Tag: videoshort

Tax Deductions | Single Family Home vs Apartment

https://youtu.be/z_gYhWYhf1Q

It sounds great. Right? You’re getting 10 to 15 times more deductions of first year, but there’s a cost to this. And when I do it for my large apartment buildings, I’m usually paying five grand or so on that thing to do this, to extract it out. But that requires sending out a guy on expenses to travel out there, but that’s obviously not cost effective to spend $5,000 to get $20,000 of deductions.

At 25% tax bracket, that’s a break even. So that’s where this do it. Yourself. Cost segregation product comes in, but bill, let me put you on the spot here. Why would Lane’s spend $5,000? What else am I getting it by cost? Say that somebody’s spending 600 bucks and one of these things. Isn’t getting just sitting no eyes wide open what they’re going into.

Well, there’s a huge difference. And I think on your bigger deals, if you’re spending 5,000, you’re not getting a very good study. You need to spend more than 5,000. Are there usually between five and 10? So on an apartment complex, it might be 7,506, six to eight, depending again, on the engineering that’s done.

So on a full study, we look at it and I think anybody else would look at. What are the engineering hours it’s going to take to do the work? Cause we send somebody on site. We count everything. We qualify everything and we do all the asset detail. So in a full study, you get complete asset detail, meaning all your roof deal tale, all your HVAC detail, all your straight line detail.

As well as all your short life detail, carpeting, flooring, cabinets, everything, you’ve got some, and we give a hundred page report or back to you showing out all that detail. And we go into everything, electrical breakers, no one else gets the breakers. We need things that people don’t do. So we are deeper, but everybody goes in an engineer’s pretty deep and gets all the outlets and things.

So that’s what a full study is. It’s a lot of pages. It’s a lot of research. And a lot of documentation with the guy on site here. Oh, you always see the guy inside. Yeah. You always send a guy inside an engineer. We send our own engineers. Some people would send picture takers and interviewers and stuff, but somebody all wasn’t goes on site.

That’s pretty much what happens now with DIY it’s a non inspection product. So DIY means we’re modeling. So we’re going to air conservative. So if we would’ve gotten a 25% results by going on site, we might get. 19% by the DIY because you’re not sending somebody on site. If in fact, you’re audited, though, again, as I mentioned, we will go send somebody on site and we will do that a hundred page report for you.

But what you’re going to get with DIY is a model solution, which is what a lot of the people out there do models and residuals and sampling, and they add pictures and some engineering. But what you get is a one-page report that gives you your five, seven, 15 and 27 and a half year. And then some categories of generally what it would be, and then a receipt, and then your data inputs, because some people put the date wrong, we fix it for them.

We don’t charge afraid of that. You get a very streamlined report, but that’s all the CDA cares about CPR. 100 pages they want. Five seven, 15 and 27 and a half to put on your tax return and they’re done. So that’s what DIY does. So it gives you a lower number. It’s a lot less expensive. And so that’s why it’s good for the lower value properties where maybe you can’t justify a five or $10,000 study.

How Much Should My Rental Property Cash Flow?

https://youtu.be/AETUTpDj1eQ

What cash on cash return would you recommend for a single family home rental property where the goal is cashflow not appreciation? So normally, I think least 8% return is what you’re trying to shoot for. So if you’re using an analyzer, what I would put in there and make sure you’re also including all the.

Repairs maintenance. Most people forget about the cap ex and the vacancy that you’re going to have, and also include the property management. So for a property that is friends for a thousand dollars, so you guys can buy a hundred thousand dollar houses out there that will rent for a thousand dollars. So out of a thousand dollars rent, each of my fingers is a hundred bucks.

You’re going to put aside a hundred bucks for repairs. $100 for big cap ex items. And that is you’re going to eventually need to repair the roof, maybe paint the house, big items. That’s cap ex. You’re going to need to spend another a hundred or so dollars stuff. That’s going to go wrong, right? Things are going to go the way you want it.

So you want to have that money sitting aside and you’re going to have vacancy. Another a hundred bucks is going to be paying your professional property manager because we teach you guys to be investors, not landlords. And then the remaining money, the rest six fingers here, maybe $400 is going to your mortgage, insurance and taxes.

And that leaves you. 200 bucks, right there, $200 is pretty good buffer in my own opinion that you should shoot for assuming that you’re accounting for all the expenses in your underwriting. But again, download the analyzer and run the numbers yourself. And after it’s all said and done on that hundred thousand dollar property, you’ve probably put down 20 or $25,000 and you’re making into your cashflow is that $200 a month.

That is $2,400 a year. So I think the math is $2,400 divided by $25,000, right around 10%. And that’s how we backed into that. At least the 8% cashflow number assume, and again, you’re underwriting your deal the right way. .

When Should You Not Invest in Syndications?

https://youtu.be/sMGxgbMmsYs

If your net worth, income minus expenses is under $300,000, or you’re barely able to save $30,000, look, syndications are not for you stick with these turnkey rentals or even do these BRRRS that we’re kind of against in this whole video. And you’re going to have a little more gains that way. What you’re doing is you’re essentially trading your sweat equity for that extra equity at the end.

How Do Sophisticated Investors Make Money?

https://youtu.be/d4y_Mj9PIVU

Just grab this out of a new Mark or recently in this models, the interest rates, which, you know, all-time lows. Once again, maybe it’s been creeping up this first quarter, but still pretty much as low as it’s ever been. And the cap rates on multi-family and that’s, this is just a general cap rate for all markets, all asset classes.

So the important thing, what I want to show here is everybody asks, when does it attempt to buy? It’s always a good time to buy when you’re trashed, but as investors, what we do is we’re basically making money on the spread between the cap rate and the interest rate. So right now, cap rates are 5.8% on average, and that the ten-year treasury as is at a 0.93 investors make money on it spread.

And then of course we apply leverage good, healthy leverage. On top of that to magnify those returns, you look what’s been happening is last few months, that’s spread between the cap rate and the interest rates is a lot bigger than normal. Some of the squeeze points of times where it wasn’t a great place to be investing was mid 2018.

As you can see by the charter that there was a bit of a squeeze there, or maybe in between 2006 and 2007, there was this, there was also squeezed there, but the times were the spread of widens. Now that’s the time to invest like mid 2012 year and right now, but that’s a year academic look of how investing works essentially.

And this is what a bank does. They go in and invest in arbitrage of money somewhere else. And they take on debt, but good debt to be able to afford onto the asset that cash flows.

What the Unemployment Rate Does Not Tell You About the Economy

https://youtu.be/4vPkhgIuZaA

The way they keep those statistics on who unemployment has been changing to make it look rosier than it really is. Yes. But I would say there’s another statistic, which is more important, which is labor force, the labor force participation rate, which is down around the 61% now. But as recently as the 1990s, early two thousands, it was around 67%.

So that’s a six and a half point. Decline or 10% decline if you think of it as a percentage of the whole, that’s a big deal. That number is the lowest. It has been since the 1970s, when women first started coming into the workforce in large numbers. Now, if you don’t have a job. But you’re not looking for a job.

You’re actually not counted as unemployed. The unemployment number we saw and yeah, declined from it was hit about 13%. Last spring came down to 10. Now it’s around a seven or so maybe slightly higher. That’s still high, but it’s a significant improvement over where it was last April, let’s say, but that’s not the number that matters.

The number that matters is labor force participation. So what’s happened is. Tens of millions of Americans have, have left the workforce there. And I’m talking to ages 25 to 54. I’m not talking about a 68 year old who wants to keep working or a teenager, or we’re not talking about disabled. There are perfectly good reasons for people not to be in the workforce.

There are always some, but we’re talking about able-bodied individuals between the ages of 25 and 54 prime working ages who have left the workforce. If you’re not. Banging on the door of the unemployment office is looking for a job. They don’t count, it was unemployed, but you’re not working and you’re not producing.

And so I look at that number because to me it’s a better gauge of economics displayed right here. So that’s just simply Google and the labor force participation. Right. Kept up by the U S Bureau of labor statistics. And is this pretty much it, this is what makes it hard, right? Because everybody hears the news headlines and we know they’re always just trying to sell use headlines, just like other talking about how collections are horrible, but I don’t see any of that issue happening.

In other words, saying that. Unemployment’s down, but is this really the way to cut through that noise? Yeah. This is a more manual chart than the unemployment rate. Again, this is the labor force participation rate. Now you notice you heard a lot of talk in the last March, April, may about the V-shaped recovery and pent up demand and all that.

And you look at that chart and look at labor force participation while you see the steep decline at the time of the pandemic. Okay. Got it. It came back. But that’s not a, the that’s like a half a B, in other words, the bounce now it’s flat and going down again. So yeah, you had a little bit of a bounce back.

That was to be expected after the, we got through the original round of lockdowns in may, in June, she had that bounce back, but then a flat line, and now it’s going down again. That’s consistent with what I said earlier, which is we’re heading back into another recession right now. Because there’s a new round of lockdowns.

You don’t need a Ph.D. to figure this out. You locked down half the economy. You’re going to get a reception. It’s as simple as that.

How Big Tech is Hiding the Health of the Economy

https://youtu.be/CqCCOQjx21w

And the other thing lane is that people go, Oh, the stock market’s at all time highs. My 401k is back where it was even better, et cetera. There is a major disjoint, if you will, between the stock market indices and the health of the economy, you have stock markets who are back to all time highs. But I look at the S and P 500, I call it the S and P six, or maybe S and P seven.

If you want to count Tesla, now, then it was the S and P 500 is a cap weighted index. That means if you have a larger market capitalization, you count for more in the index itself. 40% of the index. Is now seven stocks and you know what they are. It’s Amazon, Microsoft, Google, Facebook, Netflix, Apple. And now you can throw in Tesla and maybe one or two others, and they’re the ones going up.

They’re the ones that least affected by the pandemic. They’re overwhelmingly digital. Okay. Amazon owns whole foods and Apple has some showroom type stores. But not much, mostly they’re online and they’re selling digital products and advertising and data mining, et cetera. So they were not only unaffected by the pandemic, but did better because that was the only place people could shop or communicate.

But what about the S and P 490? What about the other stocks in the S and P 500? Have a look they’re all the kind of flat to down there. Yeah. There’s some individual cases that have gone up, but on average they are flat to down. So we bet our whole economy. So there’s six or seven stocks. So there’s no.

Relationship between how the stock market and the seas are doing and how the economy is doing. When we get back to the economy who suffered the most and who continues to suffer the most small and medium size enterprises. So restaurants, bars, nail salons, dry cleaners, boutique shopping on and on. There’s a long list and people look down their nose at that and they go, wow, you’re a small business who cares, or you’re not Apple, computer, whatever.

Sorry. Those small businesses are 45% of GDP and 50% of all jobs. That’s half the economy right there.

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.