All Forum Posts by: Joe Kim

you have to be actually making $500+ cash flow just to break even when disasters hit, with vacancy, turnover costs, eviction, huge capex cost.   Even if you took account for all these factors, one major bad tenant can wipe your "cash flow" away.

I made money on every single real estate deal (nearly all SFR) in the last 9 years in more than 10 properties.

#1 due to appreciation - which last 10 years was the greatest appreciation anyone has ever seen in REI (am I wrong?)

#2 Switching to Airbnb/STR - but this is a PURELY active business, NOT passive at all.

Biggest myths

#1 Cash flow matters most or appreciation is not important. Cash flow only matters to keep you afloat before you sell the property (unless you do furnished rental or airbnb or hugely successful at the BRRRR method).

#2 REI is passive....haha what a joke. You can only make real money if you have like 5+ doors or doing a much more active -"add value" plays like BRRR, airbnb/STR, add wholesaling. All of that takes a TON of work and commitment. Nothing is for free.

Real MONEY is made in VOLUME (scale) or add-value plays.    Or you get lucky and buy during the BEST appreciating markets in the history of real estate.    

Better to be lucky than good as they say!

Originally posted by @Jon Q.:

Originally posted by @Joe Kim:

Originally posted by @Jon Q.:

Originally posted by @Joe Kim:

Originally posted by @Jorge Vazquez:

After selling rental properties to investors for 20 years, the common denominator why people hate rentals is because they don't like managing the rentals. I always tell investors to spend their time educating, improving, and becoming the best Investor that they can be!

Do not waste one minute managing these properties! You should not manage on your own because your time is more valuable in finding the next best deal! Second, because you are not looking to become an expert property manager (you want to become an expert investor), third because you can utilize a property management company's resources and scale your business a lot faster. Finally, the most important reason you don't want to manage your properties is that it takes so little for you, your wife, or your family to get burned. It could take just one single call on the weekend on a Saturday while going to church that could make you blow up and say, "I want to leave this business"! Please don't put your future or retirement to a chance; do not let something like this happen to you by hiring the right management team.

 I also hate managing property managers.

One reason given why real estate is better than stocks = more control.   To some extent that is true but not so much because you cannot control your property managers, or know with certainty if you have a good tenant or not.   All the screening in the world, doesn't control for pandemics, divorces, job losses.

Let's face it real estate is messy.   I dreaded the emails and calls from PM because it was almost always bad news.   No news is good news in real estate.   

Sure you get tax advantages, cash flow, some appreciation - lots of goodies from real estate. But it aint PASSIVE. we should stop calling REI = passive income investing.

It's not unless you are doing private lending or syndication.

If you don't like managing rentals and you don't like managing property managers (asset management), then you may want to consider changing your strategy, serving another type of tenant quality, or going into another line of work.... because that's what investing in real estate IS... a BUSINESS where you SERVE CUSTOMERS.  Those customers are tenants.  So, either decide to serve other types of customers that you enjoy working with, contractors you enjoy working with, or change your model entirely.  If I were not enjoying it, I WOULDN'T.  I suggest you find something that you can do with love and purpose.  Life's too short my friend!

Totally agree. But just as building a portfolio greater than 10+ properties takes time and effort. selling that portfolio takes time and consideration (taxes).

I'm bullish on real estate for many people. And even for me I have plans to do it even more passively than now.

So far sold 4 properties in 2019/2020. Put half that money into tesla and made a boatload of money.

So looking to sell another 2 properties in 2021 possibly.

Now focusing on retiring (not actually retiring) but spending more time on how to spend money wisely, not just make it. I think people forget to talk about this part.

Looking for a better 2021.

Get your vaccines! I got mine!

Congratulations!

How to make and manage money wisely is something that should be mastered BEFORE investing. ( See first few books on my book list below).

If you acquire good property that generate cash, don’t sell... ever.

I don’t like paying Uncle Sam.

There are other ways of getting cash out of your property while still owning it (ex cash out refi).

Real wealth is not created through transactions / buying and selling. Real wealth in real estate is made by acquiring quality property in good locations and holding it over time and letting your money compound.  Time and habits are compounding elements.

If you invest properly, most sales you complete... you will regret.

Never sell properties that are cash flowing?     

There are many ways to avoid paying taxes.  Once you have a large enough portfolio, you can sell some properties without incurring any taxes WITHOUT 1031 due to the deep reservoir of depreciation loss.   Eventually, you will need to do a 1031 exchange.

But man, everyone is at a different financial situation.   You and I are not in the same league and not in the same financial situation.   So one person's advice may not apply to another.

Anyway, I used to be a HUGE real estate bull.   it's great in many ways, but it takes a lot of work to build a portfolio and still takes work to maintain it as well.   

Paper assets (stocks and equivalent) are much less time consuming.

What's your Financial freedom number?   not in terms of cash flow but networth?   $5 M?   $10M?

When you hit it, message me and I will be happy to share how to cash flow from your paper assets without paying any taxes and with 10x less work than doing real estate deals.  

Totally agree. But just as building a portfolio greater than 10+ properties takes time and effort. selling that portfolio takes time and consideration (taxes).

I'm bullish on real estate for many people. And even for me I have plans to do it even more passively than now.

So far sold 4 properties in 2019/2020. Put half that money into tesla and made a boatload of money.

So looking to sell another 2 properties in 2021 possibly.

Now focusing on retiring (not actually retiring) but spending more time on how to spend money wisely, not just make it. I think people forget to talk about this part.

Looking for a better 2021.

Get your vaccines! I got mine!

 I also hate managing property managers.

One reason given why real estate is better than stocks = more control.   To some extent that is true but not so much because you cannot control your property managers, or know with certainty if you have a good tenant or not.   All the screening in the world, doesn't control for pandemics, divorces, job losses.

Let's face it real estate is messy.   I dreaded the emails and calls from PM because it was almost always bad news.   No news is good news in real estate.   

Sure you get tax advantages, cash flow, some appreciation - lots of goodies from real estate. But it aint PASSIVE. we should stop calling REI = passive income investing.

It's not unless you are doing private lending or syndication.

The key to understanding this concept is not the numbers but the psychology of investing and how people do not accumulate shares of a company over time rather they sit on their ONE time purchase at a low share price and brag about their cost basis.   Sorry bragging about your $30/share tesla purchase is worthless if you only have 1 share.   vs someone who has 1000 shares at $100/share cost basis that was accumulated over time.   Assumption is both people have the money to do it but first guy only bought 1 share while the 2nd guy who is now almost half a million dollar rich accumulated shares over time.

Keep in mind.   it's not what price you paid (cost basis) that is important if you are investing in a fast growth stock.

But how often you add to your shares.

I bought more this week.  I buy every week.  I almost buy every day for the last several months.

I'm not looking at the price tomorrow but looking 5-10 years from now.    What matters that far ahead is how many total shares you own, not what price you paid.   Ultimately that's how you accumulate wealth in stocks.

100% gain on 10 shares is not as good as 50% gain in 100 shares.  

 I used to spend like 2-3 hrs every day doing real estate (as my side gig), reading about real estate, listening to podcast, watching videos about real estate while working a 60+ hr - more than full time job.

Now, i spend about the same or more learning and reading and watching tesla content since 2018.   I think I'm working towards my 10,000 hrs of expertise! 

Check out this new vid by Electrified - Dillon Loomis.    Short but powerful take on battery day.battery day summary

Battery Day notes!  9.22.2020, 2:45pm - 4pm

1) Power production of coal has dropped in HALF!   But need to go FASTER!

2) Tesla delivered 1 million vehicles, 26 billion electric million miles driven

3)  Sustainable energy generation (solar), storage (batteries), and transportation (EVs)

4)  Goal ONE -  Terawatt-Hr Scale Battery Production!   20-25 Terawatt-hrs a year!!!!

Need 135 gigafactories (Nevada) to achieve this.  Need $2 Trillion investment to make this happen! 

But how to do it cheaper, FASTER?

Improve the cost per kW/hr production.  

EV Market is growing.  But Tesla is focused on PRICE.  Making EVs affordable for even more people!

5)  Cell Design.    

A - 1865 smaller battery to larger 2170 battery - 50% increase in improvement!

B - Tabless- shorter distance for electrons to travel. Nobody has this in the world.   

Makes the battery more efficient, cheaper to make, less heat, = massive breakthrough

5x energy, +16% Range, 6X power!       New cell 4680!   

C - Cell Factory -  How to make battery cells better, faster, cheaper, than anybody else!     Follow the printing and bottling factory design to SCALE towards Terawatt level production.

D - Electrode - 

(Current Tech - now old school) Wet Process- costly, huge manufacturing cost, waste.

(New Tech - Maxwell acquisition) Dry electrode process.   10X reduction in footprint, 10X cost!  Already on revision #4 - Tesla is innovating like crazy

E.  Assembly - Continuous motion production -  You can accomplish with ONE factory that others take 5-10 factories at other companies can do    (Acquisitions that helped - Groman/Hibar)

Tesla is aiming to be the BEST manufacturing company on the EARTH!!   (and Mars too)

Eventually everyone will have EVs, autonomous driving....but Tesla aims to be #1 KING Of manufacturing!!!!!

Goal - 100 Gwh production on top of the current supplier.    3 Twh by 2030  (3 terawatt!  thats more than 30x!!!!)

E - Cathode - Nickel - HIGH density and way way cheaper than Cobalt!    (invest in Nickel!) 

Iron - good for stationary storage, short range use.

Nickel/Mangangese - intermediate grade cathode.

"it's a small world journey" of the metals to produce a cathode.   How to improve the process to save cost/time/efficiency.     66% reduction capex investment  76% reduction in process,   ZERO waste water!

F  Mining - NEW mining for Lithium via Nevada Clay!!    Mix Salt + Clay (lithium) = Lithium - all you need for all of the USA car fleet needs.

G.  Recycle - all elements from used cells.   Tesla recycles 100% of Tesla vehicle batteries.

H.  SINGLE GIANT CASTING of the rear body-  79 parts put into 1 part.    New aluminum alloy was developed to make this work.

I.  Structure batteries that actually give strength to the car frame.  so called negative weight.   SAVES weight, efficiency, space.   You can pack even more batteries if you needed.  Makes the car so stiff to improve performance.   Polar moment of inertia - mass is in the center- feels more agile.  

J. 14% (cell), 18%(factory) , 5% (anode), 12 % (cathode), 7% (vehicle integration) = 56% total savings on $/KWH

K.  LONG term goal - 20 million vehicles a year!!!!

L.   MIND blown -  $25,000 EV car!      3 year plan!  

M.   NEW PLAID model S -    0-60 mph - at less than 2 seconds!

                                          top speed 200 MPH!

                                          1/4 mile less than 9 seconds!!

                                          Fastest production car EVER  made (until the roadster comes out)

N.   Biggest story of them.   The actual cost of owing a EV is now CHEAPER and will continue to be CHEAPER to own than gas (ICE) cars.  Not only is EVs better for the environment/climate change but it's better for your wallet! 

Tesla mic drop.............all automakers need to change their pants now.                                           

Tesla battery day notes!   (First half of the shareholders meeting notes below)

Re-cap of tesla's recent accomplishments by Elon

1)  Shanghai gigafactory - DIRT to FULL VOLUME production in 15 months!  100% Tesla OWNED factory in China - ONLY ONE in CHINA.   All other factories in China by foreign companies have to be owned in part by a Chinese company.   Tesla stands alone! 

2) Cheapest Solar in the U.S. -lowest cost, highest efficiency.   Solar tile roof - no competition.

3)  4 quarters of profitability!   SP500 are you listening!!!!

4)  Future value of Tesla ....not # of cars produced.   # of cars produced X AUTONOMY!        Wallstreet are you listening!!

5) Cash Flow -  Have a factory on every major CONTINENT.    North America - Fremont, Austin coming.    Europe - Berlin.    Asia - Shanghai.    4 major continents covered!  Efficiency, speed, cost cutting best done if factory is close to the delivery location.

6)  ICE automakers are DEAD/DYING.   Pandemic = March of death for the ICE automakers.  Tesla's the ONLY automaker GROWING in 2020!

7)  ICE cars at least 3X-5X more polluting than Tesla model 3 (charged by Grid - Solar (cleanest))

8)  Tesla makes the SAFEST cars (5 star) in the World.   No competition.  

9)  Autopilot functionality  -  0.3 (tesla) vs 2.1 (ICE cars)accidents per million miles driven.

10)  FULL self driving software release to beta users in about 1 month!!   Level 4 autonomous driving!!!  (We are currently level 2)

11)  3 advantages of Tesla - 

       A.  Engineering.   Best engineer CEO Elon + smartest engineers in the world work at Tesla

       B.  Manufacturing - "The machine that makes the machine is orders of magnitude harder than making a prototype."

       C.   Software - ignored by automakers, or outsourced and not integrated into                      their cars.   Over the air software updates, autonomous driving, complete                    vertical integration

WAIT for next post for the BATTERY DAY notes next.   This note was just a recap by Elon

Tesla battery investor day 9.22.2020 !   These are my thoughts BEFORE the event later today.

This is the event that basically reveals the "how" Tesla will continue to grow their dominance in the EV industry.

1)  Million mile battery -  a battery that will last longer than any ICE (old school fossil fuel burning combustion engine) car.   

2)  New battery technology (code name Roadrunner)- higher density, cheaper manufacturing cost, newer cheaper/environmentally friendly ingredients =  translation:  lower cost of the making the car and easier manufacturing to further their mission. (larger cells, tabless,dry battery electrode, cell to pack)

3)  New manufacturing plans - Gigafactory in Berlin and Terafactory in Austin, Texas.   Improvement efficiencies, new giant casting machines to simplify and reduce cost. 

4)  Dominance in FAST (SUPERFAST) charging with supercharger network that all other EVs are not using.   Tesla has the key to long distance travel with FAST, convenient charging all across the US and the globe.    funny thing, Elon offered it to other car makers but they all refused.   Wonder why? 

5) Refresh of Model S/X with plaid powertrain that should put Tesla back on top (Porsche Taycan currently fastest EV and Lucid Air Dream that is reported to be faster).   Hopefully there is also a external and internal refresh as well.  These are margin luxury level vehicles.

6) Profitability.  Q3 and Q4 should smash all prior delivery records and bring 2020 to a FANTASTIC profit story for Tesla when all other automakers are struggling to keep billions of losses from killing their business.

7) Surprises??   Hopefully more news on Tesla roadster 2.0 and semi-truck and total surprise news too??

1:30 pm PST, 9.22.2020

Hope to hear what you guys were excited about AFTER watching the event!