Answer Box (TL;DR)
In this episode, Dan Pascone sits down with former engineer turned real estate syndicator Lane Kawaoka of The Wealth Elevator to break down how wealthy and accredited investors actually invest in real estate – and why it often looks very different from buying a few rentals and fixing toilets.
Lane explains how he went from house hacking and owning 11 small rentals to focusing almost entirely on larger commercial deals as a passive investor and operator. You’ll learn what qualifies you as an accredited investor, how syndications work, how they differ from REITs and being a landlord, what to look for in a deal and an operator, and why liquidity, risk tolerance, and your “floor” on the wealth elevator all matter before wiring a dollar.
Key Takeaways
- Accredited investors play by different rules. Once you hit certain net worth or income thresholds, an entirely new universe of private real estate deals, syndications, and institutional-quality assets becomes available – but you still need the right network to access them.
- Syndications can beat being a landlord for many high earners. Instead of buying and managing small rentals yourself, you can invest passively alongside a general partner who sources deals, signs for the debt, and runs larger properties with professional management.
- The real money is in the primary market, not the secondary. Direct syndications are “primary market” investments where you invest closer to the asset and avoid layers of fees. Public REITs and 401(k)-type products are typically “secondary market” plays after multiple middlemen have taken their cut.
- Illiquidity is a feature, not a bug. Value-add real estate projects require time to execute; you can’t pull your capital like a checking account. In exchange for locking it up, investors seek higher returns and less day-to-day volatility than in public markets.
- People and numbers both matter. Smart investors underwrite the deal (P&L, rent roll, business plan) and the operator (track record, integrity, communication). Shiny pitch decks don’t replace sober modeling, stress testing, and a strong, experienced sponsor.
Key Moments
- [00:00] Dan introduces the episode and frames the conversation around how wealthy investors really access real estate.
- [01:11] Lane’s origin story: engineer, road warrior, and accidental landlord in Seattle discovering cash-flowing real estate.
- [03:35] From beer money to 11 rentals: buying in Seattle, then pivoting to out-of-state rentals with strong rent-to-price ratios.
- [04:44] The “aha moment” with other accredited investors: trading small rentals for passive syndicated deals.
- [05:47] What it really means to be accredited vs sophisticated – and how the JOBS Act changed the syndication landscape.
- [08:25] Why many busy professionals shouldn’t be landlords and how syndications work instead.
- [10:14] Single-family vs institutional assets: occupancy, professional management, and competition at different deal sizes.
- [12:37] How to think about portfolio mix, alternatives, and why there is no “normal” allocation for accredited investors.
- [15:10] Lane’s due diligence process: people vs numbers, models vs marketing decks, and building a repeatable underwriting system.
- [17:27] Liquidity trade-offs: bread-in-the-oven analogy, why value-add deals require patience, and who these deals are not for.
- [20:04] Primary vs secondary market: why wealthy families focus on direct private deals and how smaller investors can still participate.
- [22:07] Inside The Wealth Elevator: floors of wealth, when to shift from rentals to syndications, and how high-net-worth families think.
- [25:44] The power of community and in-person networking—Lane’s Hawaii retreat and why “your network is your net worth.”
- [26:16] Lightning round: sushi, Asana, favorite real estate book, and why he’d never do a 15-year mortgage again.
Episode Summary
Episode 39 of the Making Sense of Your Money podcast features Lane Kawaoka, founder of The Wealth Elevator and a former civil engineer who replaced his W-2 career with cash-flowing real estate. Host Dan Pascone kicks things off by asking Lane how he went from a traditional “go to school, get a good job” path to living off passive income from real estate holdings.
Lane shares how he bought a primary residence in Seattle, then realized that because he was traveling so much, it made more sense to rent it out and live on the road. That accidental landlord moment led to duplexes and then a portfolio of 11 rental properties by 2015. Along the way he discovered the importance of buying in markets with strong rent-to-value ratios—often out of state in places like Birmingham, Atlanta, and Indianapolis instead of high-priced coastal cities.
The turning point came when Lane started spending time with other accredited investors. He realized that many of them eventually “trade up” from hands-on rentals into passive syndications and larger commercial deals. Dan asks him to unpack what it really means to be an accredited investor, how the JOBS Act created a world of generally solicited 506(c) offerings, and why plenty of sophisticated but non-accredited investors can still access private deals—if they have the right relationships.
From there, they dive into syndications. Lane explains the structure: general partners source and operate the deal (including putting debt in their name), while limited partners write checks and receive distributions and upside without being landlords. He contrasts direct syndications in the primary market with REITs and other products in the secondary market, where layers of intermediaries and fees often erode returns. They also discuss institutional-quality assets—larger, 90%-occupied properties—in contrast to small, more fragile rental portfolios.
Dan presses on risk, due diligence, and portfolio fit. Lane is clear that he’s not a financial planner and can’t give allocation advice, but shares how wealthy families (and groups like Tiger 21) often have 10–30% in illiquid alternative investments. He describes his own underwriting process: taking raw P&Ls and rent rolls, rebuilding the operating picture in a model, layering in value-add assumptions, and only then evaluating the sponsor’s track record, character, and business plan. Illiquidity is a key theme: investors should only allocate capital they won’t need for the life of the project.
The conversation closes with Lane’s framework from his book, The Wealth Elevator: starting on the lower floors with small rentals, shifting to syndications once accredited, and eventually reaching a level where cash value life insurance and more conservative strategies can fully cover your lifestyle. In the lightning round, he shares his favorite tools (Asana), books (Millionaire Real Estate Investor), and the advice he’d give his younger self: don’t lock money in a 15-year mortgage when you could be putting it to work in more properties. Throughout, Dan and Lane emphasize that real estate syndications can be powerful for the right investor—but they require education, patience, and a clear plan for how they fit into your broader financial life.
Transcript
Dan: I’m Dan Pascone, CEO of Tailored Wealth and host of the Making Sense of Your Money podcast. Real conversations to help high earners make sharper decisions so their money works as hard as they do. This is episode number 39 and today I’m joined by Lane Kawaoka of The Wealth Elevator to unpack how accredited investors access real estate syndications and why they beat being a landlord, how they open doors to institutional deals, and what smart investors look for before wiring a dollar. Join us and enjoy.
Narrator: Brought to you by Tailored Wealth, helping business leaders live their version of a rich life.
Dan: Welcome to another edition of the Making Sense of Your Money podcast, where we cut through the financial noise and help business leaders make smart, confident money decisions. Lane, thanks for joining the podcast. Psyched to have you today, brother.
Lane: Hey, thanks for having me. Hello, everybody – all the way from Hawaii.
Dan: All the way from Hawaii to the East Coast in Connecticut, just outside of New York. We’ve got the whole country covered here. I’m pumped to have you on today. I’m excited to hear about your expertise, how you built it, and how you’re giving back to the community through the content you publish. Tell us a little about your story and what you’re doing today.
Lane: In a previous life I used to be an engineer. I was brought up on this linear path we’re all taught: go to school, study hard. I went to college to become an engineer and started to “work for the man.” I made a decent salary back in 2007–2009.
I saved for a couple years and bought a house in Seattle. I was working on the road a lot – like a lot of young professionals, I was the road-warrior guy. I bought the house to live in, but then decided to rent it out and be “homeless.” Not really homeless – I was living in Marriotts, Holiday Inns, Best Westerns – but that allowed me to turbocharge my savings.
More importantly, I got my first rental property and I thought, whoa, what is this? That was when I got my first taste of cash flow and the world of alternative investing, starting with small rentals.
Dan: Very cool. What gave you the idea? Why say, “Forget living here, I’m going to rent it out and make money”? Where did that come from?
Lane: My parents never owned rentals. They always told me, “Don’t do that – tenants will wreck your place or you’ll get sued.” But at the time I was in my early twenties. This was before Turo or Airbnb were mainstream. It just seemed wasteful to have a big house to myself when I was only there on Saturdays.
I called up a former landlord – the guy I used to hand checks to in college. I didn’t even know what a property manager really was. It didn’t seem too hard. And honestly, it was mostly greed: I was making $2,200 a month in rent and the mortgage was $1,600. That was a lot of beer money to me back then. I didn’t know anything about reserves or property management expenses. I got more sophisticated later, but that’s how it started.
Dan: I love it. So now, tell us: how do we turn beer money into real cash flow and ultimately a career?
Lane: Between 2010 and 2012 I thought, this is pretty cool, and I bought a duplex a couple years later – again, saving 20% down. Just to be clear: I don’t do wholesaling or flipping. That’s what you do when you don’t have much money and you’re trying to get rich quick.
I had a good engineering job and was busy with that. I could save 30–50 grand a year, so my game plan was simple: keep stacking down payments. By 2015 I had 11 rentals.
I had stopped buying locally in Seattle because the rent-to-value ratios were horrible – probably similar to where you are in Connecticut or New York. In those markets it just doesn’t work, unless you go to dicey neighborhoods. I was buying in Birmingham, Atlanta, Indianapolis – targeting that 1% rent-to-value ratio, where monthly rent is at least 1% of the purchase price. I was cash-flowing and rinse-and-repeating.
Around 2015 I started interacting with other accredited investors, people who had a bunch of rentals. That’s when I had the “aha” moment: people typically trade in their small rentals once they’re accredited and expand their alternative portfolio – into stuff you guys do on the wealth-management side, and into direct real estate syndications. You cut out the middlemen. Instead of going through a big bloated REIT, you invest directly and get the tax benefits. And as an LP, if something goes wrong, your liability is limited to your investment.
My parents weren’t wealthy. I didn’t have a rich uncle. But I started uncovering this world of accredited investors and the way they do things – how they invest, how they use life insurance, how they approach taxes. It’s a different game.
Dan: Totally agree. A lot of our audience knows about accredited investing – I talk about it a lot for access to alternatives like private equity and real estate. Explain what it means to be an accredited investor and what that opens up from an opportunity standpoint.
Lane: I’m not a securities attorney, but basically there are a lot of private deals you can get into without being accredited. You need to be “sophisticated” and have a direct relationship with the operator, but you don’t necessarily need the million-dollar net worth or $200,000 annual income.
If you go on the SEC’s EDGAR site you’ll see many offerings that non-accredited but sophisticated investors could technically access. The issue is you just don’t know the people. That’s why your network is your net worth. You need to get off your butt, get out from behind the computer, and talk to real accredited investors to get into those rooms.
Then the JOBS Act came along. It created a new path where syndicators like me could generally solicit – advertise online, on podcasts, maybe even billboards. When you do that under Rule 506(c), you can only take accredited investors. That’s where the misperception comes from – people think you must be accredited for everything, but really that’s just the publicly advertised slice of the market.
There are still 506(b) deals that accept sophisticated, non-accredited investors, but you won’t see ads for them. They’re relationship-based. Personally, I’d argue that if you’re not accredited you might not belong in many of these private deals yet. You probably should stick with small rentals. That’s what I talk about in my book – different floors of the “wealth elevator.”
When I was in my twenties, I didn’t have the skill set to evaluate deals or the network to vet operators. If a deal went bad, it would have crushed me. Accredited investors are more financially resilient when they take on this kind of risk.
Dan: That makes sense. For listeners who don’t want to be landlords – don’t want to collect rent or fix a toilet – talk about what it means to be in a real estate syndication and why that might be a nice alternative to owning doors directly.
Lane: When I first started my podcast in 2016, we taught people how to buy small rentals – like I did. A lot of my audience lived in California or New York and were buying in Birmingham or the Midwest remotely. I was always frustrated: it’s not that hard, why can’t everyone do this? But apparently it’s not for everybody.
Once you become accredited, you can get in the game without being the direct decision-maker. Instead of you managing property managers and tenants, you invest in a syndication. A general partner (GP) or operator leads the investment, signs for the debt, and manages the business plan. They take a performance split – when they make money, you make money – and in exchange you get direct access to more institutional-quality assets.
We’re talking larger apartment buildings and commercial properties – typically $10 million plus. That’s a big difference from buying a fourplex on the corner. With scale, you get different contractors, more professional management, and a different risk profile.
Dan: I’d imagine there’s a different risk profile, fewer variables, and fewer things that can go wrong at that level versus piecing together small multifamilies on your own.
Lane: Yeah. When we first started, it was tough. A lot of this is economies of scale and track record. The longer you’ve been doing it, the better assets you get access to.
The commercial world is very different from the mom-and-pop world. In our space, we buy properties that are typically 90%+ occupied – not heavily distressed. A broker usually controls the asset. Sellers aren’t going to unload it for pennies on the dollar to a wholesaler who cold-called them. They’re sophisticated.
We’re not typically doing those 50-cents-on-the-dollar deals you hear about at flipping seminars. We’re buying stabilized or lightly value-add assets that institutions want to own. With that, you get a higher quality of tenant base, better lending terms, and a business that institutions can manage from 2,000 miles away. That’s what a lot of New York capital is doing – buying apartments or self-storage in the Sunbelt and operating them remotely.
The frustrating part for regular people like us is: how do you access those deals directly? If you don’t, you end up investing through a bloated REIT or fund with lots of layers and fees. In those structures you see the classic “2 and 20” – 2% management fee and 20% performance fee – and sometimes that gets stacked at multiple levels.
In a syndication, you typically invest directly with the operator. It’s you and the GP. You get a single layer of fees and splits, not all those extra hands in the cookie jar.
Dan: Makes sense. For an investor considering their first real estate syndication, what do you suggest around getting started? How much of their investable assets should they consider, and where might this fit into an overall portfolio, assuming they’re not full-time in real estate like you?
Lane: I’m not a CFP – I’m the operator – so I can’t give specific allocation advice. That’s your lane. But I will say there is no “normal.”
The average person might be doing a 60/40 stock–bond portfolio. When we host events, people see what real accredited investors are actually doing. There’s a huge range. Personally, in my twenties and thirties I had about 90% of my net worth in commercial real estate. That’s obviously concentrated, but I’m the operator.
Some investors start with 10% of their net worth in alternatives. Others are much higher. Many also pair real estate with more conservative assets like cash-value life insurance. I tend to follow a kind of barbell approach – a lot in deals I know intimately, and then a chunk in very safe vehicles at the other end of the risk spectrum.
Success leaves clues. Look at what high-net-worth and ultra-high-net-worth families do. Groups like Tiger 21 publish aggregate allocations of members with $10–20 million plus. You’ll often see 10–30% in private equity and real assets. That’s all illiquid. They accept illiquidity because they’re going after higher risk-adjusted returns.
Everyone’s situation is different, but a common pattern we see is: early on, people use public markets and small rentals to build to a few million. Then they start weaving in more private deals as they become accredited and more comfortable.
Dan: What are the key things you look for in a deal? Answer it first from your perspective as an operator, and then help an investor understand what to look for on their first or second deal.
Lane: Due diligence is a huge topic – I have a 12-hour e-course just on that – but high level, there are two sides: the people and the numbers.
Real estate is a relationship game. You need to vet the operator – their track record, integrity, communication, and how they behave when things go wrong. You can have a great deal and a bad operator and it’ll still implode.
On the numeric side, we take the P&Ls and rent rolls and put them into our in-house analyzer – basically a detailed spreadsheet model. We reconstruct how the business is actually performing today: income minus expenses, line item by line item. Then we lay out the value-add strategy. Are we just doing “lipstick on a pig” – new appliances and paint to raise rents $100? Are we doing heavier renovations?
We model out the cost per unit, the expected rent increases, and the stabilized net operating income (NOI). From there we apply conservative assumptions on exit cap rates and financing terms to see what returns look like. We stress test for vacancies, interest rate moves, and slower rent growth. We’re trying to see if the deal survives bad scenarios, not just the rosy pro forma.
For a passive investor evaluating a deal, I’d say: focus first on the operator – references, track record, skin in the game. Then look at the business plan and ask: does this make sense? Are assumptions reasonable? And does the deal fit your personal situation and risk tolerance?
Dan: Let’s talk liquidity. One thing I always tell investors is every bucket of money should have a clear purpose. Then we design strategies – traditional, alternative, and everything in between – to match those goals. What should we be thinking about from a liquidity standpoint with real estate syndications?
Lane: Liquidity-wise, you’re not getting it. When you buy real estate, especially value-add, you’re signing up for illiquidity. That’s why the potential returns are higher.
We tell investors: if you might need the money back, this is not for you. That’s not what sophisticated investors do. If you’re doing heavy value-add, it’s like baking bread – you can’t yank it out halfway because you’re hungry. You have to see the business plan through.
Less sophisticated investors sometimes get impatient or suddenly need money. That usually ends poorly. That’s another reason I don’t think non-accredited investors belong in most of these deals – they often don’t have the cushion to truly lock money up for 5–7 years.
Look at family offices – folks with $20–50 million plus. When they allocate 10–30% to these kinds of deals, they know it’s locked up. They’re intentionally trading liquidity for the chance at higher risk-adjusted returns.
Dan: I’m a huge fan of alternatives and private markets. We’ve seen the public markets shrink over the last 10–15 years – fewer public companies – and big indexes are heavily controlled by a handful of institutions, which is risky. Private equity, private credit, real estate – they’ve generally shown higher returns with lower volatility. But, as you said, you give up liquidity. The key is understanding where this fits into the overall plan.
You mentioned your course and your book, The Wealth Elevator. What do you cover in each, and what prompted you to launch them?
Lane: The book is about the different levels – or floors – of wealth building. I started with student loans and became an accredited investor around 2016 or 2017. It took me under a decade to get there.
In the book I define the different floors of the “wealth elevator.” Each stage has different strategies. When I was non-accredited, the play was buying small rentals. You’re not going to get into many syndications yet, and honestly I don’t think you should.
Once you become accredited, it’s important to switch strategies: move into syndications and tap the primary market of private deals. Then there’s a third level, around $3–10 million net worth. It’s partly about numbers, but mostly about mindset and lifestyle.
Some of my clients just want $10,000 a month in passive income; others want $25,000. That dictates how much net worth they need. But once you get to around $5 million, for many people you could put half into conservative vehicles like life insurance and pretty much meet your basic burn rate. That gives you peace of mind.
Beyond that, it’s optional whether you keep chasing higher returns. At that point, it’s more about choice than necessity. That’s what I see on the upper floors of the wealth elevator.
The book is written for accredited investors. It shows what happens on the next levels so you can plan ahead and avoid mistakes, like owning 11 rentals when you really should have shifted into syndications much earlier – like I did.
If folks buy the book on Amazon and email us the receipt, we’ll send the audiobook and PDF. Just email team@thewealthelevator.com.
As for the course, that’s about evaluating deals. If people book a call with me, we open up the syndication e-course for free. None of this $4,000 or $20,000 guru nonsense. We want investors to be sophisticated and go in eyes wide open, because there are no guarantees. You’re getting off the beaten path with private deals, so you have to do your own due diligence and build a community around you. We also run an annual retreat in Hawaii in January. It’s critical to build your network – that’s where your net worth follows.
Dan: I love it. That’s a great segue into our lightning round – time to get to know you a little better. First thought that comes to mind; one-word answer or longer, your choice. Ready?
Lane: Yeah. Money. Next one.
Dan: Money’s always on your mind, I get it. One meal for the rest of your life – what is it?
Lane: Sushi.
Dan: Nice. What’s one tool or piece of technology – hardware or software, other than your computer or phone – that you can’t live without?
Lane: We run a small company with a team, and we use Asana for project management. I even use it to keep my own notes – I have a project just for myself.
Dan: Love it. Do you have a favorite quote or phrase about money or success?
Lane: Never take financial advice from people who are not financially free. There are a lot of people talking about 401(k)s and TSPs, but why would you take advice from the 60-year-old in the office who still hasn’t retired?
When I was an engineer, there was so much bad information around me. That’s why it was critical to get around accredited investors with rentals like I had. That’s where I discovered fact from fiction.
Dan: Do you have a favorite book on finance or business, other than your own?
Lane: If real estate is new to you, I’d say Millionaire Real Estate Investor by Gary Keller. It has a lot of fundamentals we follow, like not buying luxury product but focusing on workforce housing. I believe in serving the lower-middle class. Not because I like them better as people, but because it’s a huge demographic.
I believe the rich are getting richer and the poor are getting poorer, and the middle class is shrinking into the lower middle. That’s why I want to own workforce housing apartments. They’re not sexy, but it’s a high-demand asset class.
Dan: What’s one bucket-list item you’ve already accomplished?
Lane: Quitting my engineering job.
Dan: Love it. How about a milestone you’re working toward now?
Lane: Keep looking for one good deal a quarter and deploy capital – essentially dollar-cost averaging into quality deals over time. We look at the best deals we can find in the primary market from our contacts and pick the best one at that time.
Dan: That’ll get you somewhere over time for sure. Last one: if you could give a piece of advice to your younger self, what would it be?
Lane: Don’t do a 15-year mortgage. Take the extra money and buy more real estate.
Dan: Got it – put that capital to work. You mentioned some of your offerings. If our listeners want to connect with you, collaborate, or reach out, what’s the best way?
Lane: If you’re an accredited investor, you can reach me at lane@thewealthelevator.com. I like to have one-on-one conversations with accredited investors. We probably have one of the bigger groups out there, but it’s important to build the relationship first. Once we’re in a deal together, we’re stuck with each other – it’s more permanent than a marriage!
Dan: I’m with you. Lane, thanks so much for coming on today. I appreciate and enjoyed your insights.
Lane: Thanks for having me, Dan.
Dan: That’s it for the episode. You can find our podcast along with our newsletter and YouTube channel, all for free, at makingsenseofyourmoney.com. And as always, prioritize your version of a rich life.
Disclaimer
The information in this episode and on this page is for educational purposes only and is not intended as individualized investment, legal, or tax advice. Real estate and private placements involve risk, including loss of principal, illiquidity, and changes in market conditions. Past performance does not guarantee future results. Regulations and accreditation rules may change over time and can vary by jurisdiction. Before investing in any syndication or alternative investment, review all offering documents carefully and consult appropriate professionals.