work and it's

[00:40:18] being not done. But at least now I can say that I have really good financial stability

[00:40:25] to stand on. If I'm raising capital and someone's, oh, can I see your portfolio,

[00:40:28] whatever, through you go. And so it's just baiting yourself up to be there, to be sure

[00:40:36] that nothing in the market can hurt you. If you have to go to a full financial crisis,

[00:40:42] cannot hurt you. I think just setting yourself up for that is important.

[00:40:47] Yeah, I feel that's, yeah, go ahead and take it.

[00:40:49] Speaking of net worth, last question, I swear. So you are obviously financially free many

[00:40:55] times over from all the hard work of the last decade. What makes you keep doing it? Like, why

[00:41:00] are you still flipping houses and raising money and doing all this stuff?

[00:41:05] Because my bank account is always empty.

[00:41:10] Because your net worth is in bricks and sticks.

[00:41:12] Bricks and sticks. So hey, you can't eat your network. And so I'm like, okay,

[00:41:16] I just got to keep doing more and more. But I just had lunch with my friend Jimmy

[00:41:19] Kang who Ryan knows. Jimmy, if I stopped doing what I did today, I could retire super rich.

[00:41:27] But there's also this like hunger and this craving to keep doing deals and to keep positioning assets

[00:41:33] and to keep negotiating and finding amazing opportunities. The other thing is that people

[00:41:38] to yourself in this position and me and those golden opportunities keep hitting your doorstep.

[00:41:44] And so then you're like, do I not do that? Like, I know what to do. Should I not take that?

[00:41:48] Should I not do that? Just because I feel like I'm okay. So just this that come grow and at some

[00:41:54] point, I hope it dies and I just hope I get lazy and I just sitting around doing nothing and

[00:42:01] I just hope I hope I that is bug bites.

[00:42:04] Let's just summarize this in one word. We're American, right? We're freaking out there.

[00:42:09] This is what we do. This is the way of America. Like we push and strive and grow.

[00:42:15] And that's why real estate is tax advantage because the United States wants people to invest in

[00:42:20] real estate. Right. And we're always pushing the envelope because we're entrepreneurs and

[00:42:25] that's what it's all about. You don't have to make excuses for yourself. It's okay. You're

[00:42:30] like, like, I get it. Real estate is fun. I'm yeah. I got one more question. You run an

[00:42:35] amazing meetup with the best guests and you pack the room. How the heck do you do that?

[00:42:43] Otherwise, it's impressive. Every time I go to your meetup that it is a standing room only. So

[00:42:48] I got to be honest, I've tried to have my own meetup and it's been like, Meh, whatever. What is

[00:42:52] your secret? I think just finding good speakers and having valuable content to just give away.

[00:43:01] It's also not about packing the roll but who you're packing the roll with. Having you come

[00:43:07] to the meetup and loving shoulders that just people that are just getting started. Can you

[00:43:11] imagine the value that you're adding to the attendees? And so I just feel like the people

[00:43:18] that attend the meetup too, not just the speakers. They've just been, they've accomplished a lot

[00:43:24] and because they've accomplished a lot, they can add a lot of value to someone that's just

[00:43:28] you are. Last time really come into that tech communities and so we have a lot of people from

[00:43:33] Amazon and Meta and Google attending because they have a capital. They want to invest in

[00:43:39] going to say they just don't know how and that's a really good place for them to come and meet

[00:43:43] people like to do that. They can invest. So I think just providing value and creating this

[00:43:49] platform and class, I've done this for seven years on this meetups beginning. Yeah, never

[00:43:54] miss the money. Yeah. If you're in Seattle, real estate at work is the name of our meetup. So

[00:43:59] I'm sure it's on meetup.com and maybe event bright. It's on meetup.com and it's on Facebook

[00:44:05] and we're going to have Ryan and maybe take some speak this year. So love it.

[00:44:11] Yeah, we've done this live in front of your meetup anyway. Like how do listeners get in touch with you?

[00:44:16] I know you've got a huge Instagram following. So maybe give your handle on Instagram

[00:44:21] so people can follow all the fun things you do and get inspired. But how do you touch? Yeah,

[00:44:26] just follow me on Instagram or LinkedIn. It's my first and last in Lika, and now you

[00:44:32] will respond faster on Instagram down on text. So yeah, that's just fine me. Okay, great. Thanks

[00:44:37] for coming onto the show and for those listeners that have tuned in, if you have any questions,

[00:44:42] you want to share your experience, your thoughts on real estate investing, let us know how your

[00:44:46] journey is going in all this. You can reach out to us at ask at passiveincomepilots.com.

[00:44:53] If you have a question, you want to record yourself on the show like we did in previous

[00:44:56] episodes, you can go to passiveincomepilots.com forward slash question. And you can always

[00:45:01] check us out on Facebook. Thanks everybody for tuning in and we'll catch you on the next episode.