On Becoming Financially Free Through Passive Income with Dr. Axel Meie
“I always say if somebody were to ask me what's my superpower, then it's probably the ability to see the big picture much before other people see it”.
After a successful career in the Air Force as an executive role for a software company. Dr. Axel Meierhoefer founded a consulting company in 2005, the great recession brought some turmoil around 2009, and which kind of helped him transition into real estate. He now helps people create and preserve our wealth by buying one to four-unit complexes throughout the United States and other locations.
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Brett:
I'm excited about our next guest. After a successful career in the Air Force as an executive role for a software company. He founded a consulting company in 2005, the Great Recession brought some turmoil around 2009, and which kind of helped him transition into real estate. Where he now helps people create and preserve our wealth by buying one to four-unit complexes throughout the United States and other locations. Please, welcome to the show with me, Dr. Axel Meierhoefer, how are you today?
Axel:
Yeah, very good, Brad. Thanks for having me.
Brett:
Absolutely. Glad to have you on the show. Tell us a little bit more about your story and your current focus?
Axel:
Yeah, absolutely. So the Last Name is Meierhoefer, which is a very German name. And that's also where the accent is from. And like you started out the story is basically I came over here as an exchange officer with the US Air Force, there's a program where you literally take the other person's job. So I became an assistant director of operations. And the guy who had that job took over the flight school that I was responsible for and did that for a while. And we thought, after two years, we would go back or maybe three years would go back to Germany. But after that assignment, I was told there was a need for a project management job at the US Air Force Base. And I did that and therefore six years, and ultimately, when you can fly anymore, you get close to retirement age. And you can decide, I always said, if you want to fly a desk, or you want to get out, so I decided to get out was immediately recruited into a software company in Santa Barbara, which we'll probably come back up again when we talk about the capital gains tax and worked for them for four or five years before I started my own business. And then, like you said, came up with this question, how do you actually work and develop some income, passive income for retirement and over time, and over the years, develop this passive income strategy, first of all myself, and then people said, Oh, you got to share it. And you gotta put it on the web and stuff like that. And so I started doing that. And now we're helping other people do the same thing, basically, walk the same path that I'm walking.
Brett:
Amazing. And you're out of San Diego. Now, I spent a little bit of time in college, which is an amazing place and you buy in for plexes, in or single-family up into a four Plex, in multiple locations. And we're talking about building an ideal real estate wealth, and growing that and what that looks like, here in a minute. But before we go there, Dr. Axel, I want to take one step back. And I believe that we all have been given certain gifts in this life. And these gifts have been given to us to be a blessing to others. So I'm curious, maybe one or two gifts that you believe you were given and how does that help how you help bless people today?
Axel:
Yeah, I don't know. I really think you nailed the hit the nail on the head because it's really a gift given that I wouldn't even be able to say where it came from what I always say if somebody were to ask me what's my superpower, then it's probably the ability to see the big picture much before other people see it, right. Like you can oftentimes look at things incrementally or right before you know so ahead of your nose or something like that. And somehow I don't really know how to do it. Honestly, I oftentimes get people to tell me where did you see this? How did you anticipate this and that's basically you know, see things in the big connective frame and that has helped me a lot of times to avoid mistakes or develop strategies and stuff like that.
Brett:
Amazing. Absolutely love that and so now let's dive right into what it is that you do. By the way, you can find more about Dr. Axel and I won't even try to pronounce his last name. Just know that it's Dr. Axel and idealwealthgrower.com. So Dr. Axel, what's the number one away a two or number one secret, or the first Secret to Building your portfolio with cash flowing producing one to four units throughout the United States.
Axel:
When the one number one thing, and it's very close to the number two thing is performance is really becoming clear in your thinking. Or if you, you know, have somebody to help you, as a mentor or as a coach really become clear. How do you define performance for yourself? So in our case, we basically use as an initial anchor for performance, the 1% rule, meaning like you, you look at the property, how much do they want to sell it to you for, and you take 1%, and that should be your monthly rent. So if I look at any properties here in our area there are anywhere between about 650,000 to a million, which means even if I get the lowest end $650,000 property, I would have to get 60 $500 a month in rent, to meet that performance. And that is pretty much impossible to find. And that's why we said we need to find a place or places out of state where that is possible. So performance, I would still say is probably number one, closely followed by the selection of the turnkey provider.
Brett:
Okay, so make sure we gather that for the listeners. So performance, close, number one, you defined performance, or how do you define difference for yourself? So make sure you have a clear vision for what winning is, right? Let's define what's, you know, what's going to score the bucket and what's not going to score the bucket, right, what's going to get the base hit the double the triple the home run and one way to politically apply that is using what's called the 1% rule, which states if I can buy something, let's say for $650,000, I would like to have at least a 60 $500 of rent, right? 1% of that on a per monthly basis. Is that a fair summary?
Axel:
Yeah, that's perfect.
Brett:
Excellent. And then you said the second one was,
Axel:
The second one is the selection of the turnkey provider. And I have to go a slight little bit broader so people understand so turnkey investing basically means you find a company who finds what I call the ugly duckling in a nice neighborhood, the kinda like the worst house there buys, it puts all the renovations new electrical, new plumbing, kitchen, bathrooms, everything new. So it renovates the company and then puts a price on it, that is added or just slightly below appraisal. Now, if they do this, as the good ones, 210 12 properties a month, they have a pretty good idea. And they know the area very well on what is a fair price that the property after renovation would appraise. So that's, on the one hand, the price that you would buy it for. But also importantly, it needs to be appraised so that you can actually put financing on it. But here comes the really important component. And why I say it's clause number two, to performance. And that is that exact same company that found the property renovated, the property sells it to you after it appraised at the sales price or slightly below, they also need to be the ones who manage it for you. And that is because there is a very important dynamic. And you can ask yourself if any of your listeners and viewers can ask themselves, if you were asked to fix something, and you know that after you fix the chart a few months after that, you will be responsible to maintain it. Because the person who owns it would not be there all the time, then you fix it in a way that you have as little work as possible with maintaining it, versus fixing it and selling it and never seeing it again. So picking turnkey providers who are actually doing all these steps, finding, renovating, putting a fair price on it, and managing it. That's the number two top priority.
Brett:
Wow, Doctor, that's actually, put that so well, I'm gonna make sure I encapsulate this because, you know, I grew up in the Bay Area with my dad part of my life. And we'd build these, you know, custom homes or conditions and, and construct them right. And he'd always say don't move bricks twice, right and make sure that whatever we're doing, we're doing in a way that's going to get top dollar too, but you're even taking another step forward. And if we had to still manage those properties afterward, we're going to have a higher level of care and responsibility to make sure that we're not having to fix it again. Is that a fair summary?
Axel:
Yeah, absolutely. Especially if you think about the things of daily lifetime we are all encountering, right? Like if you were to say okay, I fixed it. So it looks good, it feels good. It works fundamentally, you could go and get any kind of the cheapest appliances for example that are on sale and put them in and you know, they will be doing okay probably for the first year. But when you think about it from a long-term buy and hold strategy and you will be the one maintaining it. You will probably say well, I'm rather giving up a little bit on the profit of the sale and make my monthly management fee without ever really Oh for a long time having to do anything and therefore put a little bit better appliances a little bit better for us. It's a little bit better fit. fixtures and on and on and on, if you go through an apartment or house and you and your dad bid or any of the listeners may be living in and see, okay, look around and see all the things and imagine what you put in the cheapest possible thing you could get to maximize profit when you know that if it breaks, you are the one that's going to be cool to fix it.
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