Category: Blog

Why Stimulus Plan Is Not Actually Stimulating the Economy

https://youtu.be/ef_sbsV8rBY

Most people, a lot of experts will say, you know what? The fed printing all this money, it’ll be leading towards inflation, right? $3 trillion, $4 trillion in last few months, pop the stock market. And that’s one of the ways it’s showing its ugly head, but you’re saying the complete opposite it’s deflation that’s coming.

Maybe why is the whole inflation story? Not true. First of all, it hasn’t been true for 13 years. Go back to 2009, between late 2008 and 2009. The federal reserve expanded its balance sheet from about $800 billion to something just under $4 trillion. So they increased it by 300% and it was like, Oh my goodness, they’re printing all this money.

We’re going to get inflation. We never got inflation. We didn’t have inflation for 10 years. We still don’t. And money supply has nothing to do with inflation. Milton Friedman was wrong about that. The Austrian school was wrong about that. The Neo Keynesians are wrong about that. Inflation is not caused by money printing.

Inflation is caused by velocity of money. He knows this the turnover of money. So you can take the fed balance sheet to 7 trillion. My friend, Stephanie Kelton has used the big brand and modern monetary theory. They say, why can’t it be 10 showing the answer is it could be 10 trillion, but it’s not necessarily inflationary unless you get the turnover.

So I’ll give you a simple example. Let’s say I go out to dinner and I tip the waiter. And the way that it takes the tip money and takes a taxi or an Uber home tips, the driver, and then the driver takes the tip money and puts gas in his car. My $1 had velocity of three, it supported $3 of goods and services that the restaurant tip the taxi tip and the guests.

But what if I stayed home and watch TV, then my money has velocity of zero. I didn’t spend my money. There was no turnover. And I remind people $7 trillion times zero. Is zero in others. If you don’t have velocity, I don’t care how much money you print. If you don’t have velocity, you don’t have an economy.

Philosophy has been dropping for 22 years. It started to drop in 1998. It’s been coming down ever since our head larger spikes down in the 2008 global financial crisis and the 2020 pandemic collapse, the clear line has been going steeply down and it’s still going down. So my point is, and we need inflation inflation.

Uh, is, is not good in some ways, but you can’t print your way out of a liquidity trap. You can’t borrow your way out of a debt trap. The only way to get out of it is with inflation. And the only way to get inflation is to change the psychology because it’s not controlled by my supplies control by how people feel.

And right now they’re, they’re saving savings rates are sky high is precautionary savings. People feel the prices is going to get lower. So they defer consumption. Now. I’m talking about consumer price inflation, which is what the fed looks at and what’s policy makers. I got a few. If you think the stock market is a place, I can call it an asset bubble.

Yeah. Stock prices are going up. That’s not inflation as. Economists and policy makers to understand it. Those are just asset bubbles and they are happening. So the money has to go somewhere. I’ve heard of people got these $1,200 checks last around last June, may and June. They’re probably going to get another $600 in the next month or so what are they doing with the money?

Some people were paying the bills, but a lot of people are investing in stocks. You got all these newbies that are in Robinhood. They’re first time investors. They don’t really know what they’re doing, but they know that stocks only go up. They’re not spending the money they’re investing in the stock market.

They’re just in plating the bubble, not doing anything for the real economy, which we come from spending. There’s something to be said for savings, but that’s what people are doing, the saving the money and investing the money. They’re not spending it. So the money printing doesn’t work. Yeah. Makes total sense.

The money’s out there. It’s just the government needs have to try and find a way to incentivize throwing it into the real economy or getting reflectance mindset for consumers. .

Do THIS When Selling a Property That is Also Your Home Office

https://youtu.be/Tj3QZlW-ekU

So, if you did use a home office in your home, exclusively for business, and then you don’t want to have to face the capital gains consequences, when you sell, you would need to stop using that home office for business purposes for at least two years. How did they get around? Like, I mean, can they move back in?

What’s kind of the trick there.

Then yes. If you have a, let’s say you live in one home and you have another one that is a rental property and you’re facing a large capital gain. What you’d want to do is move back into that other homes that that was your rental property and live there for two years. And then you avoid the capital gain.

Tips for Creating Genuine Connections

https://youtu.be/uurQ-Meuv1g

One tip I always have is yeah, you introduce yourselves, but it’s always about the other person help them out. Like one tip I’ve always followed for myself personally, is help out the other person first, which is why I do all these free onboarding calls to new investors is I’m just trying to add value to them.

In 15, 20 minutes, it’s a test, whoever reciprocates or stays around. That’s what food typically stays in my network for my circle. And so I would push that out. There is like, when you get into a set with somebody or a few people learn what the other people are doing and see how you can add value means, add encouragement.

If you don’t know anything, give them a referral and articles, something you’ve heard, or maybe there’s somebody else in the group that you met five minutes ago. The day before that you can connect them with a way to add value. So you’re not just standing there spying, right? You’re not a model or a statue.

And that’s part of connection because if I’m going to connect with you that it can’t just be this. Stoic stable face staring back at me. I have to give something to receive something and we do with the old analogy of the farmer. You’ve got to go out and plant something before you can go out into the field and look for anything to harvest.

And so showing up. Smiling engaging, asking about the other person, get to know something about the other person. I have a friend a few years back and she used to say, if I ask somebody three questions about themselves or what they do, or the type of work they’re involved with, and they never asked anything of me about me.

I write them off now. That’s pretty hard. So I’m not personally going to take that stand, but it does make sense because it’s really a one-way street. And sometimes we do that because we’re nervous. We know all the answers to our own story. I don’t necessarily know your story, but get good at having at least three good questions in your back pocket that you’ve thought about ahead of time.

So when you go into these types of settings that you can start the dialogue and not feel uncomfortable. Now I can think of conversation. Lane is like playing tennis. So if I hit a ball to you and you let it drop, I’m thinking you missed it. So I’ll serve you another ball. If you let it drop again, I might serve you another ball, but then I’m going to start saying you’re not a lot of fun to play tennis and that’s frustrating.

Right? All right. You’re listening to lane and Deborah, talk about these tips or asking questions, but it’s hard to do anything unless the other person is playing tennis, but you and being vulnerable. Right. Show your insecurities, tell people what you’re working on, what you don’t know, maybe you haven’t heard about real estate professional assessment asks a freaking question.

Because that’s how you hit the ball back over the net. And this is how it works, but it can be frustrating, right? Debra, if you’re not in a place where people know how to swing the racket and get the ball over the net, right. And this is why I say it’s a waste of time to go to most local real estate club events or free online forums, because you’re in a room with people who are all about themselves, their selfish mindset.

And it’s all about what’s in it for them. I’ve curated my group and people who come to my events. It’s a different type of crowd, mostly because I’ve gotten to help the people out of here. The people that don’t fit that aren’t this abundance mindset or not just in it for them, they’re gone. So set the culture in a way and curated the list.

To be decent tennis players here stay as far away, but that’s hard, right? It’s hard to practice with people who don’t know how to swim it is. And then there’s the other side of playing tennis. So then you, I say to you Lang let’s go to the court again tomorrow. Let’s try again and you’re ready. So you’re there with your bracket and I stand on the other side of the net and just bounce the ball on my own racket.

And you’re saying Debra, I thought we were going to play tennis. And as we are, and you’re thinking if you were just going to bounce the ball in your own racket, you could’ve done that at home. And I didn’t need to even get dressed to show up. And that’s what I call a monologue and not a dialogue. When you ask somebody, how are you today?

And they never stopped talking. It’s all about them as you just. Mentioned and, Oh goodness. I’ve been to so many networking events where I’ve had people come up and shove their business cards on me and their books on me and their things and talk about what they’re doing. And I walked away going, that’d be the last person in that field I’d ever heard.

And those people typically never get anywhere. So there really isn’t much motivation to follow up there.

Can You Extract Depreciation From Your Primary Residence?

https://youtu.be/3qR4r83koRo

Can you cost segregate out and aggressively extract the depreciation on a primary residence that you want to live in. Let’s talk a little bit about that, that you cannot do. You’re not allowed to depreciate your own call. The exception to that would be if you’ve got certain areas that are used exclusively for business, but even then it may not be advisable to do that because if you.

 

Are segregating a certain portion of your home for a home that you own. Then when it comes time to sell the home, if you sell it at a game, you will actually have to deal with a capital gain portion of the home, which might more than offset any of these options gotten for that area of your home.

How Do You Want to Be Remembered?

I think when we step back one of the taglines for final touches, how do you want to be remembered? And that’s not just thinking about some people take it to the morbid side of when I’m dead. Certainly they will all be remembered at that point in some manner. But how do you want to be remembered when you walk out of the room?

When you click in the meeting on your zoom call, when you got off the telephone or you’ve just finished that email, how do you want to be remembered? That’s really quite powerful. That takes a big picture approach to every single interaction that I have with someone, whether it’s going to be brief in passing, maybe at a networking event or on a zoom call where I just see a little face on a tile or it’s long and lasting.

Maybe it’s somebody that I really do work at. Setting up engagements and having other points of contact. How do I want to be remembered? And it doesn’t matter if you’re an introvert or not. Actually, I used to be much more of an introvert than I am today. I would stand back and observe and watch people and it took practice.

All I had to do was learn some skills, practice those skills. And it became much easier. And once I understood the why does it really matter? Why does it really matter? What’s Hey, to all of us say what’s in it for me, but what’s in it for us in creating those connections. And for me, when I go into a networking event, I’m always looking reign for, do I really see others?

Because I think it’s easy for our brain to get focused on everything else that’s going on around us. All the distractions. Is my phone beeping at me or vibrating or is it not? And I’m concerned about that. Who’s in the room. Do I have the skill? I’m a little bit nervous stepping up and speaking up, but do I come fully prepared, fully present, fully ready to engage with the people that are there.

That’s important. And if I really do see others, and then I look for ways to connect with them. Virtually or in person, then I’m beginning to create those relationships that are going to enable me to find the clients that I’m looking for and find the people that I need to connect with because in business, everything is about those relationships.

Is a Cost Segregation Worth it on a Single Family Home?

https://youtu.be/ymmIjpid8v4

How much does it cost segregation cost? It doesn’t make sense to do it on a smaller property, or is there a certain rule of thumb that you have. In general. It’s hard to say if there’s an exact rule of thumb, but I have done studies on single family dwellings that were purchased for under a hundred thousand dollars.

And actually they, they worked. And one of the reasons is because we’re able to do those studies generally for under $2,000. And that the benefit that will be real honest from a cost segregation study will exceed the cost of doing it. Buy enough of a margin to make it worthwhile. And that’s in a situation where the owner is looking to own that property for the longer time, horizon five, 10 years plus disposing of the property a year or two later, it’s probably not worth doing.

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https://youtu.be/0E52ZFk-jTs

Can You Put Cash from ROTH into an LLC?

https://youtu.be/xu1_N2ryVjc

Question. Can you put cash from Roth into own LLC that owns passive income? No, you cannot. That would be oddly what’s called a prohibited transaction. So when you own rental property in your IRA, or any of these self-directed IRA accounts, there’s a arms length transaction rule where you can’t be adding sweat equity.

For example, when you buy a property and yourself director, I R a, you can’t be doing the property management. You have to pay third parties to do that. So by putting cash into your Roth and investing in Roth into your LLC, you also are violating like you can’t self deal. And I believe you cannot even partner with relatives or something like that.

As far as there’s, I’m sure there’s a lot of people that do this thing where they have a good buddy. Who’s good. At real estate, they invest. Their Roth IRA or self directed Roth IRA with their buddy and vice versa the way I see it, I think that’s a good way to getting around that totally follows the rules.

And yet I don’t do that because I don’t do any debt, investing. Everything I do is equity. And I also do that because I get the appreciation alongside of it.

This is the Next Big Tax Deduction

https://youtu.be/Pdt19mRYNqQ

And there’s a crazier one Lane, you and I have never spoken of, which is the solar credits that are still floating around out there for business use. For example, what’s going to become a big incentive and I can almost tell you that this is going to be a reality. So I’m going to get my crystal ball out and say, you’re going to watch this.

And then we’re going to listen to this in three or four years and say, we were predicting right now if I put a solar array on it and let’s say it costs me a million dollars, I get a tax credit. Of $260,000, 26%. Even if I finance the whole thing, I get a credit. That’s not a deduction, that’s a dollar for dollar credit.

So if I owe a hundred thousand dollars in taxes and I have a $270,000 tax credit, I don’t pay any tax that year. I use a hundred thousand of it and I carry it forward into future years, but I also get to depreciate. The solar United depreciate, 87% of it. So a million bucks, I’m going to get an $870,000 deduction in year one, plus a $260,000 tax credit.

And I think they’re going to increase those incentives. It used to be 30% and then this year went down next year. It goes to 22%. So that solar panel, you can deduct it all in the first year. You can deduct 87% of it. And you get a tax credit for 26%. Maybe I should go around Hawaii and find a contractor.

It makes deals with some people, but some solar panels have just sell off the credits to investors a year. You’re already there. Yep. That’s exactly what they’re doing. So I have a client. That’s what he does. He installed solar, but it gets interesting. What he does. He goes to a utilities, public exempt organizations, 501(c)3 churches.

And he’ll go find a wealthy parishioner and say, Hey, would you put the solar array on and then do a five-year contract on the energy because there’s going to be energy independent. And so they’ll sell it to the charity and say, Hey, after five years, the array is yours. And so he’s taken the big tax credit to have a little tiny bit of income on the.

Revenue that’s coming in because they’re selling them the electricity or they’ll usually they just give a right to the charity. So that washes itself. There’s a deduction. And so you have a little bit of income with a deduction that equals that, but you get that first year. It’s a ridiculous deduction, but where that’s really going to be important later is next year, if the taxes do increase, guess who’s going to be really incentivized to do stuff.

That’d be cool. Like investors bring into capital, they get the tax incentives and the plan owner gets. Cheaper energy. Yeah. What they do is they lock it in and they’ll say your energy, won’t go up for five years and then you have the right to buy it at some peppercorn price. So you’ve already depreciated it.

So you don’t really care. You would recognize all the income as ordinary income. If you sold it. For more, more than your basis. So you have a really tiny basis. So that’s what you sell it to them for you like, Hey, 13% basis or whatever that is. So I just want to not pay anything. Yeah. So during those five years, I have a little bit of energy money coming in and I have a payment on the loan, on the solar that it’s basically washing itself.

So I, again, I’m getting a huge tax credit. I give a huge deduction. I have very little income that’s coming in off of it. So I’m getting a big first year benefit. And yes, there’s a lot of people starting to do those now. And I think that creative syndicators are going to get into that area.