Financial Independence Without Losing Sight of Family Life

Lane Kawaoka, a former engineer who left the traditional path to build a major real estate business, explains how business owners can shift from earning income to building assets.

If you want a practical, founder-friendly way to think about money and wealth building, this episode gives you a clear framework. It also connects the numbers to real life, so the advice feels grounded instead of theoretical.

The conversation covers:

• The dangers of lifestyle creep and why many business owners struggle with spending as income rises
• How to scale into meaningful passive income
• An introduction into The Wealth Elevator framework
• The importance of rent-to-value ratio
• Defining cash flow in practical terms
• The comparison of rental properties with mutual funds
• The shift from trading time for money to accumulating assets
• Advice for aspiring entrepreneurs

He also discusses cash flow, tax benefits, the difference between direct investing and public-market products, and how entrepreneurs can move toward financial independence without losing sight of family life. The conversation breaks down why real estate can create cash flow, tax advantages, and long-term wealth, especially for entrepreneurs balancing family and business. Lane also shares his framework for understanding where you are financially, how to avoid lifestyle creep, and why surrounding yourself with the right network matters just as much as the investments themselves.

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TOP TAKEAWAYS

1. Real estate investing can outweigh retirement accounts and mutual funds.
2. Know your current financial floor
3. Avoid lifestyle creep early
4. Invest directly versus going through heavily packaged financial products.
5. Networking, community, and relationship-building are essential for accessing better opportunities and learning how to evaluate deals.

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ABOUT LANE KAWAOKA

Lane Kawaoka owns 10,000+ units across the US and lives in Hawaii with his wife and daughter, after quitting his day job as a Professional Engineer.

He partners with investors who want to build their portfolio, but are too busy to mess with “tenants, toilets, and termites” by curating opportunities in his “Hui Deal Pipeline Club” where his investors have personal access to him and know that Lane is personally putting his money on the line too. The Hui Deal Pipeline Club has acquired over $2.1B dollars of real estate since 2016. He has returned over $45 million dollars to his investors in distributions.

Lane reverse engineers the wealth building strategies that the rich use to the middle class via the Top-50 Investing Podcast, The Wealth Elevator. Lane’s mission is to help hard working professionals out of the rat race, one free strategy call at a time.

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LINKS

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Transcript

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the feeling that we're all trying to achieve is the feeling of financial independence, which to me is when your income is much more than your expenses. And, you have the hedonic treadmill as they call it. But, at some point, if you accumulate assets, you are able to get to a point where you can. Pretty much spend, I mean, lot of my clients, they, they spend 10 to 20 grand per month. And if you have a, portfolio of $5 million at 4%, you know, You're set, right? You're this concept of zero gravity It takes so much fuel to get a rocket ship a foot off the ground. And then you get it to the atmosphere, but at some point you break the atmosphere gravity. right? And you're zero gravity, Mm. Welcome back to the Bringing Up Business podcast, where we talk about raising a business and a family. If you're a business owner who wants to scale while still showing up for your you are in the right place. I'm your host, Kaila Sachse, toddler mom and owner of Yumari Digital. Yumari Digital supports small businesses with websites, marketing, and branding so that entrepreneurs can focus on what they do Today's conversation is all about the foundation of business, money. Our guest was a professional engineer with advanced degrees, doing everything right until he realized that the traditional path just wasn't to give him the freedom that he actually wanted. So he walked away from his career and built a billion... dollar real estate business. Now I gotta tell you, there are two things I'm really excited about for in this conversation. First, our guest is giving all of us a free gift. So you will want to stick around until the end. The other thing I'm looking forward to, is how our guest is going to break down complex strategies into something that actually feels and is doable, especially for people like us who are just balancing business with family. Welcome to the show, Lane Kawaoka. Hey, thanks for having me. Aloha, everybody. Yeah, yeah. So, Lane, Why is investing in real estate the key to wealth, especially for a business owner? Like, can't I just add money to my retirement account or my savings account or something? Yeah. I think the thing about real estate is other than, you know, fundamentals and people need a place to live the tax benefits and you the fact that you, you're essentially working the asset. You know, I know some people stake their Bitcoin and things like that, but in the same way, you know, when you rent your property out, you're working your asset, you're getting some yield off of it. And when you combine that with the appreciation and again, those tax benefits, which I'm sure we'll get more into. I mean, you just kind of compound these returns and it's a lot times it's like hidden. think a lot of people are aware of this and I wasn't aware of this. but yeah, very powerful. Okay, so it sounds like this would be a tool. Now, how could we compare it to something like a retirement account or a mutual fund or something else that our listener could be traditionally doing? Yeah, I think it's well known that like mutual funds, 401k stuff, you typically get 6% to 8%. But you know, you do eventually get taxed on it at some point at the end. With real estate, we'll talk about how you get a bunch of tax benefits today and in perpetuity year after year for you to kind of optimize your taxes every single year. So that benefit, could be very beneficial, especially if you're a higher income. earner or a small business owner. Right. and I think it just gives you the cashflow. that's, that's another nice thing about real estate, but, why else do the politicians all have this stuff and they sneak in all these like strange tax benefits for it? Right. Like I, I don't know. I have this saying where I'm like, well, "I don't know why something is the case, but I don't care." Right. Like I don't, I don't look at the roots of a tree. I just eat the fruit. Right? It's working. So that's why I do it. Right, right, that makes sense. And you mentioned cashflow. In layman's terms, what is cashflow? What does that mean? Yeah. So, I try and break things down pretty granularly so people can kind of understand what more a tangible example, but I guess when we talk about this, think of like a rental property in maybe a Midwestern city, that's a hundred thousand dollars and it may rent for a thousand bucks a month. So that thousand dollars a month in rent, 10 % is going to go to your property manager. Yeah. You're going to pay someone to do your hard work. for 10%. Some people think that's a lot, if you make money other ways, that's well worth it, in my opinion. 10 % to repairs, 10 % to another $100 goes to just putting it on the side for the big ticket items that eventually need to replace the roof or you need to change out the HVAC. And then you probably have a couple hundred bucks and then you gotta pay the taxes insurance mortgage. So once you pay all those expenses, you have a couple hundred bucks and that's your cashflow. Right. It doesn't seem very much. No landlords are not laughing their way to the bank every month. Right. It is razor thin when you think about it, but you, you layer in multiple rental properties on top of that. But you, now you're starting to see, as you're starting to layer on this, like, you know, I started investing in 2009, had my first rental property. Maybe had at least$400 or $500 a cash flow every month. But by 2015, I had 11 rental properties and maybe that was like $3,000 a passive cash flow month. And then it becomes more meaningful, right? Because that's kind of like a third paycheck a month, when I layered it on top of my engineering salary. But yeah, that's cash flow in a nutshell. Absolutely got it. So it's our income minus our expenses of having to handle the property basically. And so the leftover is our cash flow. And you know, look, starting off with 200 bucks a month, that could be your kid's sport. That could pay for your kid's sport. And that's just that one property. And like you said, you accumulate more properties. Now it can be a full-on income. And, picturing that income aside with your existing or future business. And man, we've ~ got a life that we get to live now. We feel maybe freedom. How would you describe what it's like to feel and be wealthy and not have to worry about money? Well, I mean, the feeling that we're all trying to achieve is the feeling of financial independence, which to me is when your income is much more than your expenses. And, you know, obviously you have lifestyle creep and the hedonic treadmill as they call it. But, at some point, if you accumulate assets, like whether it be rental properties or other assets that give you cashflow, you are able to get to a point where you can. Pretty much spend, I mean, lot of my clients, they, they spend 10 to 20 grand per month. And if you have a, of a portfolio of $5 million at 4%, you know, you buy a bunch of T-bills, which are lower risk, lower return type of investments. You're set, right? You're this concept of zero gravity or you, you. It takes so much fuel to get a rocket ship out like a foot off the ground. And then you get it to the atmosphere, but at some point you break the atmosphere gravity. right? And you're zero gravity, Mm. Yeah. you make, you're making more money than you could ever spend or you typically spending, right? It's a good feeling. But, you know, as, as I kind of talk about in my book, I mean, that's kind of when you hit the third floor of the Wealth Elevator. This is a point where, you know, your, you're zero gravity, and then it becomes more of a, you know, creating a legacy, not a family dynasty, but, you know, I would say, you know, it depends on where you are in the, in the wealth building journey, right? I mean, don't put the cart before the horse in a way. you know, first part is first floor, the Wealth Elevator, start buying assets, start to get that first hundred dollars, I pass a cashflow. Yeah, that makes complete sense. Earlier you mentioned lifestyle creep and that's a very real risk to the business owner who is now starting to grow and gain traction, right? Now this money is coming in from your business and you just want to spend it on your family, give your family the good life. Whereas what you can also do... You tell us, you're the expert, do you segment some of that money into your assets and investments? Or maybe you save all of it to start with. What do you do? How do you start? How do we get on the Wealth Elevator? Yeah. I mean, that's, that's the hardest question, right? When you take the spoils of your hard work and eat it, as opposed to reinvesting in your business or just speaking from my own experience, right? Like that first property gave me about 400 bucks of cashflow a month. I didn't go blow the money and, I didn't have kids back then too, but, um, and I just saved it up more. Like it's very incremental. but the cool thing is like, it's this game of like delayed gratification, right? Reinvesting in the business or for me taking the free cashflow and just saving up quicker for 20 % down payments. So that was in the beginning, it's very incremental, right? From 40 grand a year to 45 grand a year. Whoop dee doo, right? But. Like I said, um, know, 2009, I bought the first property and then 2015, had 11 properties. think my passive cashflow was like 35,000. So at that point, you know, with each property needing a down payment of 30 right? 20 % down payment on a hundred thousand dollar property. Now you're picking up a rental property every single year quicker. So this is the concept that we all call like the C curves or the exponential The whole point is, this is like business owners have to deal with this too, right? Like at some point when you take some of that top line or the bottom of the line profits to not just investing in the business. And honestly, I don't have a good answer for you on that. If anything, I would probably overlay it on top of what I have in the book of, you know, when you're on the second floor, the third floor, the Wealth Elevator, or two to $4 million net worth. That's when I think people. sort of, um, it, based on your personal preferences at that point, but certainly you take a guy who's five,$10 million net worth. I would say, you you're, you're spending, you're enjoying a lot of that, that cash at that point. But certainly when you, you know, if you haven't hit a million dollars yet or a million and a half, you probably should invest, reinvest that money again. But, um, but yeah, you know, know I'm speaking to a lot of parents here, right? Especially younger ones. These are. These are the no man's land years in a way. mean, most of the entrepreneurs I know, they're all in their late forties, fifties, and the kids are already in the teenage years. Nobody has young kids. It's like, Mm-hmm. Yeah. Yeah. what are we doing here? Like, what are you here for? Like, it's kind of a strange,~ time in people's lives, right? Where you're, you're stressed financially and from an energy time standpoint.~ you know, that's, that's why I'm like, When I talk to entrepreneurs, it's like, realistically, dude, like you got to start it before you have kids. Or, you know, as soon as the kids are like 12 or 14 and they don't want to hang out with you anymore, that's when you start it. I mean, it's just, it's just hard, right? But not say you can't do it. Mm Yeah. Yeah. I feel like no matter what stage you're starting at, you're starting and starting is difficult no matter how you slice it. So you just you just got to bite the bullet and Yeah. do it. So earlier you hinted at your book. The Wealth Elevator, describes different levels or different floors in which you could ride the Wealth Elevator up. So let's dive into each floor and break down what each floor is about. Yeah. So, so the first floor, we don't really talk about this for too, too much because there's a lot of books written for this basement level of the Wealth Elevator. So this is the floor where you're in credit card debt. just can't really stick to any kind of financial budget. You make less than 50, $60,000 a year income, or, you you just can't save more than five grand a year. Um, I don't have any experience in this, right? Like I, I. graduated with a good engineering job and I was really frugal with my money. So I kind of started out being able to save 30, 40 grand a year from my paycheck. Didn't have kids back then. That probably wouldn't have a lot harder, Yeah. Yeah. but I had a good paying job and that really kind of propelled me, but I didn't have much net worth, right? It was pretty much zero. So the name of the game 2009 to 2015 was just buying assets in my case, rental properties. And just kind of stocking them one on top of another. and, know, doing it, doing it a little bit better than the, than the first time, right? I started to buy my first few properties were in Seattle, Washington. And then I started to buy properties more in the Midwest south because the rent to value ratios are a little bit better.~ one thing we track is this thing called the rent to value ratio. So you take the monthly, ~ rents that you would probably get, you know, you could probably check Zillow, right? pretty dang good estimate or HotPads is another option divided by the purchase price. And you're looking for something 1 % or higher.~ lot of places like Seattle, California, Hawaii, New York, ain't going to work guys. Don't even look like, don't even look like there's a good chance that properties in your backyard probably will not be good rental properties from a cashflow standpoint. That makes sense. Okay. So we've started in the basement. We have the credit card debt. We're figuring out a budget. Say we work through all of that. We've read the other books that are out there. Now we're moving up to the next floor. What is the next floor? What is that about? Yeah. You probably read the book, "Rich Dad Poor Dad" which says in like a gazillion words, like go buy assets, right? Like that, that produce income for you. That's basically what it's saying. And don't be a bonehead and buy silly things like doodads. but yeah, like doodads are like things that, Describe a doodad. What could be a doodad? you know, like, I mean, I buy doodads today, like things that don't put money in your pocket that are stupid purchases, but like, I kind of justified in my head that it's coming from cashflow or it's coming from profits in the business, right? But most people will go buy, know, guy who makes 50 grand a year goes buy his$100,000 truck and his Mm. monthly payments like a thousand bucks a month, right? Like that's a, that's a, no. that's a picture in the doodads definition right there. Like silly things like that. ~ Yeah. Yeah, thinking about that truck just made my palms sweat. Like, no, no, yeah. Yeah. But that's the majority of Americans out there, right? Like the Dave Ramsey's, the Suze Ormans, they write a lot of content for these types of people. and. I think if like buying a house to live in, I don't necessarily think that that's a good idea for some people out there in~ particular people who are really good with their money and save their money and can invest it or turn it into a business.~ I do think that the majority of people out there are in the basement level of the Wealth Elevator, not really good with their money. So they need a forced biggie bank. They need to pay their mortgage. that puts it's, you know, it's like a forced payment before they go blow their on whatever doodads or whatnot after that. And that's hoping that they keep the house. Yeah, I yeah. So it sounds like renting could actually be helpful in building wealth. That's a very interesting concept that isn't talked about. Yeah. I mean, there's a lot of like calculations of people calculating this, right? But they never failed to combine the fact to like, well, you didn't just take that money, that month, monthly savings and do nothing. You put it into a business where hopefully, mean, any business you're in, you should try to make more than 20 to 30% ROI on your money. If not, you should probably go find a day job. To be honest. ~ or you're working a job that we were just trading time for money, right? That's that type of business.~ But that's, that's where I think, you you have to kind of realize that some people don't see it that way. They, kind of get lost in working at a bit,~ their job is their business, right? Yeah. They're not working Yeah. for somebody else. They, they, get that. I mean, I don't like working for anybody else either, but I Yeah, same. mean, they're just trading time for money and you get, Mm-hmm. but you got to do that. Right. And that's the whole point of the first floor of the Wealth Elevator. You're in the stage of life and wealth building that you have to. suck it up and trade time for money because you don't Mm-hmm. have assets. You don't have net worth, but once you can start to buy those things, it just slowly compounds over time. And this is the hardest part, right? The first hundred thousand dollar net worth. Once you get there, that's, that's very difficult, but now you're kind of buying more substantial assets like a rental property, et cetera. you~ and then you're kind of going on, going along this elevator. ~ but yeah, that was kind of my story. from 2009 to 2015, I was kind of just trudging along. And then when I had 11 rental properties, that was kind of about the time in my late twenties, early thirties that I became an accredited investor. So it sounds cool, but it's just, you know, net worth a million dollars or greater, or for some people they make $200,000 a year at their day job. So they're kind of bestowed this accredited investor tag. But at that point, you know, just kind of going back in my journey. I kind of stumbled upon other wealthy accredited investors and a lot of them had the same experience and pedigree that I did, right? know, good paying jobs, but more importantly, they had a handful of rental properties in their portfolio and they've been doing it for several years at least. And one thing that kind of stood out in my head was, you know, they kept saying like, yeah, you know, now we're more of a target to get sued. No, I mean, I'm not a lawyer. not giving you tax or legal advice here, anything I say, but you know, when your net worth is nothing, you don't really have much to lose. You're not really a big target. So buying rental properties, I mean, there's risks associated with that, obviously, got your insurance, et cetera, but there is personal risks there and the debts in your own name. So this is where a lot of these wealthy investors were like, well, I would sure like to be an investment where I don't get exposure to that type of activity. So. This is where, I saw what they were doing and I kind of followed suit, selling off my little rental properties for placements and private placements and syndications. ~ but, ~ I think the important thing here for, for listeners is, you may not be getting access to these types of investments if your net worth isn't a million dollars or greater, but just know that there's this whole quiet world of investors privately doing deals. investing directly into the investments. And I think that's the biggest takeaway here is unfortunately the whole 401k and you're going through the wall street channels and you're accessing the, like the investments through the secondary market or sloppy seconds is what we call it because you're getting hit up by all these fees, a certified financial planner, right? Like this is why, like very early on, When I was just running my little rental properties, I wasn't very sophisticated, but I was making pretty high ROI about two or three times greater than what I was supposedly getting in my 401k. And I was like, well, what the heck, Yes, please. Yeah. what the heck is going on here? Right? Like, why would I want to put my money in this 401k? Yeah, crazy. No, yeah. What I was doing when I was investing in my own rental properties or when I'm investing in a direct syndication in apartment building, I'm investing directly into that investment, right? I'm, I'm accessing the investment from the primary source where most people, unfortunately, they're, and my parents, they're getting access to likely the same investments, but through the sloppy seconds channel. And that to me is frustrating, right? Cause it's like, people work really hard yet they're just take getting, they're just kind of getting robbed blindly by all these fees and infrastructure. it's kind of like the shirt, right? Like the shirt I'm wearing. I have a lot of them cause I like them new, but I just, I think I just bought them for like 13 bucks right? But you could get the same shirt from like, what is it? Saks fifth for like 95 bucks. Same Mm-hmm. dang shirt, just how you're accessing to buy the product. These are investment products is what these guys sell. Mm-hmm, mm-hmm. It's that branding element. Like you think you're going in with this great investment because they have all of the fancy signage and they're sending you all the emails and they're telling you they are the best, they're gonna do the best thing with your money, but you're paying them that markup. But it sounds like with syndications and maybe with REITs, is that the same thing, a syndication of REITs? So a read, a good, I mean, that's a good example. Like, so REITs will invest in the same things, but that is institutional product, right? That's why the returns are so low. I mean, it is reliable, but it's a reliably bad return in my opinion. Yeah. Yeah.~ but when I say this, you know, I know I'm talking to a lot of newer investors as they start off with rental properties. If you haven't gotten your over a million dollars net worth, right? Like I would say investing when you, when you're investing directly into the deals, you run the risk of counterparty risk and you're, investing off the beaten path. Most people shouldn't do that. Right. Like even some smart people should not do that. Did you just stick to the normal stuff? Right. Like I'm actually like booking a cruise ship right now and we got to pick this, the shore excursions. And you know, we go on a nice one, right? So like, I know that we're getting completely screwed over by these score, these shore excursions. And Yeah. it shouldn't cost like this much to do. And sure enough, I go on, you know, some other channel, see it for like less than half the price, right? But that's, Mm-hmm, mm-hmm. mean, that's the world, that's a world capitalist world we live in, right? I mean, I don't get mad at it. I just understand that's the game. you're paying for the service. You're paying for the service. And note, if you were to go onshore and book direct with the excursion provider, that is going to be your lowest cost. So that would be, yeah, that would be our... Yeah. Yeah. At the same time, I did have this, ~ it never happened to me, but my buddy was like, you know, we went, ~ went to, I forget what was Bahrain or something like that, you know, middle East. And then they went with this, you know, they did the same thing. They get, went off the beaten path and they got like stuck up and like hijacked no. ~ and sort of kidnapped for a few hours. And I'm like, well, that's not worth it. I don't care too. Bye. But that's a good example of like, you know, when you're getting at the beats and path in some of these investments, you're doing it yourself. Right. Mm-hmm. Or you're entrusting a general partner, operator, sponsor to do this for you. It's not for everybody, especially when you're like brand new green right out the gate. Right. And I think this is where what I've realized and it was important for me, right? Like I had owned rental properties from 2009 to 2015. I wasn't an idiot. I knew what I was doing. I didn't know exactly how to evaluate like a big apartment building because I was a little intimidated. I was very intimidated in fact.~ So what was critical for me was to getting around an ecosystem of other purely passive accredited investors. So that's kind of what I do today, right? Like people read the book, they like the values and the way I explain things. And then we put on these kind of cool events and we facilitate, you know, conversations with other...~ accredited investors, right? Net worth million dollar or greater guys, typically guys in their 45 to 65 years old and gals too. But, um, I think it's refreshing for them to kind of finally meet other people who've got their financial life in order. Um, some high paid W-2 guys, a lot of business owners too. I mean, that's quite frankly, the only way you're going to get past a couple of million dollars net worth before age 50, if you haven't been given this money, um, or by owning your own business, by the way, But yeah, it was critical for me. That's why, the big thing that we do these days is we kind of source, this deal flow, and then we build this ecosystem so that people can co-source and cross check their own knowledge and understanding and do it within a community and ecosystem. Mm, and that sounds like a much more cost effective way to learn how to do something with without putting your actual money in the hat. And yeah. Yeah. Yeah. But, but it's not for everybody, right? Like, mean, like Gen Z-ers do they, some of these guys are like super afraid of talking to people, you know, like the only one that texts, right? Like that's not the way that you can't, in my opinion, can't do that. Like you have to Mm-hmm. kind of rely on like good old fashioned relationship building and connections. And that's the way you're Yeah. going to navigate this country club world. Yeah, you know, it's so crazy that you say that we hear that all the time on this show and we're we've we've guested multiple industries doing all these different things. And that is a through line. Everybody says you have to network. You have to get around people. And at the end of the day, it makes complete sense because when we are running businesses and when we are getting out there trying to make deals, you're you're working with other people. If you don't have any sort of an ecosystem, how are you even going to get started? You've got to get out there. And so thank you for putting together an ecosystem that can help business owners get into the real estate game and grow their wealth. Yeah, I mean, it's, it's important. mean, I'm joined just from the business side. mean, Entrepreneurs Organization, EO, and, people always joke like, or my wife does like, why do you spend all this money and like to join these silly things? You know, like, ~ Hmm. Hmm. well, it's the only way we get access to other people that kind of do what we do.~ That's right. you know, and it's different, right? Like. I mean, I have kids, my kids, parents, friends, they have J-O-Bs. It's different,~ not to say that, not to downplay anybody's job or anything like that, but there's just a little bit more on the line when you're running your own business. ~ Mm-hmm. And you also could make a lot more too. So it's like different, different, different world that you live in.~ And I think it's important to have, I mean, we all know that you're the five people you hang out with most. Yeah. But, know, like I think I would highly recommend like Entrepreneurs Organization, like from an emotional standpoint, like it's a struggle, right? The ups and downs, like entrepreneurship is known as I this great definition. like, you can feel like you're in the top of the world in the morning. And then something happens at lunch. You're like, my God, I'm going to die. Right. Why is that so real? And then you add in parenting too and it's just like, it's a roller coaster all day long. Yeah. Yeah. Yeah. And usually you're Yeah. Yup. like, you're pretty, you're pretty beat up and then you're kind of short, short tempered with your spouse. Right. And then, yeah, you know, Yeah. I mean, that's why you get divorced and all this stuff happens. Right. Like it's real. Um, Mm-hmm. I don't know what the statistics are for divorce with entrepreneurs, but I know they go through, they hire and fire a lot. I bet, you know, a lot more than the average person. Ooh, that is fascinating. Yeah, I'd be curious to hear that stat too. That's so fascinating. So thinking about our listener, they want to get started. They want to figure out what floor they're on. What is the very first thing that they should do? Yeah. So I actually got this from Gary Vaynerchuk. know that he, everybody likes him out here, but he always, he talks about empathy and, and knowing who you are self-awareness. So that's kind of where the book foundation is. Like it has these different floors at the Wealth Elevator. The first step in, in this world is like understanding where you're at, because if you're already a million dollar net worth, you're not caring about silly financial tips about like, don't have your $6 latte, right? Right. Um, If you're at the third floor of the Wealth Elevator, you don't care about paying your kids. Whoop-de-doo. All the CPAs talk about that on social media, but it doesn't really move the needle too much.~ it, you got to figure out where you're at first and then kind of understand, okay, here are my goals. Here's what I'm trying to do now. And here's what my portfolio and trying to do. But then you also need to find your cohort, right? You're other people that are have the same trajectory, but also kind of at your same point too. So you can kind of grow with them financially.~ and then it all kind of fits in your business too, right? Cause your, business at the end of the day, unfortunately for most business owners, like 80 % of their net worth is in their business, which Defies all like, mean, I'm not allowed to get financial advice apparently, because I'm not a financial planner, but you know, also have that much concentration in your net worth in any one whether it's apartment building a house ~ Yeah. or your business, right? But everybody entrepreneurs disobey this thing because is their ticket to financial freedom and wealth. Right. ~ I call, I define this as like life-changing money, right? Usually about four or $5 million for most people. So normally for business owners to You need to get yourself to one or $2 million revenue that typically at a three, four multiple, which is a low one, typically can get you to life changing money,$5 million exit. So, but that's going to be all your money, right? You don't really have money to invest. And for a lot of my investors who are entrepreneurs, I tell them upfront, like, man, you're going to get a higher ROI if you just take this money and you invest it in your business. Now I don't know how that is. might be a new employee. Might be some Meta ads for all we know, right?~ but you know, you got to bet on yourself, right? If not, why are you playing the game? Right. So, Right. Yeah. but at some point, once your business is kicking and rolling, I would say at least at the very least you get like one or $2 million revenue. Cause the reason I say that, I mean, this is call come in all shapes and sizes, but in particular, I think what's driven off of is like how your org structure is.~ usually at one to $2 million ~ revenue annual,~ you know, you're, you've got a set of directors and they've got another run. So you're talking about get three rung system. You know, Mm-hmm. the next stage is now you're talking four rungs and maybe 50-100 employees plus. And your revenue is like five to 10 mil, right? ~ Mm-hmm. I'm not a business coach, right? There's a lot of guys in EOS and you know, at the other one that teach this stuff, but I overlay it from a what percentage is that of your net worth? And when, once you get to your point to your businesses, you're out of the business, you've got directors kind of doing your stuff for Now you can take some of your bandwidth and put it to investing because it's very different. Cause some of my Mm-hmm. investors, they're just W-2 guys. There's high paid W-2 guys. They know nothing about business. You don't want them to handle anything with. You know, risk and employees, I mean, they manage people, right? They're leaders in their own right. You know, especially Yeah. at, at salaries of 200, $300,000 a year, they're leaders, but they're just, they don't have business savvy, but they're really good investors. And this is my whole theory is like to be a good investor and a business operator is two very, very different things. you I always think, I always thought of myself as a better investor than I was a business owner. I think long-term. I mean, long-term, when you get past five mil, 10 mil net worth, that being a lazy investors and having not being a not okay business operator is probably better, but you'll never get there unless you're a good business operator. Right. Right? So there's a transfer that happens. And I think it kind of happens around the two to $5 million net worth range, or certainly when you get past that one to$2 million revenue, annual revenue, because that's indicative of what your business is worth at that point. Mm-hmm. Makes sense. So zooming out, if you want to get started, analyze where you are, where are you even starting from, set some goals for yourself, and surround yourself with like-minded people. And then from there, just grind, put your nose to the grindstone and just get it done. And then eventually when you get to the point where you can invest in bigger do so. Yeah. Grind 'til you get life changing money, which is $5 million net worth from an exit of your business. Or you can sell it. Maybe you can sell it through an ESOP or a partial sale. You know, there's many, many different options out there, but you know, what I do is I help people turn from asset~ accumulation phase, right? When you're trading time for money or you're grinding in your business to the asset allocator stage. Like we have enough assets. We have critical mass. We have enough stuff. And again, it's different for everybody. It could be anywhere from $2 million net worth to $6 million network. But once you have enough stuff, the philosophy changes from trading time for money and working in your business to let me just allocate this out and get an ROI. Right. You could be a real bonehead investor and just invest in T-bills. You think today is like three and a half percent or something like that. Right. You could probably do better. Yeah, But you know what, that's the, I'm just using it as an example of that's in the spirit. You are operating as a family office allocator, right? You're, you're allocating your own capital to work harder for you than you are actually working.~ some people can't make that shift, right? Cause they got the ego thing involved where they've got to be the guy flying the ship and, Mm. multiple other reasons too, right? Yeah. But I think the quicker you can get there and that may not. That may not motivate you, right? The reason why you do your business maybe for other reasons, but, that's kind of the natural transition over time. Cause we know Mm-hmm. for sure your kids are not going to want to work as hard as you and, and more than likely just, mean, not that I, I, I do think the entrepreneur gene is a genetic thing too. Like, I just don't think that they're likely to have it. So you need to have both of those, those key character traits. more than likely, they won't even have one of those two. but that's great. You're rich, give them all the money and just have them allocate the money. Cause you can be a kind of a bonehead and still do that and do it somewhat successfully, especially if you surround yourself with the right professionals, right? Yeah, yeah, people are smarter than you. Right. And so hopefully Yeah. I'm, what I'm doing is I'm kind of painting the picture of like, what is the vision after five,$10 million net worth? This is what we kind of talk about in the third floor, penthouse level of the Wealth Elevator in the book.~ but you know, if you're not even to the first floor, don't even pay attention to what I'm saying. Just buy some rental properties, you know? Yeah. Focus on that. How exciting. So let's go ahead and dive into our lightning round. first, which came first for you, parenthood or business? Yeah, tell me more. Business. I started the business in 2009. So that was like more than a couple of decades headstart. Lucky me. Yeah, seriously. What was that transition like for you between business and parenthood? I mean, luckily by that time I was already having employees, right? I think that's hard for people still in the beginning stages and also in the solopreneur stages. I mean, that's, that's rough. Yeah, yeah, good. So you have the help, that's good. What was one way that your parenting has benefited from your entrepreneurship?~ one thing I get a lot, like I'm in Vistage. So, a lot at Vistage, talk about HR issues, dealing with people and really personnel like issues. And one of the topics that comes up is like multi-generational, workplace. I'm a millennial. I'm like a late millennial,~ or actually early millennial. And sometimes I kind of feel like more of a Gen Z in terms of my conservativeness, but. Yeah, I started to realize that like, look, Gen Z and my kids age, they're just different. Like, in some ways better, I think they have a better autonomy, like where I can do something I hate, and I still do it. Right? Like I've done that in corporate America.~ where I won't do it. I won't do it good though. Right. Yeah. But I think what's good about this latest generation is they have autonomy. Like you give them autonomy and what they're doing, you really get a lot of production out of them. The bad thing obviously is you say one piece of criticism and they crumble like Mm. a bunch of sticks. no. And it's hard to find kind of the right people. You have to go through a lot of people. But I think that has, as a parent, like when my kids is like that, I understand it's not their fault, right? That's just how people are. It's not their fault. It's not, you know, it's just the generation they are. And what I've kind of realized is like, we are, we're the leaders, right? Like if you're a Gen Xer or a early Millennial like myself, look, the Baby Boomers are gone. They're not here. And the dinosaurs are dead now. It's us. So Yeah. us as leaders, like our job is not to manage the way we are, but it's managed to the people, right? So, I mean, that's, that's my philosophy is like, you need to manage to how the people are. It's like how you are is going to be different. How I manage your coworker. Yep, yep, excellent advice, it's so true. You have to know your team so that you can best work with them and motivate them. What is one way that your business has benefited from your parenting experience? Um, you know, I, I have a high regard for my kids because I think at the end of the day, it's my DNA. So I have a soft spot there. So I have this mindset of like, I don't think you're stupid or anything like that. It's just not your fault. And I also feel like, whether employees do good, bad job, it's also the same thing. It's not, it's not their fault. They're just a product of their upbringing Yeah. Yeah. and their environment. Um, and. That's just, it's just a little bit more empathy and understanding. I think people want to do a good job at the end of the day. They also want to be appreciated. I think that's my issue is like, come from a time where you just suck it up and do it and you don't, you don't need any recognition and you shouldn't want any recognition. So that's where I find difficulty kind of, you know, doing that. to force myself to do it. Yeah. Hey, you know what? That's the beauty of parenting is that it softens us in ways that we had no idea were even possible. Yeah. Yeah, I'm not that bad though. I don't quite have a checklist of like praising my kid on certain aspects of things they do at random times, you know, but yeah. Yeah. Yeah, yeah. And what has been your biggest business mistake and how did you overcome it?~ Business mistake. mean, we operate investments, right? And we navigated through kind of the worst time since even worse than 2008 in commercial real estate. So, I mean, it got so bad that, there's really nothing you could have done at that point. But that's how investments are, right? There's market cycles. people lose money in the stock market all the time, right? 2008, 2020. ~ hasn't been a big correction lately, but you know, I think that's, that's kind of the thing is right. Like you, you believe in the business plan and you work it, but you're not going to have the best outcome every single time. sure. You, you, you go back to the drawing board and you're like, okay, what, what broke down? Where was the failure point?~ or was there a change in the, the thesis, right? Investment thesis. Or was it completely like the surrounding macroeconomics, right? The environment, right? And of these, unfortunately, you don't have control over macroeconomics. You only have control of your business operation. like businesses, right? You can have the best product. You just could have bad timing too. Same thing. Right, that's very true, very true. What are some marketing strategies that have worked for your business? mean, first, do you even have to do marketing? Is marketing a part of your business? Yeah, it's a huge part of our business. Yeah. mean, we, think our hard, our hard thing is like, we, do investments off the beaten path, right? Not many people even know that there's a path and to get off that path to find us. Right. So I always think of like people with businesses, either people know about you and you're probably in high competition with other people. That's a different subset of problems or. Nobody knows what the heck you, the business solution you offer. And that's what we're in. So. ~ What has helped, mean, lot of this content marketing, right? Like I go on podcasts like this, share my story. I'm obviously very motivated because it's changed my life completely. It's not a get-rich-quick scheme. takes a long, long time to kind of apply this different set of strategies, but you know, investing off alternate investments. And then now you get these tax benefits from the investments to pay less than legally. ~ You know, it's not sexy and it's also scary. for people getting off the beaten path too. yeah, I've done a lot of podcasts. I think my book is, does a really good job of kind of capturing because it's the stuff we do, need to explain it. Like it's kind of complicated on the stuff that we do. It's not like, hey, wear this golf glove and now you'll swing a golf club better. Like, no, it's like, you got to learn the systems and you have to now apply it too. and also have an ecosystem around you, right? It's kind of difficult. So yeah, a lot of layers. many layers. Yeah. Yeah. Yeah. What is a marketing strategy that has not worked for you? You've tried it, you gave it a good shot and it just flopped. Um, general mass marketing to the masses. Um, I, kind of, thought that at one time we, we would just kind of mass market, you know, mass market to everybody out there. But what I realized is less than like 1 % of 1 % of people are even on the first floor of the Wealth Elevator and greater. Right. I mean, who is listening to like a business podcast now and not just listening to music. And of those people, who has a million dollars net worth to invest, right? Even smaller part of that. Right. Cause everybody who doesn't have money is hungry to learn. But once you have money, you don't. Right. Like, I mean, we used to do in-person meetups, but most real estate. meetups are filled with guys who don't have money, like the house flipper guys and stuff like that. And then, know, look today, like most of my clients are age 45 to 65. They have older kids, right, or kids, you know, they're not going to a happy hour meetup on a Thursday night. No, right? No. You can't do that. Right. I mean, these guys make $300, $400,000 a year at their day jobs or their businesses. They're not messing around and going to hang out with some young guys who trying to flip some houses. Like, and I don't know Right. Right. why I didn't think of that earlier, but yeah, you know, that, that kind of, the, the, the misalignment of like, always say like, so basically like go to where your people are. You know, I just kept doing what felt what was right. And that wasn't what I should have done. Mm-hmm. That's the key to marketing is understanding who your actual customer or client is and meeting them where they're at. Yeah, yeah. But I think the Yeah. Yeah. problem is sometimes you're too close to the action too, right? ~ Mm-hmm. Yeah. You can do these meetups and you can have the great conversations with people, but somebody in your shoes and perspective be like, why are you talking to them? They have no money. Nobody has money at this meetup you're putting together. Wait, we need to change where you're doing this. Whereas maybe I'm just too close to the action, right? That's the hard thing. That leads us into our next question. What is your advice to listeners who want to start their own business? Um, so I'm a proponent. mean, the way I did it is I was working my engineering job from, you know, from the start. I actually didn't quit until 2018. So I was kind of working this double life for a decade, basically. Wow, yeah. I mean, in the beginning it was easy, right? But then I had a bunch of rental properties and I'm kind of like taking during lunch break and stuff like that. But I think the cool thing about that is like you're building lean systems because you don't have time to, so you're being very efficient with your time, you're creating systems. and you're not just loosey goosey with your resources. So that when you finally do quit your job, it's boom, now you have all this extra time and that really should help power you out of the gate once you're going. So every business is different. Like some businesses I feel like are, you gotta put 100 % in and you gotta burn the boat so you gotta quit your day job. Yeah. Real estate is the opposite of that. Real estate's kind of one of those things you can do on the side of what you're already doing. but I just see so many people kind of in the middle and they just flame out, right? Like most entrepreneurs fail. Yep, yep. I would prefer to see a lot of people hold onto the side of the pool, aka have keep their day job so they can at put groceries on the table for a few years. Yeah, solid advice. If anybody has a question, where can they find you? They can check out my podcast, The Wealth Elevator. I guess what I would recommend everybody is pick up the book, The Wealth Elevator. And then, if you're an accredited investor looking to exit your business, certainly a revenue million dollars or greater would definitely like to get on the phone with you. Shoot me an email lane@thewealthelevator.com.⁓ Well, thank you so much for your time, Lane, and for all of your wisdom. I'm excited to apply it to my own life. So thank you so much. Yeah, thanks for having me. Thank you so much for listening to today's episode. Lane has gifted our listeners the free PDF version of his book, The Wealth Elevator, which can be found in our show notes. Enjoy.