August 28, 2026 – Biz2Credit $8 Billion Rohit Arora and Wealth Elevator Lane Kawaoka

00:04 INTRO 1: In the AM, broadcasting from AM and FM stations around the country. Welcome to the Small Business Administration Award-winning School for Startups Radio, while we talk all things small business and entrepreneurship. Now, here is your host, the guy that believes anyone can be a successful entrepreneur, because entrepreneurship is not about creativity, risk or passion, Jim Beach.

00:20 JIM BEACH: Hello, everyone, welcome to another exciting edition of School for Startups Radio. Boy, we have a fantastic show for you today. We’ve just been on a roll recently. First up, we have Rohit Arora. He is running a business creating loans and other financial vehicles for us small businesses. He has placed $8 billion in the hands of us small business owners and has the company up to 750 employees. Wow, what an incredible story.

00:48 JIM BEACH: We will hear that. I can’t wait for you to meet him. Then after that, we are welcoming back to the show, Lane Kawaoka. He is The Wealth Elevator guy and has an amazing real estate story, now has $2 billion under management or so. So incredible guests. And thank you for being with us. So the other day I made a bold comment, maybe perhaps rude, that I’m no longer going to have telemarketing people on the show.

01:17 JIM BEACH: And I wanted to explain why. I’ve always said that I’ll have anyone that’s legal and mostly moral, mostly moral and a little bit legal, whatever the joke is, right? I don’t really care what you do as long as I don’t think that it’s wrong. And I’ve decided that these people that create fake telephone numbers and call me a 100 times a day, 50 times a day are immoral. They are deserving of being banned.

01:45 JIM BEACH: There should be some sort of government regulation. And I know a lot of places do have it. Unfortunately, here in Georgia, we don’t have it, but it needs to be an American U.S. Based law, a federal law that says you can’t just blanket people with unsolicited telephone messages. I’m getting 2 categories right now. Maybe someone could message me and tell me what this means. I have a house for sale and people are pestered, not for sale.

02:14 JIM BEACH: It’s not even on the market, just sitting there and people are constantly asking to flip it. And then they come back and tell me what the ARV is and they say it’s not worth as much as you want. And I said, well, you started this. You know, I didn’t start this. You did. And leave me alone. Then another category of just people offering me small business loans. And, uh, they just call nonstop.

02:42 JIM BEACH: And so it is all based on AI. They’re AI agents and it’s going to drive me insane. So I’m not having those people on the show anymore. We’ll be back with a great show, though, in just a second.

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03:26 JIM BEACH: We are backing again. Thank you so very much for being with us. Very excited and honored to introduce another fantastic entrepreneur to the show. Please welcome Rohit Arora to the show. He is the CEO and co-founder of Biz2Credit and Biz2X. He is a recognized expert in small business finance, fintech, and digital lending. He started Biz2Credit in 2007 and they have now helped 1000s of companies arranged financing some $8 billion in funding. He has been named a Crain’s New York Business entrepreneur of the year.

03:57 JIM BEACH: He is on the president’s economic council of advisors at the White House. He’s been featured in the New York Times, Wall Street Journal, Bloomberg, CNBC, MSNBC, Washington Post, and he’s also a member of the Wall Street Journal, CEO council. Pretty impressive. Rohit, welcome to the show. Thank you for being with us, calling in from India. Welcome. How are you doing today?

04:19 ROHIT ARORA: Yeah, thank you. Thank you for the opportunity, Jim.

04:22 JIM BEACH: So congratulations on the $8 billion. That is amazingly impressive. Tell us a little bit about the business and just get us introduced.

04:30 ROHIT ARORA: Yeah, so I think that’s a very good question. So we started this business, me and my brother, we are the co-founders from New York and just before the great financial crisis, our thesis was that, you know, even when the mortgage boom was going on in the country, you know, getting access to credit for small and mid-size businesses was tough. It was very paper-based, used to take a long time. And most of the business owners are very busy people.

04:58 ROHIT ARORA: They’re wearing multiple hats and they don’t have a lot of time to, you know, you know, look for financing and and it was a pretty inefficient process. So, so our whole premise on that was that if we set up something digital, like a full digital workflow, not just a lead gen, you know, model, because in the in the legion model, the biggest challenge is that you can come and fill out an application and then you will get multiple lenders to call you or work with you.

05:28 ROHIT ARORA: So our premise was that, you know, if we can, we can create a full workflow solution for businesses where we can embed ourselves into the core activities that they are doing with the payroll, payments, marketing, filing taxes. And this was like pre-fintech era, pre- API era. And once, so, so like we started that business and then obviously the great financial crisis came in and we initially thought that, you know, we are solving a problem for, you know, immigrant small businesses because they, they had a harder time to get access to credit.

06:02 ROHIT ARORA: They didn’t have banking relationships in the country and everything. But over time we realized that this is a mainstream problem. And now we have seen that, you know, as we’ve grown quite a lot is that, you know, a lot of our, you know, thesis around increasing digitization, better availability of data, people getting more comfortable using online platforms and uh, obviously post-COVID, you know, uh, we also saw that, you know, less and less people are visiting branches.

06:29 ROHIT ARORA: There’s a lot more consolidation happening in the banking space. And with the march of private credit and alternative, you know, capital coming in, you know, now we are seeing a lot of growth happening in the in the space. Uh, you know, which which we had initially thought about it, but it took longer than expected. But now the pace has increased quite significantly, you know.

06:53 JIM BEACH: Well, Rohit, that is amazingly impressive. Who are you giving the small business loans too? Is it to the individual or to the business? Does the individual have to cosign?

07:03 ROHIT ARORA: So the way we have structured all our deals that obviously we give it to the businesses and their enterprises and and we base it on their business cash flow. So that means that the personal credit score plays a role, but not a overwhelming role unlike in personal lending. Having said that since smaller mid-sized businesses are so much identified by their owners. So we obviously take a personal guarantee.

07:28 ROHIT ARORA: So what that means is that, you know, uh, while we don’t attach any of their personal assets to it, but like in case of a fraud or a misrepresentation or, you know, where the cash flow issues are because of, you know, uh, you know, misappropriation of any kind of funds, then we can, you know, make the business owners accountable. Having said that, you know, it is, the loans are made strictly to the businesses only. Yeah, actually.

07:55 JIM BEACH: Okay, so I can’t. Borrow money to renovate my house.

07:58 ROHIT ARORA: Yeah, so you cannot exactly. So you have to use the money to, you know, uh, like for business purposes, you know, uh, and and also for productive use of money because uh, if you don’t, if let’s say you borrow money and then you buy a piece of real estate, which is unrelated to the business, you know, and and this used to happen a lot before the 2008 mortgage crisis where a lot of people, you know, are borrowing money against their businesses and are buying houses to flip it, then that is obviously not allowed under the covenants.

08:32 ROHIT ARORA: But if you’re borrowing money to buy a piece of equipment, buy a commercial real estate or to expand your business or need money for marketing, you know, then we are there to, you know, help you. And because because we know those use of proceeds are for productive, you know, measures and we are looking at, you know, how to help you to enhance your business.

08:55 ROHIT ARORA: So we also provide something known as virtual CFO platforms where, you know, and that’s free for people, whether they borrow money or not from us, but those who borrow, then, you know, we give them some advanced tools to manage their cash flow, look at their accounts payable and accounts receivable data, and also, you know, help them to utilize the use of proceeds in the most productive way, okay?

09:20 JIM BEACH: That’s cool. Tell me more about that. Do I have to use one of your CFOs?

09:25 ROHIT ARORA: No, so you don’t have to mandatorily use it because it’s free of cost, but what it does is that it picks up a lot of your businesses data. It benchmarks it against other businesses, of your size, your age, and your industry. It helps you to manage your cash flow better.

09:43 ROHIT ARORA: So while we’re not forcing them to use the virtual CFO platform or tools, you know, a mandatory, but it shows them on their dashboard and now with the advent of AI and everything, you know, you know, we have made those tools even more powerful because now the business owners can customize, you know, the outcomes based on their needs as well as preferences. So the way we do it is that, you know, this is free of cost, you know, for any business owner.

10:12 ROHIT ARORA: So the more data that they give to us, or let’s say if they borrow money, then I have tremendous amount of data coming in. And then we can synthesize it, we can help them. Because the big reason is that, you know, if these businesses are using some smart tools, then their cash flow remains good. That also means that our portfolios perform better. So then it’s a win-win situation for everyone.

10:37 ROHIT ARORA: And then, you know, and if that happens and they can borrow more money, they get money at a cheaper cost, and they can also then use that money in a wiser way to keep growing their business as well as the business valuation also, you know.

10:53 JIM BEACH: Okay. Somehow I got on a list, Rohit. I get 10 telephone calls a day, people asking if I want to borrow $65,000, $82,000, $46,000. I get that call 10 times a day. Uh, are you making that call? Are you offering? Uh, outbound marketing to try to get people to invest.

11:11 ROHIT ARORA: So are you getting calls from us?

11:13 JIM BEACH: I have no idea. I have no idea who the calls are from. I just hang up. I’m so frustrated with it.

11:20 ROHIT ARORA: So we typically will not call the business borrowers until unless they’ve applied on a platform, you know, so the way we do it is that everything is inbound, you know, so let’s say they come either through it, like organic discovery or they, or they have seen our ads on TV or we have embedded finance, you know, partnership with like large payroll companies and insurance companies, you know, actually.

11:45 ROHIT ARORA: So we typically will do only, you know, calls to the, to the customers who have already, you know, uh, you know, registered with us or who are part of a, you know, from a partner network, or our affiliate network, because what we feel is that, you know, making unsolicited calls to people who are not ready or who haven’t even know, uh, you know, have, have not even raised their hands, you know, doesn’t make a lot of sense, you know, out there. Actually.

12:14 ROHIT ARORA: You know? And more and more, we are trying to go like either deploying AI agents on the calls or encouraging more and more businesses to just fill out an application on their own. So today almost 80% of businesses who apply on a platform. You know, they just go from start to finish almost unassisted, and they can just connect their bank accounts digitally online, and then we can, you know, collect all the data on their bank accounts based on their consent.

12:43 JIM BEACH: I like that. I’m glad you’re not going to call me to death. I’m going to have to get a new telephone number, all these damn.

12:51 ROHIT ARORA: I know. I get so many robo calls these days, you know, because what has also happened is that, you know, a lot of businesses, and business owners, you know, they’re, Information is now available on databases like ZoomInfo Apollo.io. So a lot of these companies, what they are doing is that they are just taking that information out from there. And that’s how they bombard, you know, businesses or even individuals and call them all the time. And actually these days.

13:20 JIM BEACH: Right. All right, let’s move on. So how is the market doing now? We hear the possible recession coming on? We have been hearing that for 10 years now. What do you think is going to happen in the next 3 months, 6 months, one year?

13:35 ROHIT ARORA: So I think that’s a very good question. So I would say there are three distinct trends that we are seeing right now. So one trend we are seeing is that, you know, there is a lot of, Like, you know, like last few years have been rough for small and mid-sized businesses. Obviously COVID was rough, but then there was a big stimulus that came in, which really helped them.

13:59 ROHIT ARORA: I think once Trump came in, there was a lot of expectation that he will create a lot of deregulation, which he did, but he also create a lot of uncertainty for the economy, both in terms of tariff and immigration piece. So 2025 was a tough year, a lot of small businesses because the tariffs really started impacting them because if you see, you know, US is a big import country and most of the imports in US are handled by small and mid-sized businesses.

14:28 ROHIT ARORA: So even folks like or companies like Walmart and Costco, you know, they, while they import a lot of stuff into US, they don’t do it directly, they do it through, you know, vendors who are mostly small and mid-sized businesses. And tariff really was impacting their cash flow and also the immigration piece with ICE detention and everything. So the availability of labor had gone down and there were more shortages which started happening. And also the demand took a bit of a knock.

14:58 ROHIT ARORA: Now, the tariff situation got a lot better after Supreme Court knocked off the tariffs and then, you know, a lot of uh, a big majority of refunds have come back, uh, you know, for the small and mid-sized businesses, which is like a big stimulus. I think the challenge that businesses are having right now is obviously higher oil prices and continued uncertainty.

15:20 ROHIT ARORA: You know, in the economy, because my worry is that if the inflation increases and if fed somehow has to even increase the interest rates, obviously everybody’s expecting that the interest rates will go down by now and that hasn’t happened. And almost all these small business loans are like mortgages are floating rate loans.

15:39 ROHIT ARORA: So every time there is going to be uh, like interest rate increase or higher interest rate, that impacts small businesses, even in their existing, you know, lending are like, mortgage is where, you know, if you took out a mortgage in 21 or 22, you got great pricing and you can continue with that for next 5 to 10 years. So that, I think, is a headwind oil. High oil prices is a is a headwind, tariff situation, a lot more improved.

16:07 ROHIT ARORA: Deregulation is great. You know, for the businesses, whether that helps them to, you know, reduce their overall cost. So I think it’s a mixed bag right now. Now in terms of recession, that’s a good question. Because what has happened is with AI spending going through the roof, you know, lost small businesses have got benefited. So, you know, we have a lot of clients who do HVAC, who do plumbing, and they’re busier than ever because of, you know, they’re so involved in setting up data centers in US, you know, actually.

16:39 ROHIT ARORA: So that is happening, you know, even in the manufacturing, we are seeing a lot of Renaissance happening in the country. You know, so that is a good news, you know, actually. So there are sectors which are which are doing really well right now. But then there are sectors like, you know, retail and food and some of the other where, you know, higher labor costs are impacting and higher input costs, you know, actually. And that is, you know, squeezing out the margins for the businesses.

17:09 ROHIT ARORA: Overall, I would still say small business or smaller business economy is pretty healthy. Delinquency rates are still pretty benign and low. And everything is that if the interest rates stay where they are, I think businesses can manage it because the tariff issue was a big issue that is gone. But if it, but if the interest rates start increasing anytime soon, then I feel that, you know, it will create a pretty significant headwinds, you know, for the for the businesses, actually.

17:39 JIM BEACH: All right. How much? How many deals do you do a quarter or a month? How do you measure that?

17:45 ROHIT ARORA: So we, over a quarter, we will fund on an average between 6,000 to 7,000 new businesses, you know, actually?

17:52 JIM BEACH: Wow.

17:53 ROHIT ARORA: And yeah, so because on an average every month we get around 32,000 to 35,000 new applicants, you know, actually. And, uh, and then we are obviously we are allowed to sort it out. Some people are applying to use our tools. Some people are, you know, looking to, you know, do things. You know, are looking to, you know, do other things. So, So the, uh, uh, uh, uh, but there is a lot quite a few people who actually are looking for money.

18:22 ROHIT ARORA: And obviously, you know, we cannot give money to everyone who comes in because, you know, we have to check for the credit worthiness, we have to check for their, you know, overall, you know, how much money they’re looking for, what is the repayment that they can afford, you know? So around 7,000 to 8,000 businesses we fund every quarter.

18:43 JIM BEACH: Amazing. And where do you get the money to give them? You have to raise that 8 billion, didn’t you?

18:50 ROHIT ARORA: Yeah, so the way that we have structured our business is like very unique in a sense that, you know, what we have done is that we, uh, we have sourced money from credit funds, we are sourced it now and now we get our portfolios rated. So because now we have a very good rating. So we have access to a lot of insurance money, pension fund money, and some of the other, you know, sources of money which are more long term.

19:18 ROHIT ARORA: So over time, what we have been able to do is to diversify our source of capital. And the way we now work is that we are a fulfillment marketplace where we will originate underwrite. And, you know, scorecard, all these, all these loan portfolios, we will go and, you know, then, you know, also service them.

19:37 ROHIT ARORA: In certain portfolios will securitize and a lot of other portfolios, we have a forward flow partnership with large asset managers, insurance companies, pension funds, who actually then, you know, buy it from us and we keep managing those portfolios and then we do renewals, re-ops, everything else, you know, on top of it.

19:56 JIM BEACH: And how many people? And where are you located?

19:59 ROHIT ARORA: So we are headquartered in New York City, and we have offices in New York and in Miami, actually, and then we have a technology center in India. Uh, you know, so uh, but but our core leadership team, the decision making team, product team, underwriting teams are all in US, you know.

20:17 JIM BEACH: And how many employees totally have?

20:19 ROHIT ARORA: So total we have close to 750 employees.

20:22 JIM BEACH: Wow. Very impressive. Go back in time. When you had this idea with your brother, what did you do first? Can you give us the entrepreneurial history of the very 1st months and days of the business?

20:35 ROHIT ARORA: Yeah, so I think when we started this business, it was a very simple idea that, okay, you know, being 1st generation immigrants into US, we thought that there was a gap in the market for immigrant businesses and we have to sort it out. So, you know, living in New York City, you know, we used to go and visit a lot of these small and mid-sized businesses because one, it was like a very dense population, easy to commute kind of stuff.

21:03 ROHIT ARORA: So, so, so we used to meet a lot of them, like Main Street businesses, restaurants, bodegas, delis, gas station owners, uh, you know, uh, physicians, you know, so, so, so we literally used to go and meet them, trying to understand, you know, what their pain points were, because those are very early days. We were still in the process of, you know, designing like a, what I said earlier, like a workflow platform and everything else. So we thought like, okay, this is, you know, how do we solve a problem?

21:35 ROHIT ARORA: And our philosophy, even at that point of time that, you know, a successful business is built when you solve some pain points, you know, of the businesses, because if you are doing a business where there is a vanity or some, you know, short term, you know, kind of need, then those businesses normally don’t serve a purpose in the long term. So we said, what is the real purpose of this business? What problems are we solving? Are these hard problems or solved problems?

22:04 ROHIT ARORA: Because when you’re trying to solve a solved problem, then, you know, you don’t build a long-term sustainable business. And then if it is a hard problem, then, you know, what moat we can create in the market? Because obviously, the whole idea was that, you know, if you’re going to get into a business, then over time we need to have a sufficient moat, you know, because without that, we won’t be able to, you know, grow and and take the business to the next level.

22:34 ROHIT ARORA: And then the other piece was that, you know, how do you put different pieces into place. So it was like, how do you originate customers? How do you scorecard them? How do you monitor from where you will get your capital? Uh, you know, what what kind of infrastructure you have to create, you know, in terms of both digital and physical. And then the idea around, you know, how to create sustainable long-term businesses where customers want to come and they want to pay you a fair price for your services.

23:05 ROHIT ARORA: And at the same point of time, you know, there are, you know, things that you can add on over time. Because that’s the other important thing. If you are, if you’re doing something good and let’s say you offer one or 2 products, is your business has enough TAM, you know, uh, you know, uh, is it like something that, you know, they can, uh, you know, uh, is there a way to cross sell, upsell? Is there a way to increase the average, you know, revenue per customer or not?

23:36 ROHIT ARORA: So I think those were quite a few things that, you know, we started thinking about it and obviously we knew that, you know, to build a long term sustainable business, it’s going to take time. So if you’re in a rush to build a long term sustainable business, that doesn’t happen, you know, actually.

23:55 JIM BEACH: Right, but you did it pretty quickly.

23:57 ROHIT ARORA: Yeah, it took us a few years. And I think the best time, as we say, and a lot of people have said the best time to start a business in a recession because it’s very tough initially. But what it also does is that it clears a lot of dead wood, it also make people very focused.

24:17 ROHIT ARORA: It also takes away a lot of, you know, uh, you know, uh, you know, useless cost, you know, actually, and and it also makes, you know, it also sorts out this stuff that, Who is what is a real pain and what was a vanity out there? Actually.

24:33 JIM BEACH: Right. Well, it’s very impressive what you have built. It is amazing. Who is your biggest competition, just normal banks that don’t lend a small business? Who do you consider your competition?

24:44 ROHIT ARORA: So I think I think when we started the business, it’s a very good question. We toss that question to business owners that, you know, like, like, you are coming to us, have you gone to your local bank? At that point of time, I would say 70 to 80% of the businesses were going to local banks 1st and then if they were getting rejected, they used to come to us. Now the landscape has changed so much that, you know, they just go online, you know, 1st right?

25:14 ROHIT ARORA: Majority of the business owners 1st want to go online, check their, you know, you know, preferences, you know, and also their options. So over time, I would say it was initially banks. Now, I think it’s just like, Can they borrow on the credit card, which is again very expensive? Can they get money from some lending sources and all that kind of stuff? So I think the, the, or the dynamics of the competition has changed, banking sector is getting consolidated.

25:43 ROHIT ARORA: So most of the banks after the 2008 crisis never came back to lend money ever. So I think those are the things that have really, you know, changed, uh, you know, uh, the dynamics of the competition also, uh, you know, over the years and uh, and it’s actually becoming very interesting now because now what we are seeing with advent of embedded finance and all that, there is more co-opetition happening, you know, happening, actually.

26:09 JIM BEACH: How do you market? What are you doing to bring in those 35,000 new customers a month?

26:15 ROHIT ARORA: So I think 2 or 3 things. So what we now do is that, you know, is that, you know, uh, uh, uh, so there are 3 different, uh, 4 different, you know, strategies out there. One is obviously organic discovery where, you know, we were using a lot of SEO now, now it is becoming more AEO, you know, because of advent of AI search and everything, more agents are now visiting your website than, you know, that used to happen earlier, you know, actually.

26:44 ROHIT ARORA: So how do you customize your content, how you, how you, how do you customize your discovery, piece, how do you answer stuff back to an agent compared to a human being that’s very different? So that’s one PC. 2nd piece is that, you know, um, you know, as I said, we do embedded finance with a lot of payroll companies, payment companies, insurance companies.

27:06 ROHIT ARORA: So, so we are, we are at that stage where we are going deeper and deeper into where the businesses are doing their day-to-day transactions and with data becoming better, ease of use and everything, so that is increasing. The 3rd is affiliate marketing, you know, because in any online stuff, affiliate marketing is becoming a bigger play. You know, actually every day because, you know, when customers are doing their comparisons, they’re discovering stuff. So can you be present there?

27:35 ROHIT ARORA: So there’ll be a partnership with like companies like Forbes, Fortune, CNBC, you know, we co-produce a lot of content with them, and then, you know, that discovery process happened. And then the 4th now is that, you know, a lot more social media. So Instagram, YouTube, YouTube is in my view is going to become is becoming bigger and bigger because LLMs are also, you know, using a lot of YouTube content now. And that’s going to get even, you know, like a bigger play for us. As we see things happening.

28:06 ROHIT ARORA: So I think those are the 4 or 5 different channels that we use. We used to do a lot of linear TV earlier, but that has gone away. So like instead of that, we are using more, you know, I would say, connected TV, like Netflix, Amazon Prime, we are starting to experiment, a lot more on that. You know, where we are looking to, you know, do things, uh, you know, which is a lot more targeted and a lot more, you know, uh, um, you know, I would say a lot more narrow focused in a way.

28:39 ROHIT ARORA: So let’s say if I do healthcare financing, then in connected TV, I can serve those healthcare financing offers or ads, only to healthcare professionals, like doctors, dentists, pharmacists and all these people. Uh, you know, like linear TV which used to be, you know, spray and pray kind of stuff. So I think that has become a very good channel for us and I see these new channels becoming better and better.

29:04 JIM BEACH: Wow, you’re all over the place. Experimented with a lot.

29:08 ROHIT ARORA: Yeah, yeah, yeah.

29:09 JIM BEACH: What’s your philosophy of entrepreneurship or your pet peeves of entrepreneurship, the things that bother you that you see other entrepreneurs doing?

29:17 ROHIT ARORA: I think, yeah, entrepreneurship is not an easy path. So I think a lot of people over last 15, 20 years, you know, entrepreneur has been glamorized a lot. Like people see Elon Musk, they see Mark Zuckerberg, they see Jeff Bezos. It’s great, but the pain that you have to go through.

29:35 ROHIT ARORA: You know, like Elon Musk has said that NVIDIA guy, Jensen Huang, has said that, you know, that, you know, that pain that you go through is massive, you know, if you want to build a successful long-term enterprise, you know, and one has to be willing to take that pain.

29:52 ROHIT ARORA: You know, second, it’s a 24/7 kind of a, you know, so until you’re not passionate about something that you really want to do in life, you know, entrepreneurship is not for you, you know, because if you treat it like a 9 to 5 job or you treat it like, you know, okay, I’ll only do this stuff that I have to do. Like as an entrepreneur, you are you are responsible for everything, every everything, you know, actually, even if you’re a big team, you still need to be, you know, take the ownership.

30:25 ROHIT ARORA: You still need to, you know, like like you can delegate, but I was saying that there’s a fine line between delegation and abdication, you know, kind of stuff. So while you can delegate, you cannot abdicate. You know, that’s very important.

30:39 ROHIT ARORA: And then the 3rd thing is that, you know, entrepreneurship is something that is rewarding, absolutely, you know, not only in financial terms, financial terms, yes, if it succeeds, but also it gives you a lot of satisfaction, that you’ve created something, there’s a lot more freedom, you know, to do things and there’s a lot more like creativity that you can bring out, you know, in yourself. And my view is this in this day of AI now coming in.

31:07 ROHIT ARORA: You know, more and more people will either be part of gig economy or will start becoming entrepreneurs because that long-term white collar job scenario is shrinking very dramatically.

31:17 JIM BEACH: Yes. Very well said. Rohit, I am very impressed and love what you have achieved and hope that you can help some of our listeners with some money. Very, very impressive. How do we find out more? Follow online, get in touch, all that stuff, please.

31:33 ROHIT ARORA: So, I think I think if people want to come online, then it’s, it’s, it’s very simple, www.Biz2Credit.com. Or you can send an email at info at Biz2Credit.com. Also, you know, I get all those emails myself still. So the key thing is that, you know, uh, that’s the best way to, you know, go and if you’re looking for, we have a lot of content, we have a lot of education material. There are a lot of different things that, you know, are there.

32:01 ROHIT ARORA: So we can do, we, we can help, you know, businesses to get educated, we do a lot of webinars, and if a business is ready to apply for funding, they can do that online, it’s a very simple, you know, 3- to 4-minute form, and and then, you know, and then we move at a very good speed, you know, we can adjudicate the, your request of funding in 24 to 48 hours, and it doesn’t take us more than that normally.

32:29 ROHIT ARORA: And then, you know, and if you’re looking for online tools like virtual CFO and everything, that’s free of cost.

32:36 ROHIT ARORA: So we encourage people to use it because, you know, at the end of the day, in this day and age, any business which wants to grow and thrive, you know, they have to use these tools, they have to use the power of knowledge, which AI is making it even easier to access, and they also have to, you know, have a way to adopt a lot of these best practices, you know, because this is becoming very important because AI is going to make things even more competitive and cost, you know, from a cost and perspective, you know, businesses which are going to use AI the right way are going to get a lot more productive and competitive, but businesses which are not going to use the AI in the right because AI is both pros and cons. Cost can be very high if not use the right way, but if you don’t use it, your productivity goes away.

33:30 ROHIT ARORA: So it’s that fine balance that you have to create as a business owner and then also the ability to be curious and trying to understand your overall landscape, you know, actually.

33:41 JIM BEACH: Rohit, thank you so much for being with us. Great stuff, and we’d love to have you back.

33:47 ROHIT ARORA: Thank you. Bye.

33:48 JIM BEACH: Bye. And we will be back in just a 2nd to talk about The Wealth Elevator. We will be right back.

33:51 INTRO 2: Well, that’s a wonderful question, actually. Oh, my gosh, I love the opportunity to do this. Thank you, Jim. Wow, that’s awesome. That a great one. You know, that is a phenomenal question. That’s a great question, and I don’t have a great answer. That’s a great question. Oh, that is such a loaded question. And that’s actually a really good question. School for startups radio.

34:26 JIM BEACH: We are back, and again, Thank you so very, very much for being with us. Very excited to welcome back to the show, an amazing story. Please welcome Lane Kawaoka to the show. He started off as an engineer, but by the time he graduated college. He had already put together his 1st deal, bought a house, saved up $80,000 amazingly, and was able to get into his 1st deal.

34:50 JIM BEACH: He has since then created or raised about a quarter $1 billion and turned it into over $2 billion of assets representing $1,200 units of commercial rentals, storage units, uh, hair salons, you know, all of the commercial stuff that we rely on. He has got a new book and a great podcast that talk about this. It’s called the Wealth Elevator, and he has a great deal, I think, for you on the book as well. Lane, welcome back to the show.

35:18 JIM BEACH: Thanks for being with us.

35:20 LANE KAWAOKA: Yeah, thanks having me.

35:21 JIM BEACH: So it’s been a year or so. Some things have changed. I know you don’t do Airbnb, do you?

35:28 LANE KAWAOKA: No, I mean, we have some short-term rentals in some of the apartments. Um, very few, but yeah, you know, that’s just kind of a saturated market where you have a lot of like amateur mom-and-pops in there. And, you know, with different municipalities have different rules on that, right? So it really depends on which market you’re in.

35:48 JIM BEACH: All right. Do you think that they’re going to recover or did they kill that market for Vrbo and everybody else too?

35:55 LANE KAWAOKA: Um, I mean, again, it’s it’s submarked as submarket, right? So if you’re in Honolulu, Hawaii, where I’m at. I mean, you’ve got a lot of big lobbyists for the hotel industry, so, you know, that’s some slim pickings out there, but in some other rural areas, um, out there, um, I think it’s still game on.

36:14 JIM BEACH: I didn’t know you would move to Hawaii. Where are you in Honolulu?

36:19 LANE KAWAOKA: That’s correct.

36:20 JIM BEACH: Where? I used to live in Hawaii, Kai, [unclear phrase], I guess. Honolulu.

36:24 LANE KAWAOKA: Yeah, yeah, pretty much right out there too.

36:26 JIM BEACH: Okay. Yeah, I got a master’s degree at Hawaii. So, aloha and all that stuff. Okay, well, very cool. The bigger market. What do you think about just real estate is overall right now as a seller market buyer market? I am, I have a property that I sort of got backhanded. I didn’t want, I’m stuck with it and it obviously has set off some kind of gotten on some list because I get 10, 15 calls a day asking if I want to sell it.

36:55 JIM BEACH: So what’s the big market doing it right now?

36:58 LANE KAWAOKA: Yeah, I mean, we split things off into commercial residential, right? So commercial real estate. From a national standpoint, you’re looking at 30% cheaper than what it was three, 4 years ago at the peak of the market. Um, caused by interest rates increasing. So commercial real estate, you got a good deal there. Um, it’s caused by, you know, the loans and commercial real estate are a lot shorter, right? You know, anywhere from under 10 years.

37:25 LANE KAWAOKA: So when the market drastically changes, like interest rates skyrocketing, how it did, you have that bounce back a little bit quicker where on the residential real estate side, I’m not really on. I’m on the commercial side buying apartments and commercial assets. But on the residential side, you got a little bit more insulation from that due to the 30 year mortgages that people will get. Um, you know, interest rates shot up. All they, a lot of what’s happening right now is people who have those nice mortgages under 4% are just staying put.

37:58 LANE KAWAOKA: And the issue is a lot of the new home buyers, they’re kind of priced out of the market because now they’re they’re looking at double tripled interest rates that their counterparts bought at a few years ago. And, you know, that’s making it tough on them.

38:14 JIM BEACH: All right, let’s go back in time and tell the birthing story and then we’ll get caught up. I love the college story. So give us that in more detail. You saved up 80,000. Hal, eating ramen isn’t enough of an answer there. Tell us that story and then we’ll move into your current day stuff.

38:33 LANE KAWAOKA: Yeah, I mean, I was just good at saving, right? I mean, I didn’t get paid a phenomenal salary, but engineers get paid pretty well. And I was able to save like maybe 30 grand a year or so. So bought a house in Seattle for $350,000 with an $80,000 down payment, which took me a couple years. And at the time I was a construction supervisor working for the railroad. So I would be out on the road 100% of the time and really only home on Saturday.

39:03 LANE KAWAOKA: So at the time I didn’t have kids, wasn’t married, and it kind of was silly to have this big house myself. So on a whim, I just turned it into a rental property. And in a way, was homeless, but not really homeless. Let’s just live from hotel to hotel which my company paid for. And I skyrocketed my annual savings from like 30, 40 grand a year to almost a 100. And just plowed all that money into more and more rental properties.

39:31 LANE KAWAOKA: You know, so this is between 2009 to 2015. At that point, had 11 of these little rental properties, which I think is great. But, you know, when you’re in an accredited investor net worth of $1 million or greater or make over $200,000 a year, they’re just not scalable. And that’s when I started to invest in private placements and syndications, investing in apartment buildings.

39:54 LANE KAWAOKA: Um, and yeah, that kind of fast forwards today, uh, $2 billion of acquisitions, and, um, You know, interest rates skyrocketed a few years ago, definitely put a damper on our future acquisitions, and we’ve been kind of pivoting to all our gas. Um, buying other little businesses and, um, you know, uh, we still do apartment here to hear.

40:14 JIM BEACH: All right. To follow up with there. So… I want to ask about oil and gas. I don’t know how us do. I got to hear about that. Tell me about oil and gas and why that’s better than real estate if it’s down 30%. There’s the buy opportunity of a lifetime, no?

40:32 LANE KAWAOKA: Yeah, well, I mean, it’s not that it’s better, right? I mean, sophisticated investors want to typically diversify in different asset classes. Normally your retail investors, those unsophisticated ones will just go into one thing, especially the thing that’s hot, right? I mean, that’s today, that’s AI stocks. That’s pretty much S&P 500, right there that has a huge, huge portion exposure to that. Um, sophisticated investors. You know, they have some of that, but they have some real estate.

41:00 LANE KAWAOKA: They have some oil and gas, they have some private credit. They have businesses, you know, they’re much more diversified. And, you know, it’s just a, it’s just another, um, I mean, I like it because if you look at the, you know, where things are going, you know, AI is just using more and more energy. And you’re just going to need much more of the stuff where people don’t realize a lot of the byproduct, especially here in America is the natural gas where we get a lot of electricity, electricity from.

41:32 LANE KAWAOKA: And then, you know, you can’t have all these plastics without petroleum and oil.

41:36 JIM BEACH: Yes. The AI usage and water, too, is really creating a huge backlash in just about every neighborhood. I think if you were to offer them a nuclear power plant or an AI facility, they would choose a nuclear power plant now. Um, AI is so unpopular.

41:52 LANE KAWAOKA: Yeah, I mean, you know, you kind of hit it on the head. I mean, to me, to supply the demand where oil needs are going in the future with all the AI stuff, you’re going to need to go nuclear, but that is an incredibly unpopular decision because everybody thinks that Homer Simpson runs their local power plant and all the health concerns there. But, yeah, you know, I think that’s where it needs to go, but, you know, until then, you know, oil and gas production is going to be where it’s at.

42:24 JIM BEACH: Yes. Uh, You know, who wasn’t? I think it was Google announced they were going to build their own nuclear power plant, didn’t they?

42:32 LANE KAWAOKA: Yeah, they did.

42:33 JIM BEACH: I remember that distinctly. It’ll be interesting to see if they have the political power to get it through that Georgia Power or some of the power companies don’t have to get it through. So absolutely fascinating. And then there’s also the next-generation now. I’m a big you know, proponent of the next-generation. Those are basically nuclear power plants that are built in a factory and then shipped and then installed and because of that, you have so much more quality control and stuff.

43:02 JIM BEACH: It’s the French are doing it, of course. So.

43:05 LANE KAWAOKA: Yeah, the small modular power plant. That’s definitely kind of an interesting trend.

43:10 JIM BEACH: Yes. Well, I think it’s the ultimate solution. Every town should have their own. And, you know, just that would be just really interesting politics. Our town has energy. Your town doesn’t, you know, but our town also has these rules. So it would be fascinating to see. Tell us about the book, The Wealth Elevator. It has, what is it, 175 five-star ratings on Amazon, very, very impressive subtitle, real estate syndications, accredited investor banking, and exit strategies for 1st gen millionaires.

43:38 JIM BEACH: What are the main things you want us to learn there?

43:42 LANE KAWAOKA: I mean, the book is mainly written for accredited investors, so those people with a net worth of $1 million are greater or make over $200,000 a year. Um, you know, that’s where I started, you know, working as a younger engineer, I, you know, I made a good salary, but I didn’t have a network, anything yet at that point. So I just kind of bought little rental properties, but, you know, in the book, we kind of break down these different stages of the wealth building game, right?

44:13 LANE KAWAOKA: Like the 2nd floors when you become an an accredited investor and maybe you get your little rent of properties and you get involved in larger syndication deals. Um, And then, you know, the 3rd floor and beyond when you hit $4 million to $5 million net worth. So a lot of these stages, um, not not, people don’t talk about this, right? And there’s a lot of so-called financial advice out there, but at what point in the journey does it make sense?

44:41 LANE KAWAOKA: So what I would urge everybody is pick up a copy for yourself and um, see where, where on The Wealth Elevator you fall and kind of start out from there. It’s kind of a self-awareness test. If you’re in credit card debt and make under $50, $100,000 a year, probably not the book for you. But yeah, you know, I think nobody’s really ever created a blueprint for, you know, people who make good incomes, run their own businesses, et cetera.

45:09 JIM BEACH: Okay, I love that. I love anything that’s sort of like a roadmap and the different layers or different floors of the building representing the different steps. So if I get into a syndicated situation with you or some of the other people who have these syndicated offerings, can I just skip rentals and go straight into a larger deal that I don’t have to manage myself or am I going to lose so many percent points in paying for your management fees, that it’s not worth it.

45:39 JIM BEACH: I know you, you have a, you’ve raised a whole bunch of money. What is it, 180, $200 million?

45:45 LANE KAWAOKA: Yeah, I mean, I don’t I don’t really count it by the penny. But there’s a lot. Yeah, there’s a lot.

45:52 JIM BEACH: Well, tell me about… Should I go into your syndication or should I try doing it myself? What are the advantages of this syndication? What’s it look like? Talk to me about that?

46:03 LANE KAWAOKA: Yeah, I mean, whether you work with us or anybody else, what I would always suggest is, you know, being educated. I mean, when I 1st went into this world, I mean, just speaking from my own experience, I didn’t know who to trust. I didn’t know that you should be looking for an operator that’s done at least a $1 billion of deals or at least a dozen full cycles. Um, and I didn’t know about like the numbers in the underwriting to be able to look out for.

46:33 LANE KAWAOKA: Now, passive investors are not going to be underwriting specialists. But, you know, on my website, The Wealth Elevator, we educate people on, you know, a lot of like the definitions and what are some of the normal ranges for deal assumptions. You know, so like, for example, um, I mean, reversion cap rate is something that we teach heavily, but it’s a little more technical, but, you know, like what? Reversion cap rate, um, exit cap rates and deals, but, you know, just…

47:01 LANE KAWAOKA: So, okay, you dared me. So when you look at a deal, There’s always a cell on the spreadsheet where you’re trying to model what the market is going to be in the future. Right? Nobody knows what the market is going to be in the future. So you pick a number that is that is weaker than it is today. So for example, if you’re buying class B in Dallas, Texas, that’s 1990s vintage. I do believe that today I might be trading for about a 5 cap or 5.5 cap.

47:32 LANE KAWAOKA: So the reversion cap rate that you’ll use on that, or when you’re looking at a deal, you just want to make sure your operator is using something more conservative at that. So maybe a 6 cap. Um, But I think the problem is, like when people, you know, get these deals, the operator or sponsors using the best numbers to show the deal the best in their light, which is nothing wrong with that, right? I think you as a passive investor need to kind of know this on your own.

48:03 LANE KAWAOKA: You know, so it’s like if you go on a date with someone and they wear a lot of makeup and look better. Um, nothing wrong with that, right? You just need to know. So if you if you look, so the idea is to educate yourself on these different aspects of the deal and to be able to be able to catch out when the operator is being a little bit more aggressive.

48:27 LANE KAWAOKA: Because if an operator is using, just say that example, they’re using a more aggressive, they’re saying that the market’s going to be better than what it was today, and they’re estimating that they may make 100% return. Well, if it doesn’t and the market stays the same or gets worse, you may make no money. Out of that, right? So I guess the idea is to normalize these numbers to use normal assumptions on all deals so that you’re adequately able to compare apples to apples.

48:57 LANE KAWAOKA: Um, you know, another example of this is, You know, rent increases per year, right? There’s typically an annual escalator that is applied to all deals. And this is supposed to account for normal inflation. Yeah, so maybe you might use something anywhere from one to 3%, which sounds like small numbers, but they hugely impact their projected returns at the end of the day. You know, so I mean, right now, if you’re looking at any deal in Phoenix or Austin, you’re probably looking at negative rent growth.

49:27 LANE KAWAOKA: You better not be seeing the operator put in 2 to 3%, right? Rent escalators every year.

49:33 JIM BEACH: What about Atlanta?

49:34 LANE KAWAOKA: Atlanta’s not doing too well, man. I don’t think it’s thing as bad as Phoenix, um, or Austin. And I’m not super familiar with Atlanta. I mean, we bought one apartment out there that we exited quite a while ago, but, uh, you know, I got to believe, I mean, Atlanta, there was a lot of buildup there, right, in supply. So I got to believe that maybe Atlanta might be uh, 0 to one% rent escalator per year. But that, but that’s just one cell in a spreadsheet, right?

50:04 LANE KAWAOKA: And what I’m saying is there’s maybe about a dozen that really moved the needle. And it’s passive investors, the name of the game is, it kind of educates yourself on how these things move the projections. Incrementally together. Ultimately, at the end of the day, you’re trying to find people that you can trust and build long-term relationships with and that’s why we, you know, we try to educate our investors, we do events. We get to know them personally.

50:32 LANE KAWAOKA: And, um, you know, at the end of the day, you know, in these partnerships, you know, the way you want it to operate is the, the agreement is written where when everybody makes money. Everybody wins, right? And as opposed to, you know, that’s my big issue with like financial planners, right? They send you, they sell you a bunch of stuff. And whether it goes good or bad, they don’t care. They got paid on the front end.

50:58 JIM BEACH: Yes, that is a horrible model. So, I hope that I think that industry has finally figured out you have to pay or results only, so we will see. In the book, you talk about the family office, how do I protect real estate wealth for multiple generations? Should I put it in a family trust? What are your recommendations on that?

51:19 LANE KAWAOKA: Well, every situation is different. I’m not giving tax or legal advice, but, you know, the trust is just a mechanism to pass the assets down. Now, unless you’re getting into more exotic irrevocable trust structures, there’s really no asset protection there. Uh, you know, of course, everybody should be talking to their CPA or lawyers and seeing what kind of entity structures such as an LLC that they should be employing. But, um, you know, I mean, that’s, you know, that’s a lot of, it’s it’s all just personal situation, right?

51:51 LANE KAWAOKA: Somebody with a net worth of $2 million is going to do something very different than somebody with $1 million net worth.

51:58 JIM BEACH: In the book, you have a bunch of wealth elevator gift resources. What will those include, please?

52:04 LANE KAWAOKA: Um, so we’ve got a, you know, people are interested in learning more about how to analyze large deals. Maybe you’ve got to pitch the deal in the past, but you had no idea how to underwrite it or even evaluate it. Um, I got a full 10 to 20 hour course online for free for you if you’d like to go to the website and check that out.

52:27 JIM BEACH: I think you misspoke.

52:28 LANE KAWAOKA: No. No. The only thing that’s not free is your time to go through it because I already wrote it.

52:35 JIM BEACH: Keep going. Tell us about it.

52:37 LANE KAWAOKA: But yeah, you know, if people, um, check out the book and they, you know, on Amazon and they leave a review. Hopefully it’s good. We’ll hook you up with the free PDF version. So I know a lot of people are going to put that into their GPTs and ask it other questions. Um, and the MP3 version in case you’re like me and you can’t read too well. Well, I guess I’ll read it to you.

53:02 LANE KAWAOKA: And for those of you guys who are accredited investors, a net worth of $1 million or greater or $200,000 a year in income or greater. Um, you know, would be glad to get on a quick call with you, talk through your situation a little bit, see if it’s a good fit. They can email me at lane at the WealthElevator.com.

53:23 JIM BEACH: Fantastic. Lane, thank you so much for being with us. Really appreciate it and love to have the repeat guests. I don’t know if you know this or not, but after 5 appearances where you’re giving you a green jacket, just like at the Masters. So if you win the match, they’re in the jacket. Now we’re doing that here after 5 appearances. So just keep that in mind, all right?

53:47 LANE KAWAOKA: Okay, okay. Good.

53:48 JIM BEACH: Lane, thanks a lot. We will talk to you again of the year or so.

53:53 LANE KAWAOKA: Appreciate it.

53:54 JIM BEACH: We are out of time for today, but back soon. Be safe.