About Our Guest
As a retired Air Force officer, Axel started his first company in 2005, focusing on consulting, employee skill development, and program management. These areas remain in place these days and have grown internationally. He has always had a love for education and helping people help themselves become successful.
Hey, everyone! We’re excited to have Axel Meierhoefer on the show today.
Axel is the founder of Ideal Wealth Grower and a retired Air Force Officer. He helps people learn and succeed in reaching economic independence through Real Estate investing, leadership, mindset, and productivity.
He has a unique perspective on how to invest in real estate, and we’re going to talk about that and a few other topics today!
You Can Become Financially Free Through Real Estate Investing with Axel Meierhoefer
[00:00:00] Ryan: Hey guys, Ryan DeMent from Chasing Financial Freedom Podcast. I hope you guys are having a great day this week on the podcast. We have Axel Meierhoefer, and I know I didn’t pronounce it correctly, but I’m close and I’m gonna continue to try those last names because I butcher you guys know that. Axel is the founder of the ideal wealth grower.
[00:00:25] Ryan: And we’re gonna talk lots of real estate investing right up my alley. Axel. Welcome to the. Yeah. Hi Ryan.
[00:00:32] Axel: Thank you. And you did awesome on the name by the way.
[00:00:34] Ryan: Thank you. I hate butchering last names and yours is a little more difficult, but I give it a shot. No, you did great. So before we get into, you know what you’re doing with ideal wealth grower, tell a little about your background in listen.
[00:00:50] Axel: Yeah. I’m originally from Germany and came over to the United States as part of an exchange program between the US Air Force and the German air force stayed way longer than originally anticipated. And that’s a story in and of itself. And. In aviation, your body just gets to the point where you just can’t handle that kind of physical stress anymore.
[00:01:11] Axel: That is required in jet aviation. So I was basically in front of the decision, do I stay in the military and not fly anymore? Or do I retire from the military and see what I can do in civilian life? And so I chose the latter, then got into an executive role at a software company. And then in 2005 started my own business.
[00:01:33] Axel: Have. Having a business of my owner now, two businesses ever since. And if you think about 2005 was just slightly removed from the.com bust. So that was one of the big things. When I got into the civilian world, I was like, thinking what could I do? So I don’t have to work forever, but stocks seemed to be out.
[00:01:56] Axel: And so I went into researching what other options are there and started looking into real. And yeah, and dug deeper and deeper in good German diligent way. and here we’re 15 years later it became basically a passion and a profession.
[00:02:14] Ryan: I know we had a pre-call, but I didn’t know your background as a pilot.
[00:02:18] Ryan: So what were you flying that didn’t that’s pretty cool.
[00:02:21] Axel: Yeah. I started out in Germany. It was one of the very first people to fly jet court, the tornado, or also officially known S G R one. Dual engine so forth. And then when I came over to the us, I flew F1 elevens for the us air force. Yeah. And those were the two main plane.
[00:02:40] Axel: There were a few other little inter me source and stuff, but those were the main tool platforms I was flying.
[00:02:47] Ryan: So how long did you fly for 22 years? Wow, that’s really cool. That’s awesome. Yeah,
[00:02:54] Axel: it was an awesome time. It’s just, I wish when you turn like into the forties, that your body would hold up a little bit.
[00:03:01] Axel: I could have done this, but mentally I thought I could have done it forever, but I remember the very last century huge training. So every. Year, you get like a really thorough physical and then every other year you’re being tested for your ability to handle the strain, so to speak. And one of the ways to do it, instead of going out in a plane is they put you literally like with your astronauts, they put you in a century Fuge.
[00:03:24] Axel: And then you have to do certain exercises to keep the blood in your head so that you can see and can think and stuff like that. And so they increase the speed and you are like pumping like a like little hamster or something like that. And. So I got to the limit at the time was like 6.5 and they push it until you say, okay, I got enough.
[00:03:44] Axel: So I think my limit at the last test was like 7.8 or something like the G. So everything, like your hand, your nose, your feet, everything weighs 7.8 times as much as normal. And But then I came home and for one I felt really exhausted. And so I’m undressing and to take a shower and my wife said, what the hell happened to you?
[00:04:03] Axel: And all these little capillaries under the skin. I look like somebody had run like a metal brush over my skin or something like all these wow. Head burst and yeah. And so it only was there for four or five days. And then it all healed up again. That was my final indication. He said, I don’t think you should do this anymore.
[00:04:25] Ryan: So how many G’s was that? Was it six and a half? You said it was 7.8, 7.8. Is that the most G’s you’ve ever pulled? No,
[00:04:34] Axel: temporarily. I went up to nine, but the thing is in the century, I mean they can slow it down pretty quickly, but the point is that you can actually maintain your own pressure through muscle exercises, Uhhuh in up high.
[00:04:49] Axel: To sustain because obviously the blood wants to go in your feed and you need it in your head. , that’s what I mean by pumping against it, so to speak. And you can do this with your muscle exercise. You can basically constrict the arteries, but obviously the pressure, Causes reactions, I guess is the best way to put it.
[00:05:09] Ryan: Wow. That’s pretty cool. I’ve never, I know pilots, but not military pilots and that’s really cool that you could do that and that’s gotta be some serious strain on your body over 23 years, 22 years that you did that. Yeah, absolutely. Yeah. That’s
[00:05:25] Axel: a lot of work. It’s also, on the other hand, I always try to look at the positive side of things.
[00:05:29] Axel: And one of the positive things I believe is that it infused the level of fitness, right? That I’m nowhere near as fit as I was when I did that, but I still believe that all this activity, all this exercise and stuff have trained the body to be more. Resistant to any kind of external influences.
[00:05:49] Axel: Then if I would’ve just been at a desk all my life or something,
[00:05:54] Ryan: so you decide to get out it’s 2005 stocks were out. What kind of led you down the path to what you got into with your.
[00:06:04] Axel: Like I said, first, I started looking at what alternatives are out there. And in that search for me, I was really like, where do I start?
[00:06:13] Axel: How do you find something like this? And one of the things was that in the area where we were living there were like Edward Jones and these kind of like financial advisory services. And I met with a few of these people. And they didn’t, they basically pretended that what ha what was going on in the stock market didn’t happen.
[00:06:34] Axel: Like they basically made it sound like a flu, but one of the things that had happened at the last base that I was stationed at in, in New Mexico, we became friends with the real estate agent who had sawed us the lot for the house that we got. That was at the time, the first time that we actually got a new house built and he was basically involved in the development.
[00:06:57] Axel: And sometimes, I don’t know if you or your audience members have experienced that you have an initially a business relationship, but you click and you like each other and you meet a few times and then you get invited to a barbecue and all that kind of stuff. And so we kinda became friends.
[00:07:11] Axel: So in those three or four years that we were St. Stationed and living in that house. And I talked to him a lot. And then when I got out of the military, I talked to this financial advisor and he made so much sense and the financial advisor basically made no sense to me. So I thought real estate could be something who is doing this.
[00:07:30] Axel: Because a little 25,000 people town in New Mexico is definitely not the Mecca of real estate investing. So I looked into it and I found a few people that the one that is still stuck in my head is Arnold Schwarzenegger. Who is at the time was holding one of the largest, real residential real estate portfolios in California.
[00:07:50] Axel: Because he used the money from the movies and investigated in real estate. And then he started digging further. Went to workshops there weren’t things like podcasts yet or so forth, but I bought books and stuff. And I guess as a German, what really resonated with me is all of this made sense.
[00:08:05] Axel: The math made sense. The idea that, Muslims, pyramid, people always need safety, food, and shelter that will not change. So for me to say, okay safety I did for 22. Food. Yeah, I like gardening, but not on that scale. How about so got into that and yeah, basically I did it initially mainly for our family just to say, okay, I wanna build a portfolio so that we can identify a retirement that is reasonable.
[00:08:35] Axel: And obviously we made friends outside of the military and in conversations, they were just saying, oh, what are you doing? And I . Unbeknownst really, I will, would put it. I threw out like jargon, right? Like I’m considering a 10 31 exchange. I might be able to actually avoid Capital gains tax. And I think the deductions were on was balance my initial income from my little consulting company and people like, what the hell is he talking about?
[00:09:05] Axel: Right. and so then questions came up and I started explaining and out of that really was, wow, you have learned so much about it and you actually doing it, you should share it with other people. And that was when I said, okay, then let’s have a website and. Solid idea with grower, because I wanted to have a name that is reflecting.
[00:09:28] Axel: What are we really doing in this? This ideal is not just a word. It’s also an abbreviation. And so all these things coming together, we trademarked and so forth. Yeah. And ever since I’ve slowly grown like a tribe as I call it of people who like to basically. Take advantage of the path that I have gone down, as well as all the relationships I have formed over the years with lenders, with turnkey providers, with developers, with insurance agents and stuff.
[00:09:59] Axel: So it’s not just, I can tell you what you could do or what I do, but I’m actually literally connecting people to these relationships.
[00:10:08] Ryan: So back to the beginning, what was your very first in.
[00:10:12] Axel: The first investment in a way, if you take the strict definition of investment was the house that we had left in the last few years of my assignment in the air force, because like I said, I got recruited in the software company.
[00:10:25] Axel: The house was in New Mexico software company was in Santa Barbara, California. So we moved there and had to make a decision. Do we sell the house or what do we do? And I was just starting into real estate investing. Realized. It was probably better to rent it, which we actually ended up doing. And that was the first time somebody said, oh, this is now an investment property.
[00:10:46] Axel: I didn’t know that when you rented it became an investment property, but that’s basically the first one was the one that we had built left in it ourselves. And for New Mexico terms, a few years later actually sold it and made a little profit, which is not easy to do in New Mexico. yeah.
[00:11:05] Ryan: So you did that.
[00:11:06] Ryan: You moved yourself to Santa Barbara and then you’re starting to build the company. What are some steps in there? And we’re, I’m a backup and just say what I’m, where I’m trying to get to is a lot of these individuals that listen to the podcast, but also people that are connected to us on social media.
[00:11:24] Ryan: They’re trying to find ways to. And I know we had a conversation about passive investing and so forth and the differences in nuances and so forth, but they need to have a place to start and understand there’s a starting point. And getting there is taking those first steps like you did. You created your own first rental and it’s an investment property.
[00:11:41] Ryan: What are some of those steps and what are those, what do your steps look like that started out initially. And then let’s start walking that path down the road to where you’re at.
[00:11:51] Axel: Yeah. One thing I have to say is the times when we did our first investment property that I just described, if you compare that to nowadays, things have changed a lot.
[00:11:59] Axel: So I would say if you, if we bring it up to now to, to your audience and to what people would do or what I’m advising people to do is basically from a starting position, you have to look at two scenarios. The one scenario is to say, okay, Check where you are physically. What is your physical location?
[00:12:20] Axel: Like I mentioned for me, we moved to Santa Barbara. It didn’t take a rocket scientist to say probably really hard to do real estate investing in a place where at the time, even then. A regular house was like 600, 700, $800,000. Wow. So when you find out that you are living in an area somewhere in the country, where the ratio between the price of a property that you would be willing to own and then lease or rent out to a tenant versus what you can actually collect and rent.
[00:12:50] Axel: If that ratio is out of whack, like I live now in the San Diego area. Average prices for really modest homes are like in the 700,000 plus area. So if I apply the, one of the kind of quick check things, and they are not to say, this is the decision maker for the property purchase, but it is a starting point to say, is it even worth analyzing?
[00:13:11] Axel: So if I look at this first thing, I look at. Is the ratio anywhere close to 1%. So if you have a $700,000 house, that would mean I would have to be able to collect somewhere around six to $7,000 a month in rent, which nobody pays, obviously no and there are people who pay that in rent, but then the house is.
[00:13:28] Axel: 3 million. So of course, so that makes yous outta whack. And so if you find yourself in any of those areas where you say, okay, I know what the prices for properties are, and I have an idea, or you can use a tool online to see what are typical rent, or maybe you have been attended in the area. If that is not somewhere close to 1%, that means you have to look somewhere.
[00:13:48] Axel: And what we basically, as part of our strategy have developed is called the outer state turnkey residential realistic strategy. And what it means is yes, you go outta state that could be like 500 miles or a hundred miles where the next state boundary is, or a thousand miles or more. But you’re going into an area where that ratio, where you can see, I can find $160,000 house and 1500 a month rent.
[00:14:11] Axel: That’s pretty close to one. And they are still to this day, I’m just in the process of finishing a purchase of a brand new gold towers in Memphis, Tennessee, 150 or 160,000 purchased price. And it’s renting for 1400. So that’s a good ratio. So that’s one thing now that’s for people. Who can say, okay, I’m bringing to the starting line, a certain amount of savings or a certain amount of money that I converted from stock investments or whatever you, where you get the money from or got the money from to invest in real estate.
[00:14:44] Axel: So if you take our $150,000 deal in Memphis, you need somewhere around 30,000, maybe 35,000. If you have that’s number one. And let me just say very quick. The other option is if you say I want to do real estate. But I don’t yet have enough to get started with a full house purchase right away.
[00:15:02] Axel: There are now platforms that I teach people. I do it myself. I call it cash flow banking. Online platforms where you can have partial ownership in a three bedroom, two bathhouse. And so you can start that literally with $50 a month. Now it would take a really long time if you keep going that way.
[00:15:22] Axel: But I just want to demonstrate that. The barrier to entry that the media is oftentimes portraying. If you wanna be a real estate investor, you first have to be rich. It’s just not true, unless it’s now true that having $50 a month is being rich. So I’ve not heard that definition. So if you 50 or a hundred or 300 or 400.
[00:15:43] Axel: You can put, so then you can build like your investing down payment. And as soon as that reaches a number that is enough to actually make the first investment, you can then get that first investment and take the cash flow and pump it back into the same location, $50
[00:15:59] Ryan: increments. So let me back up for those individuals that don’t have enough for a down payment.
[00:16:06] Ryan: describe that vehicle. Are you taking $50 a month from them and building it up over time and putting in some type of money market or some type of vehicle, or are you putting it into like fractional ownership? Of a, yeah,
[00:16:18] Axel: I’m not taking the money from the client. I’m basically showing the client the platform that I’m using myself.
[00:16:24] Axel: And so they basically establish an account, hook it up to their bank account and then decide how much money per month or on whatever interval they want. They would like to put in it and fractional ownership for your audience. Just to describe that really quick, what that means is the platform owner.
[00:16:42] Axel: Finds a property at 1 23 main street in Cincinnati, Ohio. They basically sign a contract for this property. And let’s say it’s $180,000 property that is renting for 1600 or 1650, or something like that. So they sign the contract to purchase this property in cash for this asking price immediately turn around and.
[00:17:06] Axel: An LLC, a limited liability corporation called 1, 2, 3 main street in Cincinnati, Ohio . And then, because they know exactly how much they paid. So it’s the hundred 80 plus some fees and stuff like that. Let’s just say for easy calculation, the total is 200,000 all in 2000, right? So 200,000 all in, they break that basically in $50, incre.
[00:17:28] Axel: So that means you have 4,000 and the best way I like to explain it is think of it as shares in a company so you have 4,000 shares. Every single one is $50. And if you buy one or you buy 10, or you buy a hundred, you have that many shares in this LLC that owns one through three main street in CI.
[00:17:47] Axel: And you will now participate in the rental income. You now participate in the appreciation of the value of this property. Now you participate in the depreciation that people get when they own residential real estate, you get a K one from their platform. For you a little increment of that property and you can do this like one month you say, okay, I have $500.
[00:18:10] Axel: So I buy 10 of those. And next month they have 1, 2, 3 main street in Columbus, Ohio, and you buy 10 of those. And then the next month they buy, they have 1, 2, 3 main street in Dayton, Ohio. And you buy maybe 20 because you have a bonus or something like, and step by step, you have this fractional ownership in the same thing.
[00:18:30] Axel: That you ultimately wanna really have ownership in the full property. . Now when you say, and you might, your audience might say, okay why do I ever leave that? Why wouldn’t I just continue to keep putting my 5,000, 200, $500 into this platform? The really key thing to realize is I said at the beginning the company, the platform buys the property for.
[00:18:52] Axel: And everybody who owns a piece in the form of these shares owns them in cash. And the real thing that makes real estate investing so superior to almost every other thing in investing anywhere is leverage. So when you buy your own property, the one that we mentioned earlier, the $150,000 property in Memphis, you put 30,000 and maybe a few thousand in fees.
[00:19:16] Axel: But the rest comes from the bank. Now the trick here is you, if that $150,000 property improves in value by 5%, that’s $7,500. It’s not just you getting 20% of that. You getting the full $7,500, right? So if you say what 30,000 in the property improve in value by $7,500, that’s more than 20% return just on that.
[00:19:42] Axel: And you haven’t collected any rent or. So that leverage is what makes the big difference between buying and owning the property outright for you. You owning the whole thing versus $50 increments on a platform where everything is in cash. But when you say, how do I get on the past to, like you say, creating financial freedom or chasing financial freedom.
[00:20:07] Axel: the initial, these initial incremental steps. Are just little steps on the way. Yes we have this term time freedom point, which is a number that you determine at some point in the future, on the calendar where you say, I have a pretty good idea what my life expenses are. And therefore I want to build a portfolio of passive income that is giving me that amount of money every month.
[00:20:33] Axel: Because when you get to that point, typically for most people, it takes. Around seven, eight years or so, when you get to that point, then you have the freedom to decide what you want to do with your time, which could be you keep working, you work half time, you come up with something that you’ve always wanted to do, but it doesn’t pay well, now you can do it because you don’t have to worry about the money anymore.
[00:20:55] Axel: So those two aspects and that first one about the increment just didn’t exist. When I first turned my house into an investment property in New Mexico, but now. Even somebody I have to wait years before I have enough for the starting line. No, if you can say I have 5,000, $200 a month available, you can start.
[00:21:16] Axel: And the interesting thing, why I’m combining it in our conversation about this is what we are buying, how we are buying it, how we decide this one or that one is exactly the. As you will later have to do when you choose which property you buy for your own, with leverage and all of that. So the education is, I would say in my view, in my opinion, perfect.
[00:21:40] Axel: Even though you’re only putting a few hundred dollars or even just $50 in to get ready and better informed if you’re not in the category that can already buy one or more properties.
[00:21:52] Ryan: And it’s it’s amazing that investment vehicle has come a long ways. Cause I’ve seen it in many different forms and it used to only be for accredited investors.
[00:22:02] Ryan: And then now it’s become for the least sophisticated investors. There’s just so many things that go into that. But I’m with you is if you can actually. Get into the game. I’m all about going in full tilt and leveraging your assets and going through that process. But I think the other piece of it is we have some individuals and listeners that are wanting to take baby steps.
[00:22:23] Ryan: And I think that fractional can work for them. But like you said, and I agree that about this is you get stuck in that rut to where you’re like, oh, I get $50. I’ll put $50 in. I’ll put $200 in you don’t ever push yourself to get above and beyond. Excuse me, to be able to push yourself to start owning your own properties.
[00:22:43] Ryan: Are you gonna get to that financial freedom? If you continue to buy these fractional shares more than likely not. It’s, it will take a very long road. It’ll take a very long roadmap to get there and it’s not worth it at some point, as I say, you gotta pull the bandaid off and let it bleed out a little bit and just say, okay, I’m ready to do it.
[00:23:02] Ryan: And that point that you talked about time and freedom is a huge thing. My podcast, this one specifically, and my other podcast, I do them because I have the. because I’ve built up another business and now a secondary business too, that allowed me to do this, but it took me eight years, seven, almost eight years to be able to get there.
[00:23:25] Ryan: And you’re right. It’s a journey that you have to be willing to go on and know where to get there. And a lot of people are not willing to put that sacrifice in and that, and I know that is part of your business. And I wanted to foray into that is you do some coaching. When people come to you about real estate investing, how much is it is coaching and how much is it educating?
[00:23:47] Ryan: There’s two different pieces of the pie there. Yeah,
[00:23:50] Axel: I would probably say in the beginning it’s more 70 30 on educating versus coaching. And I believe part of the reason why it is that ratio is because there are so many myths and misinformation that the media puts in people’s head that it takes quite a.
[00:24:09] Axel: To first get to a starting point of really truly understanding. And one of the, I really feel there’s a big differentiator between somebody say, Hey, buy my course and do the course. And then you’re ready to do your own thing. Versus what we do is the education in combination with mentoring, where I’m always, if I, if we talk about, for example, this platform we just discussed, I’m sure, literally in a zoom.
[00:24:33] Axel: I’m screen sharing my account. So even the new client who has not done anything yet, they look at my account, they can see exactly what I bought when I bought it. How much rent I get, how it’s stuff like that. I’m showing the portfolio of my property. That is a little different than just enrolling into a training program.
[00:24:51] Axel: The other component, when does it shift or how does it shift from the 70, 30, training versus coaching to more 50, 50, or maybe even more coaching that happens? When this initial foundation, okay. Now I understand what it is. And now how do I fit into the picture? Because I am still blown away almost every time.
[00:25:14] Axel: And I’m not saying this as an acute accusation, but it is always necessary. To really dig a little deeper of what do you really want from life? What are really your goals? Where do you really want to go? How and I do, for example, a nice little, I believe it’s a nice little exercise. If you were a client, I would say Ryan, let’s do the following exercise.
[00:25:35] Axel: You imagine yourself three or four years into the future. Maybe five, if you want. And then even if you haven’t done it. pretend you are a journal or the British would call it a diary writer. When you write down exactly what happens during a day from when you get up until you get to bed. So pretend you are 3, 4, 5 years in the future, and you’re writing a diary or a journal for two weeks of your life that you want to then get converted into a novel or something like that.
[00:26:07] Axel: And really think in depth, how will your life look like if you had more financial freedom, if you had reached a time freedom point, if you had purchased a bunch of properties, and that is just one little exercise to say, okay, I really have to find a quiet time for a few hours. Doesn’t have to be all consecutive at one time and really think about how do I want my life to.
[00:26:30] Axel: And what I want to be able to tell people in the future, like you just said, Ryan, like you have the benefit of time to do podcasts. If somebody were to say, Hey Ryan, how did you get there? You would wanna be able to fluently tell them the story. And so what I’m doing with this and other exercises to say, let’s imagine what that story would be.
[00:26:51] Axel: And what we are finding is that a lot of people haven’t spent a whole lot of time to imagine how their life in the future could or should look. and that robs you to some extent of a constant motivation, which is really what coaching is, it’s not so much teaching you what to do. It’s basically in a sense, be your accountability, buddy.
[00:27:11] Axel: Making sure that what you said you want to do is progressing in that direction. Even when you feel down or when the deer didn’t come through or something didn’t work. To build you back up to encourage you, to inspire you, to remind you all those kind of things. But first we need to know where we want to go, right?
[00:27:29] Axel: And that’s why I put this finding the goal setting and where we want to go really important. And that’s when we get to this 50 50 point,
[00:27:38] Ryan: we talk about smart goals and all those great things. But realistically, until you set a goal that. Pointed for your life in the sense of where you want to go.
[00:27:51] Ryan: And you have that vision, like you were talking about, you can’t really go anywhere now. And I’m talking from experience. I would put goals together. I have a whiteboard on the other side of this, and I would put goals there, but for me, they weren’t measurable enough. I wasn’t achieving them. So I wasn’t being very specific and I wasn’t being thorough in what I was trying to do.
[00:28:12] Ryan: I honestly feel my first two businesses failed because of that. And I learned a lot from that and being able to put goals in place that are measurable, actionable, and you can hold yourself responsible or hold yourself accountable for them is huge. And it doesn’t matter whatever you’re doing in life, real estate investing life, job I don’t know what else, marriage?
[00:28:33] Ryan: I don’t know. Whatever if you don’t have something in writing and I’m with you, I don’t, oh, I don’t have it with me. I actually have a little book that I keep all my goals in and my goals don’t reach that book, pin to paper until there’s specific, actionable, and going to be determined by me. I have a, I use Google docs.
[00:28:57] Ryan: I’ll write down some ideas of stuff that I wanna do. But if I don’t get them onto a piece of paper, that means they’re not something I’m gonna go after. And I have a lot of ideas and a lot of goals, but again, I have to be specific and I have to be actionable. And I’ve learned from the coaching that I do outside of everything that I do is that these individuals are failing because they don’t have those actionable goals and they have to.
[00:29:27] Ryan: Something that they’re relatable to most people. I’m gonna joke about this and I know you can laugh. Most people tell me I wanna make more money. Okay, great. I’ll give you a dollar. You just made more money. How much more money do you wanna, make, how do you wanna make that money and win?
[00:29:45] Ryan: And people look at me like I’ve got I’m, I’ve got four heads. Like it’s a big deal. And I’m like, yeah. How, yeah,
[00:29:53] Axel: actually I’m actually with you, Ryan. And the one thing that I piggyback on that doing the exact thing that you just described is to say, when you have identify what it is using smart or something along those lines.
[00:30:07] Axel: Yep. Now imagine how it will feel. I like that. And that aspect of, and that’s where this light writing a letter to yourself thing comes in or diary or journal, is that part how, imagine how it will feel can become a really strong motivator. Even for me as a coach and mentor to say, is this desire to have this feeling, this kind of life and how it feels.
[00:30:36] Axel: Is that desire still there or has it changed or do we need to adjust it? Has it gotten bigger? Has it more profound? How, and you can have that conversation over and over again. So the smart goal absolutely aligned with you. I really think this is extremely important and the kind of softer, more emotional aspect that comes with it.
[00:30:56] Axel: How do I think it’s going to feel like when I can tell people about what I’ve done. That becomes basically the energy, the fueler, so to speak, to stay the cause
[00:31:07] Ryan: I like that. How often are you having your clients revisit those goals?
[00:31:11] Axel: It depends a little bit I would say probably, but with my recommendation is twice a year, but I personally do it a little bit depending on their behavior.
[00:31:23] Axel: I sometimes have clients who have a great conversation with me, they tell me all the things they want to do. Oftentimes even have quite substantial amounts of money that they could invest. , but there are some inhibitions hesitations analysis, paralysis, those kind of things in the way. And when you go through the exercise of identifying the smart goal and how would it feel to get there?
[00:31:45] Axel: That reduces that inhibition, that hesitation. And so if it resurfaces, I bring it bring back that conversation, regardless whether it’s been three months or four months or six months, or however long it’s been or similar things. When people, for example, get a little antsy, right? Because as you said, it is a journey it’s not very quick thing, unless you have an amazing job with a huge amount of disposable income and stuff like.
[00:32:11] Axel: But the majority of people that come to me, they may have gotten a good starting chunk of money, but then going forward to do the next couple of properties, because it’s never gonna be enough to just have one, you typically end up in residential real estate investing to get to a time freedom point.
[00:32:27] Axel: I would say you’re ending up somewhere between eight and. If it’s significantly more than that, then you might wanna look at how your life expense is really reasonable, right? If you need 15 or 20 properties to cover your life expenses you might be competing with the Jones’s yes.
[00:32:48] Ryan: You’re chasing the Jones.
[00:32:49] Ryan: I like that. So typical is that what you’re seeing is eight to 12 properties for your clients is what they’re needing. Is that when I say this I’ll, let’s get in the weeds a little bit. Is that just to cover living expenses or is that some profit in their pocket? What are you seeing at eight to 12 properties?
[00:33:06] Axel: Eight to 12 properties is looking at what do I need for living expenses, but I consider things like I want to go on a vacation once or twice. I wanna be able to, have enough money to get a new car. I wanna have my hobby, any, not the hobby into your full time profession, but something that you do, like you might, do bike riding, or you might go swimming or running, or any of those kind of things.
[00:33:29] Axel: For me, this is all part of life expenses, but to say, okay, I have to have a new car every two years. And it needs to be the newest model and stuff like that. That seems to me like you seem to be competing with someone rather than looking. What is a reasonably reasonable necessity. And that doesn’t mean that I say you shouldn’t have a good car, but I have a BMW convertible.
[00:33:53] Axel: But I bought it three years old for half the sticker price. And if you go by, okay, is it a high quality thing? Yes. Are they building it for more than three years? So then if you wanna buy it, it’s still a high quality thing. But I literally, at that point, and I like to put things in these relationships, this thing would’ve cost $56,000 brand new.
[00:34:16] Axel: I paid 24. I basically saved enough money to make a purchase of one of those Memphis house. So
[00:34:23] Ryan: that Memphis,
[00:34:24] Axel: actually one interesting little thing that Memphis house, after all their expenses, like for the mortgage, for the insurance and all of that pays enough cash flow to, if I were to buy the car on a loan, I could pay it loan with that cash flow.
[00:34:39] Axel: So the manager house basically pays for the used car, but it would never pay for the new car. This is just a little example to say, okay, is it something that is life expenses, something that is completely normal and you should have a nice car and everything, or is itching. And the time freedom point in that number is not for slutching it’s for having a good, comfortable life.
[00:35:00] Ryan: Yeah. And not chasing those Joneses being in debt and having that’s a whole nother conversation of. Of living so right. But
[00:35:07] Axel: it, to bring this back to where we started with these two starting points, I mentioned, if you don’t have the investment ready to go to purchase a leverage property right away, you can start with as little as $50 a month.
[00:35:19] Axel: If you go to this Memphis house, you now bought it, the tenants are in, and let’s say you have $350 a month in positive cash flow after everything else is. Where do you put it? Obviously in my tribe, in my community, I say, while you just put it right back into those incremental ownerships, that’s seven, they call it tokens or chips or shares, whatever term you want to use that you can get every month from this property.
[00:35:44] Axel: And guess what? These properties are also performing at eight, nine, 10% cash on cash. So you invested the money, you got cash flow out of the money. You put it into 7, 8, 9, 10, however many tokens every month at 9%, let’s say on average. That helps you accelerate to get to the next purchase.
[00:36:04] Axel: It might take a year or 15 months or something like that. And in the beginning, maybe even 24 months, but it’s like a flywheel that you keep feeding and putting more and more energy in. And every so often you have enough to buy another property and that’s how you get to your eight to 12.
[00:36:19] Ryan: And that’s all about being persistent and consistent. And you’re talking about people not being patient either. And that’s, it’s an easy,
[00:36:27] Axel: yeah. That’s why you need accountability, buddy. Like we said earlier, right? Where I’m saying, okay. And sometimes people, come up with all kinds of crazy ideas, how to buy the third, fourth, fifth property because they get addicted.
[00:36:38] Axel: So it’s sometimes you need to get them going. Sometimes you also need to hold them back a little bit and stay on a realistic path.
[00:36:45] Ryan: Yeah. It’s amazing how often they steer away and they think they’re gonna be millionaires overnighted, but that’s a whole nother topic for us to discuss.
[00:36:52] Ryan: Can we talk a little bit before we wrap everything up a little bit about this Memphis property? You’ve got it. You’ve got my interest and it’ll help the listeners listen a little bit about it. Can you share just some of the background in how you, how this is going and where you’re at?
[00:37:06] Ryan: Maybe some of the basic ROI and some numbers.
[00:37:09] Axel: Yeah. So fundamentally when all the different machinations developments, whatever you want to call them in the last few years occurred for me, when I saw inflation, rising stock markets, getting a little bit overly exuberant several other indicators in the economy showing, okay, the market is shift.
[00:37:31] Axel: I mean anybody who paid a little bit attention saw how massively real estate prices have increased. They can see all the reports. Now how much rents have started increasing will continue to increase. So as a residential real estate investor, you obviously, especially when you coach and mentor people and educate people, I feel an obligation to always keep an eye.
[00:37:54] Axel: What’s the market doing? How do we need to potentially reposition, especially in light of the fact that mortgage interest rates have gone up a lot. So if I then look at the situation, what I determined was the price appreciation of renovated properties compared to price level of brand new build properties.
[00:38:15] Axel: What used to be a pretty big gap has closed. Not quite to be the exact same, but very close, right? If you say, okay, I go to a turnkey provider in Tennessee or in Ohio, it’s completely normal to find 150 hundred 80, $190,000 properties then are still reasonably close to that 1% rent income. And then on the other hand, you find properties in the same price range, brand new.
[00:38:42] Axel: Now, when you think about time, freedom point or financial freedom, and we said eight to 12, I have to, and I’m advising our clients to keep in mind that an older, fully renovated house is still an older house. You haven’t exchanged everything. You’ve exchanged the majority of the important systems.
[00:39:02] Axel: If you have a brand new house to the current cos brand new build in 2022, it has literally everything new and the longevity on a reasonably well built house is easily 50. it doesn’t mean that you never have to repair something or maybe have to renovate something in those 50 years, but you’re starting out at a different starting point.
[00:39:22] Axel: So for me, when this parity came closer and closer, became more and more obvious to advise our clients. To go for new build properties versus renovated properties. Now, what still is important in this case? Like I said I’m my, because I signed the contract end of last year. Mine is gonna be about hundred 50,000.
[00:39:41] Axel: If you sign a contract right now, it’s 160,000. It’s a three bedroom, two bars, 1300 square foot house. So basically a starter house brand new minus closing next month, or no, actually we are 1st of August this month, I can say no, sometime this month. And yeah, and it’s renting right now. Rental prices are between 1350 and 1400.
[00:40:05] Axel: So it’s not quite 1%, but for a brand new house. And one of the things just for your audience to understand if you buy a renovated property, knowing that it’s like in originally built in the 1960 seventies, eighties, maybe 90. You always want to have reserve CapEx, reserve and maintenance reserves. Now, if you have a brand new house, you can get away with saving yourself those 10% of your rental income, because you typically get a brand new house with certain warranties on it on pretty much everything.
[00:40:36] Axel: It’s not just the builder, but is all the stuff that’s in the house is under certain warranties. And I have lived we started this conversation in a brand new build house, a custom build house. And we lived there for seven years and there was barely anything breaking, which I think is reasonable for a well build property.
[00:40:52] Axel: It should be that way. Now that is 10% of the rent might be said earlier let’s say 1400 is the rent. That’s $140 a month less to put aside. For eventualities, which means you can reinvest that $140 a month. Everything else being equaled. So that’s the main reason. So about 1300 square feet, about 1400 rent hundred 50,000 to 160,000 purchase pies.
[00:41:18] Axel: And so that’s, and one other thing is, and when people listen to us about talking about real estate, it’s still true. That location is important. Yes. And so Memphis as a community is very well known in the United States as one of the more stable rental markets, not just for the level of rent, but also how many people rent versus how many people own.
[00:41:41] Axel: So it has for decades and decades been a very stable. Market, the economic environment has been positive. The political environment has been positive. So all those check marks that you go through to find out where do I invest have been and remain to be strong for investments in Memphis. And I’m pretty happy and I’m happy to any listener who is interested in that to maybe contact me and say, Hey, how can I get one of those things?
[00:42:09] Axel: I’m very open to say you don’t have to be a client to benefit from what I know or who I know or what I can do now. Obviously. We like to, for people to join our program and really get like the full treatment so to speak. But if somebody could say this would be something interesting for me to do, I haven’t heard about that.
[00:42:28] Axel: And Memphis is just one example. We do other locations as well, but it’s always important for me that I only advised people to do anything that I have done or am doing myself. So I’m always the Guinea pick up front to say, does this work? And sometimes it doesn’t. I had recently tested a tiny house development in Panama.
[00:42:50] Axel: Cause I thought maybe, something outside of it. And I tried for seven months to make it work. And for one the fees were insane. The work habits were insane. Nothing got done anywhere close to when it was supposed to. And after seven months we had neither started construction, nor did we have the financial or the contract or the L C or anything in place.
[00:43:13] Axel: So I’m glad in hindsight, yes, it was paying like lost a few thousand dollars in all that fee stuff. But now I know I didn’t get it done and I would never give any client into that scenario. And I only know this because I. Yeah. And no, that’s, that’s an important criteria where a lot of people say I can teach you something and then you go out and find out how you can actually execute.
[00:43:40] Axel: I only involve people in things that I have or am doing myself.
[00:43:44] Ryan: Yeah. There’s a lot of those wannabes out there that will say they’ve done all this stuff and they haven’t, and that’s great that you go out and do it first and then share it with your tribe. That’s the best thing. No, that’s actually,
[00:43:54] Axel: If you were to ask me, what is the most important question for anybody who is listening to the two of us or watching us to ask when they get involved with somebody that wants to help them with their investments is for whatever they recommend, ask them to show you, literally show you with name or title or something that is an official document.
[00:44:16] Axel: How much of what they advise you to do have they done and, or currently own themselves. And you’ll be shocked how few people. Can actually they all have all kinds of, by the way, quite creative excuses, why they telling me what to do without doing it themselves. But that’s a really important question.
[00:44:34] Axel: Hey, you just told me to invest in this mutual fund. How much do you own that you just told me to invest into this? I don’t know. More development. How much do you own in that? Ask people how much of, what they advise you to do and put your money in. They own the.
[00:44:50] Ryan: Proof is in the pudding and that’s where we’re at.
[00:44:52] Ryan: I’m with you when people come into our group and we do that stuff. That’s the first thing is I don’t even let them, I don’t even, I don’t even let them ask the question. I’ll say here’s our prior deals and here’s what we’re doing. And this is our track record. I have no problem sharing that information.
[00:45:06] Ryan: So
[00:45:07] Axel: to go on our website, you can literally see the houses we own. Yeah. The point is oftentimes you get a good story. That sounds convincing. Sounds interesting. Sounds profitable. And as soon as you see don’t show me your so to speak
[00:45:22] Ryan: yeah. Yeah. It’s sad, but there’s a lot of people out there you see ’em on social media, see it all over the place and they’re charging, tens of thousands of dollars.
[00:45:31] Ryan: To show people to do something that they’ve never done. And it’s horrible.
[00:45:34] Axel: I’m that comes, that question comes right after the one why you’re doing what you’re doing, right? Yeah, exactly. You do podcast because you can afford to have the time I do the same. And I basically keep the number of people that we allow into our program.
[00:45:49] Axel: Very limited, because I’m not doing it for the money. I’m doing it to help other people achieve their goals. but not at the 10 hours a week 10 hours a day job. I did that. I’ve been there, but that’s not really the intent anymore. And that’s when you get to financial freedom, you have to have the ability to make those choices.
[00:46:08] Axel: But most of the people that, that potential customers encounter, they’re doing it purely for the money, even if they have no connection or no investment of their own in what they’re pitching.
[00:46:19] Ryan: It’s the greed factor, as I say it’s sad, but it’s out there and that’s just what it is. But the other side of that is, I’m a for profit, you’re for profit.
[00:46:28] Ryan: You hear about making profit, but not at the expense of people that your clients or people you’re working with, you’re doing business. And that’s. In this industry is loose at times. And now that we’re going in a cyclical change, it’s gonna get a little more crazier. I was in the other side of this in 2007, 2008, I was in the heat of it in Vegas.
[00:46:49] Ryan: And that’s how I learned note investing. I know we talked about that, but we’ll wrap up, but it was just that way, cutthroat greed. And it hurt a lot of people. I think we’re gonna have a little bit of that today, going forward how bad it gets. I don’t know. No one can tell you, here out in Phoenix, we’ve had houses sit on market.
[00:47:08] Ryan: We’ve gone from, instantaneous to 10, 15 days now. 65% of houses on the market have had a price cut. Now houses from listing to sold have lost almost $40,000 in price. So there’s changes here in these hot markets. How do you take advantage of it and how do you capitalize on it?
[00:47:26] Ryan: And what can you do? That’s all about education and doing it yourself and seeing what works just like you did in Panama, the exact same thing. You gotta find out what works and then you share it once you actually have the success.
[00:47:37] Axel: Yeah, absolutely. I’m totally with you. And I think it’s also important when we spoke earlier about smarter cohorts or smart chord.
[00:47:45] Axel: When you have a goal where, and this is I think a really important paradigm shift that people are struggling with sometimes when you talk about financial freedom or I talk about the time freedom point, what is sometimes misunderstood is that these are stepping stones to the actual. When I say, I want you to describe how it feels after you accomplish the stepping stone.
[00:48:11] Axel: Cause the point is not, what are all the things I need to do to get to the time freedom point or to get to financial freedom? The real goal is the life after reaching that. And so that’s that’s also taking out of the picture, anybody who want to do these, get rich quick schemes because they get you to a number and then the house of cards falls apart.
[00:48:35] Axel: In our case, yes. I say it takes eight to eight year, seven years or something like that to get to the number of properties. But when you reach that passive income number, your properties are still there and they’re hopefully there forever. You will. Fund them over into a trust and then have your kids and their kids and so forth.
[00:48:55] Axel: Generations benefit from generational wealth. Yeah, one those, if you’re saying like I have age 10, 12 properties, guess what? The year after you reached your time, freedom point rents will increase again. Your cash flow will increase again. Your passive income will increase again, and this will continue at different varying percentages on and on the same thing with properties, go back and ask your.
[00:49:19] Axel: How much is the property that somebody bought 12 years ago worth. Now what about 20 years ago? What about 30 years ago? If you go like 30 years, it’s almost laughable, right? You could buy 30 years ago in Phoenix, you could buy easily nice houses and nice area for a hundred thousand or less. And now they cost a million or more yes, or more, but the point about it is if you own them, you have the equity, you have probably done five helos in the last 30 years and bought instead of that one.
[00:49:47] Axel: You have probably 10 and all of that must keep performing both in appreciation more or less over time and on cash flow through rental income, more or less over time. So it’s important. The financial freedom point or the time freedom point is an important milestone. But the goal is the life after that.
[00:50:06] Axel: And that’s why we wanna invest in something that maintains, or it keeps increasing its value and doesn’t fall apart after 10 or.
[00:50:14] Ryan: Agree new homes in land. I love land. I have been in the land for a while, so
[00:50:20] Axel: don’t make more of that. That is actually
[00:50:22] Ryan: they don’t the man upstairs is not make you more well, axle.
[00:50:27] Ryan: I thank you for coming on. How can everybody get ahold of you if they want to talk?
[00:50:32] Axel: The easiest is you can go and Google and put in ideal red grower, or you go to the website. Ideal. We grower.com within like about 30, 40 seconds. It pops up and says, do you wanna have a call and set that up? And.
[00:50:47] Ryan: Okay. I will also link it in the show notes, so people have it and all that information. So we’ll go from there. Axel. It’s been a great conversation. I enjoyed it some great interesting concepts points, but also the basics on goal setting and understanding where you want to go in life. So I thank you for that.
[00:51:06] Axel: Yeah. Thank you for having me, Ryan.
[00:51:09] Ryan: You’re welcome. Thank you.