Tag: videoshort

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.

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.

2021 Changes to Real Estate’s Biggest Tax Incentive

https://youtu.be/GVD0DpFMY70

The 2018 tax and jobs act allowed for a bonus depreciation and whole bunch of passive losses that you could extract from deals that do cost segregation. The bonus depreciation was, Hey, if you have five, seven, 15 year property, anything less than 20 years. You could choose to accelerate the depreciation.

 

Now let’s say you have a carpeting and you put a hundred thousand dollars of carpeting into an apartment building. Normally you’d get to write off $20,000 a year as a deduction because the whole carpet will last five years. So you’d take $20,000 in June. What accelerated depreciation allows you to do is just take it in one year.

 

You have this huge incentive because about 30% of most buildings. Our five, seven, 15 year property. So all of a sudden you can accelerate your depreciation at any particular time. You can just, you can choose five years after owning a building. Boom, I’m going to take it. And you have this acceleration where you can really accelerate what you’re able to do.

 

Sometimes it’s 50. Sometimes it’s a hundred percent. It depends on when you put the building into service, but you can do the acceleration. And all you’re doing. There’s nothing crazy about it. You’re just writing it off early. You’re still gonna write it off over time, but it’s almost like getting a loan from uncle Sam for no interest and saying, Hey, I know I’m going to get the tax benefit over the next 20 years.

 

How about you? Just give it to me now. So if you guys miss it, the rule of thumb is about a third of the building gets written off in the first year, but to simplify it even more, a lot of these deals, you’re trying to max out the leverage 70, 80% loan to value. So what I’ve seen is passive investors that put in a hundred grand, they’re getting anywhere from 60 cents to almost a dollar back in that first year bonus appreciation, 60 grand or 80 grand back, depending on the deal.

 

Unless you qualify as a real estate professional way, what you might see as the accelerated depreciation. I think in 2023. So in three years, two years really will start to go down to 80% and I’ll drop to 60% and then go down from there. I’m not certain, but I may, I haven’t looked at it in so long. If it goes away completely, I’d be shocked, but sometimes it goes down to 50%, which is still pretty good.

 

Not always do we accelerate the depreciation, especially not on the five-year property. Sometimes you just let it spread because unlike you, like you’re a real estate professional, you had massive amounts of deduction, but it doesn’t help you to get really dizzy zero because the lower tax rates are pretty low.

 

Like I’m okay. Paying 12%. I’m okay. Paying 22%. What I’m not okay. Is paying 39.6% on rents. I’m not okay. Paying 37%. I’m not okay. Paying 32%. Like it’s getting too high plus by state. So sometimes it’s just about making sure that you’re hitting that number. So I tend to look at 200,000 and say, if I can keep people around $200,000 a year, That tax.

 

It’s not going to be so extreme. You get up into the half, a million, 600,000 rings, every dollar. So much of it is being taken away from you for every dollar you make. Let’s say we had the Biden for every dollar you made after a million bucks. If somebody was taking 60% of it. And that’s really what it gets up to.

 

If somebody is taking that much away from you, you’re probably don’t have much incentive to make money and it’s hurting. Cause it’s not always cash that you’re receiving. Sometimes it’s profit, that’s blowing down via K one or your investment. You don’t have the cash. Now you have to liquidate assets to pay the tax bill.

 

And that’s what we want to make sure that you’re never in that situation.

2021 Tax Changes | What You Should Do

https://youtu.be/LhFxKYm0ZMQ

What are you thinking it’s coming up in the future. It’s like the Biden clan going to be getting rid of that 10 31 exchange out of the 10 31 exchange. They want to get rid of step up and basis, and that’s going to affect all of us. That’s huge for anybody who has substantial amount of real estate, it’s going to force you to have to get rid of your real estate during your lifetime, because it’s not going to step up.

 

Which means if you’ve depreciated it, you’re going to have some substantial recapture. If somebody sells it after you’ve passed and the step-up in basis in English just means. If I have a building that I’ve depreciated or a piece of real estate or stock say I’ve owned stock for 20 years and it’s gone up in value.

 

The day I pass the basis, steps up to the fair market value on the date that I pass. So if I have a building that I’ve depreciated in my basis might be a little bit of land. Maybe it’s a hundred thousand, it’s a million dollar building right now. If I pass their base, that steps up to a million dollars. I live in a community property state.

 

So even my spouse could sell it the day after I die pay zero charge, no recapture. If that goes away, then assuming that somebody had to sell an asset after somebody passes or wants to, because they don’t want to manage it. No, they’re going to pay recapture in capital gains on that. So they’re going to pay up there.

 

Twenty-five percent on the recapture and up to a underbite and it could be 39.6% on the capital gains. So it’s a pretty big hit. Now the other side to that is if it’s real estate, not only does the patient have stepped up, but you can read deep, appreciate it. Sure. You can go back and write it off and you lose that.

 

So. That’s flying under the radar. And that’s the one that I focus on saying that’s the one that’s going to have the biggest impact. People who are investors are going to get punished under that the old strategy was accumulate real estate and capital assets, 10 31 exchange your real estate into more real estate.

 

Leverage. Use the proceeds if you need to, for other things. And then pass away and you don’t have to worry about any exams that they could either really appreciate it. So they’re not going to pay any tax on it in the wrench for a long time. So you’re going to appreciate it again after they’ve passed at that higher amount.

 

And all of a sudden they’re getting huge tax benefits or they sell it and they pay no tax. And so there was always that kind of a silver lining, especially in community property States where the first spouse, everything steps up, dad passes, and mom can sell the stock and not have to worry about getting hit with capital gains.

 

Now mom could be getting hit with as much as 39.6% federal plus the net investment income tax, which is 3.8, plus their state taxes, which can be as high as 13%. So you could be in a scenario where you’re paying 50, some odd percent you get, it gets a little ridiculous. So is the solution either to wait until a different party is in there and changes a login or some kind of dynasty trust or a trust irrevocable trust that owns the assets.

 

So it never does a step up. Yeah, that’s a tough one because yeah, because no matter what if I put it into trust, the basis is the basis I’m done. So when they there’s really not much of a strategy on the step-up you can do, what’s called a deferred sales trust. Um, substantial assets or you spread it out over time and you allow a installment sale essentially, and then step up the basis and you sell it and avoid the tax immediately, but you spread it out over, let’s say 20 or 30 years, and there’s still some strategies that you can do to lessen it realistically.

 

And under those circumstances, it’s just, you’re sitting down going option a, B, C at the time. I’ve seen people make changes. Where they were scared to death. So I’ll give you a good example. I had a client. That was siblings. So there was five siblings and the dad had a office building and this particular office building was in Ohio, but it has substantial value.

 

So they were worried about the estate tax. So he started giving away interest in the building wasn’t eliminated partnership. So this is back in the day when limited partnerships ruled the world and not LLCs. And he would give his kids these interests. So he transferred the entire building to his children before he passed it, own that building for going on 40 years, the basis was tiny.

 

And then when he passed, it was in the year that they had the unlimited state tax exclusion. So there wouldn’t have been an estate tax at all. And he would have still been underneath the threshold. It was multimillion dollar building, but he’d given it all to his kids. So his kids said they were going to sell it.

 

What our basis was his basis, which was almost zero. So they got hit with this huge tax bill that would have been avoided, completely had he just done nothing. And so I tend to look at attorneys that are pushing people to do huge gaps or we’ll make big changes. And I’d say, don’t do that. You don’t know what the future is going to be.

 

You could make you really hurt yourself. And those that hurt him. There was a little bit of a dispute over whether they wanted to keep it and operate it, but it was like they didn’t have the depreciation. So they actually had income coming in off this thing. And they were like, Oh my gosh, they had to do some fixed up on it.

 

There was some capital call issues. And so they decided they wanted to sell it. And instead of getting a dollar, they were getting 60 cents. And because it’s not cheap to sell a building. You’re paying the commission, you’re paying the real estate tax, the closing costs and all these things that eats away.

 

Plus you’re paying long-term capital gains on that thing. And you have a lot of recapture on the original building and in the improvements that they had done thereafter and ended up really hurting. And it was shocking to look at it. And I’m talking to the accountant who advised him the whole time. And I could tell, he was like, Oh, that was what the dad wanted to do.

 

Overreacted to reach law changes.

How Many Rental Properties Do You Need to Retire?

https://youtu.be/JA5sHtI_MYw

How can I continue getting bank loans for my buy and hold properties? The banks will not count rental income until it’s full two years of tax returns, which is almost three years of ownership. If I keep buying five units per year, my debt to income would be too high to qualify very soon. I have good W2 income and earn a good amount of cashflow.

But the bank sees me as having less and less income. Every time I buy a new unit until it’s seasoned, even though the reality is I’m increasing my income, your net worth is over half a million. I think you should probably look to investigate more scalable investments. That way you don’t have to do anything.

You don’t even have to put any debt in your name, private placements and syndications. You can get more information at that on my ultimate guide, it’s simple. Passive cashflow.com/syndications. But to summarize here, this is kind of a moot point. I’ll just say from my experience, I had 11 rental properties and I had one or two evictions a year and some kind of big issue that came up like in a basement or a tree fell on my house, maybe four times a year with that many rental properties.

Normally I’d cashflow two or $300 a month on each of those rentals. So we’re talking about 2,500 $3,500 of cashflow a year. Not bad, right? I mean, I’m not complaining, but let’s face it. A lot of us two or $3,000 a year is not enough for you to quit your day job or be financially free. You’re going to need to triple that number.

So if you’re going to triple that amount of rentals, you can get up to 20 or 30 of those things. Now you’re talking about an eviction every other month and some kind of big catastrophe that happens every other week. Pretty much. And you’re starting to realize how this is becoming quickly, not scalable.

Borrow Against Your Home or 401(k)?

https://youtu.be/kPilGUnpAUE

Did this investor wanted to know, should they borrow or invest? So they’re looking at a hilar and he looked at 5.5 and a 50,000 loan out, or their 401k for four and a half percent. So I guess first thing, I mean, awesome, cool. You’re looking to borrow. Most people would think this is. Total sin by taking money away from your equity of your house or worse your retirement system, because we’re all trained in program that that is absolutely very nodded to do.

You shouldn’t do that. I think you’re looking at this the right way, right? Like, let’s look at this arbitrarily. We are going to take a loan or let’s compare interest rates. So five and a half percent on the hilar four and a half percent on the 401k loan of, from a tax perspective. If you play your cards right, you should.

Still be able to finagle to get that Wheelock as a deduction because you’re using it to further improve your business. And that’s the key word right there. So five and a half. And you should be able to deduct that might be less than 5% after it’s all said and done after taxes before one K loan is at four and a half percent, but I don’t think you can deduct that.

And that one, you’re kind of paying it back to yourself in a way. Depends what you want. I mean, I think you’re splitting hairs here and kind of wasting your time. Hopefully you don’t, you’re not sitting on this for more than a couple of days thinking about this. Like just do one, like. It basically comes down to which one would you rather put leverage on your home you live in or your retirement funds?

To me, I think that you can look at it from this perspective, which one of these assets is more at risk for you losing your money over night. And I think it’s the 401k then the value of your home. So I would go after the 401k loan first and exhaust that funds.

How the Repo Market Led to Printing Billions of Dollars

https://youtu.be/XE947Ea1DOQ

0:00
So I dug into what the repo market is. And just to keep it super, super simple, it’s basically a pawn shop for banks. So imagine a pawn shop, you’re short on cash, and you’re like, Okay, what do I have, I got a watch, and you go down to the pawn shop, and you basically sell it to the pawn shop operator, but you have the ability to redeem it in a certain period of time and they charge you interest for the use of the money but presumably, whatever you are Hawking your asset for is important enough that the premium you have to pay to get access to that is there and of course, the the rate that you pay is, you know, kind of based on the risk. 

So anyway, so banks are showing up in the repo market, and they’re bringing in their treasuries and they’re Hawking them they don’t want to sell their treasuries or they don’t want to be divested of who have the right to get them back it basically saying the banking system is low on cash that’s what activity in the repo market is and just like maybe you’re not proud to tell all your friends Hey, I had to Hawk my watch right the banking system they’re not like proud that they had to go Hawk their treasuries to raise cash. It’s an indication of dollar shortage in the system and the Fed accommodated that by printing a lot of dollars.

New X1 Credit Card – Should You Get It?

https://youtu.be/5wn0CJRc4OE

0:00
What’s up guys, I’m on to do a quick pre review of this new credit card, I found the x one credit card, which the reason why it’s kind of exciting is because it’s made out of steel. And it gives us 4% cashback or points, which is pretty high for your general credit card. Normally the highest for just a general category is about 2%. Of course, there’s a lot of them out there that it will give you five or 4%. But that’s only on one category. I kind of like to simplify my life. And when I spend money on like my car insurance or large purchases that don’t really fit a grocery category, or like Office of my category, I want to be using these general cards. But yeah, let me show you this screen here. And we will walk through it. 

So here’s the website, it’s at x1creditcard.com And it’s gonna check out the link below. But right now they’re doing it as a waitlist right now. So this thing hasn’t been launched. As you can see, it’s 17 grams of sheer stainless steel, what else could you want, if there was a annual fee, I wouldn’t be looking at this, you know, I try to stay away from any annual fees on anything, it’s To me, it’s just not worth it. It was even $1 20 bucks. But yeah, it’s your annual fee, it’s worth a shot, we’ve seen that there’s some higher limits here. I think the cool thing is like they’re, I mean, it’s pretty much as offering higher rewards 4%. And they’re doing this based on a word of mouth. And, to me, that’s how they’re able to insert paying out referrals, or all these affiliate commissions, which is very common in the credit card industry, they’re able to give it back to the customers and it comes in a cool box. But kind of did a quick, cursory review over this. And, you know, gonna be a roll out some high notes here. So it’s not released yet. And the nice thing is there’s no foreign transaction fees. 

But to kind of go over the pros here, you know, virtual card numbers. So you can those guys can like to sign you up your stripe accounts or the subscription services. Or you can give them the big middle finger and you can change the virtual number at will based on probably an app or online for those you guys who are stuck in those gym memberships. I don’t know if it’s part of your subscription. But you know, it’s a way to fight back against that. Supposedly, there’s some hot, flexible, higher credit limits with this. And I don’t know how much more higher but see how that comes through. No annual fees, like I said, no foreign transaction fees, which is a big thing, then, of course the Forex risk rewards and to get that forex level Did you need to be able to refer a buddy to get that. If not, it goes down to three extra words, which I think is still pretty decent for general credit card you to be able to get that you need to hit $15,000 A spend per year for a lot of us in a simple passive cash flow nation that’s really not that far from us, fortunately, and if you don’t hit the $15,000 threshold, you hit you get to two X on air rewards there. 

So here are the cons hot one. And I was kind of looking at this wasn’t really seen as like cash back it was more seen as like points. And I’m always like a little wary of points because points kind of go through like a Pachinko machine, kind of a set where you get these points, you got to get these gift cards and the gift cards are are kind of a pain to deal with. But we’ll see they say you know, just looking at the website here, we gain points that brands you love, you can use points to pay off your stuff. So it seems like it’s not going to be too difficult to use those points. And I think the biggest issue with this card is this is this card even going to happen there was a card earlier that was called the zero card that I think they finally stuck a fork in it earlier this year. And that is didn’t get enough traction. My understanding and they I don’t know zero card was the car but there was another card that those of you guys have seen them the documentary where they had the the fire festival that never happened. That guy also another one of his scam projects was one of these kind of cool credit cards. It was more of like a black, super high end credit card. And this cards more made for everybody. 

But you know, in conclusion, I’m going to try it out. I’ll put the link in the webpage so you guys can help me get it quicker. That’s how you guys if I can get it, how it’s going. But you know, it may be not much better than my 2% double cash, Citi double cash card which I think everybody should have. I also do the Swiss Army Knife method where I have multiple cards that give me four to 5% in specific categories like I have an American Express blue for groceries at 6%. I have like another American Express simply cash I don’t think they have that card anymore. I think it’s something else these days but that gives me 5% of that office. And I have another one that you know gives me higher executive saver card or something gives me three or 4% at restaurants. The Costco wants pretty good too. I think now it’d be 3% at restaurants there and then travel through percent travel, but I’m going to give it a try. 

And if you guys are into this type of stuff, maybe not the best return on your time but I find it very fun. Also trial tradeline hacking where you can put an authorized users onto your credit card I mean, I made about 10 grand in 2019 I’ll probably make just as much in 2020 go to simplepassivecashflow.com/tradelines. To learn more about that we have the full e course there. And if you guys want to learn more about this go to info page I have built on this card at simplepassivecashflow.com/x1card that’s /x1card you guys try this out. Let me know i’ll be posting into on that website. If I actually get the card and start playing around with it.


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