Should I Put Money in Real Estate?

we're live hello everybody don't go anywhere for just a moment if this is coming up in your feed whether it's on youtube or facebook or instagram my name is mark kohler cpa attorney helping small business owners for the last 20 years around the country main street america trying to help them build wealth protect it save taxes yadda yadda hopefully many of you that have subscribed and follow me you know who i am and every thursday at four o'clock i go live we do an open forum talking about questions you have in your small business investing wealth i've got a special guest here with me i'll introduce in a moment his name is darren just given hey hey guys okay see you heard him he's really here i'm here it's true he's gonna come on board when we hit the open forum oh there's a okay there you are there we go okay he's really there so we'll bring uh darren in here in a minute he's an attorney in our office and uh very insightful very smart he's an engineer so he's pretty anal about things and really good detailed responses now every week what i like to do first is talk about a topic i think of it like it goes you know late night show this is the opening you know stand up if you will i want to make a couple statements on some topics i think all of you need to hear a little bit and try to give you some advice or direction and then the time drawers we're just going to open it up for open forum please type your questions in down below if you find this helpful at all maybe there's a section of the video that's great remember look at the time stamp and then forward it to a friend a business partner a family member and just say hey listen to the time stop uh even the portion of this video when mark talked about this or darren made a comment about that we want to be there to help you out um maybe give away we'll give away some books maybe blah blah blah i've got some workshops coming up this fall four of them around the country and then a live virtual we've got a directed ira self-directing retirement account summit in phoenix lots of good stuff coming up this fall it's nice to have the country semi-open right it kind of feels good so i'm excited to get to some workshops i'll tell you locations maybe even do a little discount just for today for a couple hours of those that want to go can we do a discount jack that this this little thing for two hours yes okay you'll make that happen i'll announce that later okay so here's the topic i want to just cover for a moment and that is should i invest in real estate should i put money in real estate right now in this economy you know it's kind of a seller's market nationwide as a whole the values of homes are up everywhere there's little towns and big towns everywhere there's no inventory so it's a fair question now you may say well hold up mark you're not a big time real estate educator you're not you know on some national panel studying real estate you know markets every day around the country and little things like that i agree but in our law firm 12 attorneys accounting firm 15 cpas our staff directed ira and everything we're doing there we talk to a lot of people on the street every day help and advise them on their what they're doing and their plans well we see patterns we kind of get the inside scoop on markets around the country and deals they're doing are people still investing in real estate yes they are as much as they were five ten years ago no you know there's periods of the fluctuate so but what i want to offer you as your accountant attorney helping you with your finances from a business advisor coach i just want to tell you what we're seeing with our clients from around the country and we're grateful to say we've got a lot and we're busy and i know some of you may get frustrated calling our office going hey i need an appointment and say what two weeks what the hell you know so if it's ever ever urgent life-threatening you tell the staff but and if you don't get through on your first call be patient we're trying and and we're growing so but we're here for you so today i wanted to talk about this real estate topic for just a moment maybe five minutes 10 minutes and then you got questions on how to write off your kids how to write off your auto uh how many llc's do i need for this real estate deal or do i should i have an s corp should i buy crypto how am i going to pay tax on the sale of this asset or any of those topics if it's tax or legal freaking i better have the answer i'll know where to get it so here's the answer should i invest in real estate yes absolutely i want you investing in real estate the question is when is it next week next month next year i don't know we're going to talk about that where do i invest in real estate how do i do it and that could include analyzing the deal to the legal structure and with what should i use my own money someone else's money my ira's money this could be a three-day workshop couldn't it in fact there's experts on all these little things so be patient with me as i just try to comment on some of these and if some of you have a question on these specific topics rather than a tax or legal question i would love to hear it we're going to do our best to help field your questions um all right when i'm going to say favorite several things you should always be keeping your eyes open for a deal uh when should you buy when you see a deal when it makes sense when you see an opportunity i don't know if there's ever a perfect period in time are there deals out there right now in america in certain locations and locales with certain types of real estate sure there are you're like well freaking they're hard to find i get it but i don't i don't think it's healthy to just say well it's a buyer's mark i mean it's a seller's market i'm just gonna i'm not gonna even think about real estate i'm gonna wait till the real estate adjusts well in general that's a fair point you might be stockpiling some cash but it doesn't mean you stop looking i even had some family members in the last four months uh i've talked about jack and ally and their little fixer-upper rehab that they turned a single-family home into a three-plex and they're cash flowing it and it's gonna probably increase in equity a third on top of what they paid for it they bought it four months ago three months ago there's deals out there you got to keep your eyes open there's opportunities i met with some clients last night out in tennessee they got a v he's a veteran uh just got out of the military he can tap into a va loan they're still looking they might find a deal so i want to say when is you're always looking i'm just going to say that don't ever turn off your vision or shut down uh looking for real estate deals when an opportunity arises now let me give a thought here that i think permeates when and where as well two comments one i have clients that are going my kid's going off to college this fall my daughter molly my paper shredder administrator that many of you for 10 15 years have seen little pictures of her shredding paper and getting paid and building her little roth ira ah she's in my book i love talking about molly in fact gosh i got a ting of emotion this weekend i'm gonna go down to salt lake city where she's going to college and and spend an afternoon with her but it's hard seeing your kids go off to college gosh i got emotional didn't i oh it's the rock star by the way only 10 calories no sugar no carbonation we love you rockstar i haven't had one yet today and i'm getting emotional you're getting emotional about that okay yeah what do i do with my hands i don't know okay ricky bobby okay now if your kids are going off to college instead of paying rent out the butt for them to live in a dorm in a frat and a sorority uh maybe in a little rental home maybe you buy a home for them to rent from you you say well it's a seller's market hey you still might be able to find a deal your kids can work on it maybe it's trashy maybe they don't get to move into it for a semester because you're working on it together getting it rent ready i had a client thinking speaking of salt lake i'll give a shout out to brian this was last year he bought a home in the salt lake area and he rented four rooms in it to girls and his daughter's there in the master bedroom and she's the landlord does it cash flow yes because he rented out rooms is that better than paying rent to someone else absolutely so when it comes to when and where you don't have to have a kick but awesome real estate market to say my kid's going off to college maybe i should buy a rental there number two this has been a conversation i've had with some clients that has been difficult in the last month where their parents are now maybe looking at medicaid they might be going into assisted living and so they're saying well should i buy the house for mom and dad and rent it back to them so they can qualify for medicaid are you going to get a better deal when it's mom and dad selling it to you yeah does the real estate market really have a factor in that maybe maybe not you may be inheriting the house anyway but let's buy it cash in on mom and dad's sale of home exemption they pay zero tax now they rent from you and they can go qualify for medicaid after a certain time period all the state rules are different on that but see when you have parents that are starting to get to that age where you need to take care of them maybe it's time to buy a rental for them or buy their home from them and rent to them so they can get different assistance right see these are the great and i want to say thank you and applaud you for being here for this little live broadcast because if you're not learning this on a broadcast like this where are you learning it you don't learn this in college you don't learn this down at the bank at the monthly seminar where you get a toaster for opening an account where do you learn this stuff i am so proud of you for being here so if that if you feeling it please subscribe you'll get a little ping every time i go live every thursday at four whether on youtube or facebook and and hopefully i'm here helping you and it's a business but i give away so much info i really do we got a great podcast and vids on youtube and yada yada okay third idea who's the best renter you're ever going to have it's you i am building a little shop across town have you been over there yet darren you got to come see it it's a little i haven't yet it's a steel building 3600 square feet i'm moving this studio across town four blocks from here to a steel building so i don't pay rent to the city anymore i also have three storage units with crap in them i'm not going to rent anymore and i have a place i was paying for an rv i'm not going to pay there i think i have a fourth storage unit i'm going to be able to move some crap from so all these places i'm paying rent to other people i was able to take a duplex rental property i have carve out the back lot put a steel building on it and move my studio and all my storage units there i just saved all this rent i was paying somewhere else so some of you buying your own commercial building could be a perfect time for you to save rent to someone else and build your own operation pretty cool all right so when it talk when we talk about when and where it these three strategies just those three i mean like i said we could be here freaking all day just these three strategies hopefully some of you are like huh man mark sure thinks out of the box yeah maybe but you know where i get these ideas from you from your fellow followers from your fellow watchers sometimes i'm the biggest benefactor of you calling our office because i hear your ideas and i go oh my gosh i've got to share that with everybody okay now how all right well this is kind of fun how are you going to do it well let's just talk business structure for a minute let's go to the trifecta my favorite so here's your trust this is your revocable living trust someone called the other day and said should i have some other trust should i have a charitable trust and your insurance trust and this trust everybody start here first this is your revocable living trust we're going to use it for privacy i don't want your name in it it's going to be the foundation where your personal bank account is down here and your 1040 tax return i like to see it as water flows downhill so all your money all your assets flow downhill into your revocable living trust no annual fee you don't have to file it with a state we charge 1500 bucks it's done boom we build a diagram for you in the process i got 12 attorneys you can meet with get this thing done so that's step one and then we divide your life in half now for those of you that have seen my trifecta you're like where are you going with this mark why are you bringing this up well when we start to talk about real estate i want to be able to put it in context and last night i was with these clients from tennessee i was saying and we built a little diagram for them and a checklist of all the things they need to be doing over the next two to three years they were like on fire i felt so happy it was like a fun consult i don't deal with freaking lawsuits or divorce or bankruptcy or duis or criminal law i help you guys make freaking money i love it i love my job so we've diagrammed this out and what i wanted to do is i wanted to see in a couple now some of you are single but as you get married one of you might have a w-2 all right one of you might have a side hustle and we knock that out with a little llc now for you full-time entrepreneurs and this is what i have i have an s corporation that's my parent company i only have one s corp in my life but it owns all these other businesses that i might have an interest in and then i get a w-2 from my own s corp and all the profit flows down into my 1040 and trust for those of you that have a side hustle it may flow down through a schedule e i mean ascari's schedule c as in charlie all right your w2 is floating down now over here is your asset side and this is where we put your real estate but guess what i'm going to put real estate in two spots i want you first to have an llc you transfer the rental property to it after you close don't worry about the bank and do on sale clause it's not going to be a problem we have a way around that so you're going to transfer any rental property into an llc and do you own the llc no you don't your trust does your trust will also own your home now that's another topic that we could get into today should i buy real estate well one of the concerns you know one of the considerations some of you should not buy a personal residence when i was living in southern california it was better for me to buy rental properties that created cash flow and rent my own home i got a better deal sometimes buying your own residence is not the best move depending on where you live but if we can we want to buy our personal residence and i love dave ramsey he's going to say let's pay down that mortgage as quick as we can and i'm good with that now if i buy a rental this rental is going to be owned by an llc that's owned by my trust this is your first main area we're going to buy rental real estate now could this be a college rental for your kids could it be your parents home that you they rent back from you could it be a commercial building that you rent to one of your operations over here absolutely but we're going to put it in an llc so we get protection some people go well how many llc's do i need no no no that's a whole other topic we may go there today i don't know i'm going to we're going to open up for questions here in two more minutes the other place i want you buying real estate is in your iras your 401ks in your roths and you can pool money from all of your different retirement accounts if you need to or want and i'm going to erase that here so this looks a little prettier we can create an llc with all this different money and buy rentals here so you can have rentals in two buckets this bucket i'll put it in red this bucket is for your pre-tax or tax-free money roth's iras and you can buy real estate with that we've been teaching that for 20 years over here is your personal real estate that you're investing in that is rental income property and then down here is your real estate for personal use it could be a second home a farm a raw land a cabin now up here it could be an airbnb you might find that buying a rental property that i can use once in a while is a good deal love the airbnb strategy so we've got all this different real estate over here that we might be involved in this real estate is owned by your retirement accounts this real estate is your personal real estate that you're not rent creating rental income with so my friends as we get into how and what the how is this kind of structuring but i want to throw out one last bonus if any of you want it i've been doing it for a couple years now i have two or three little spreadsheets and a little video of how to analyze a rental property and i know there's some great groups out there that have some great podcasts and youtube channels i and they produce great stuff to help you analyze real estate but i got some my own methods too and the more resources you have the better so if you want to email me and it's free just email mark at mark j kohler.com i could give you the law firm or accounting firm email they all go to the same spot but if you email mark mark j kohler and just put real estate in the subject line it'd be a little easier if you put real estate spreadsheet i'll send you a couple spreadsheets on how to analyze residential rentals easy advanced a commercial rental spreadsheet i'll give you a couple little videos give you and this is free my assistant whitney she's wonderful say thanks to whitney when she sees these she kind of takes care of it for me if there's a question or i need to deal with it she'll say that's an email for you but this is one if you just type real estate spreadsheet in the subject line we're going to send you some good info and so in this how how do i analyze a rental property or how do i structure it those are some real strategies i want to give to you all right so analyzer structure always be looking be creative on where and when you buy always keep your eyes open and what you buy or with what money you use you may have be using retirement accounts you may be partnering with others um you may be using banks va loans any of those things so that's that's my presentation for today so i'm hoping some of that was helpful if some of you want a little extra help send that over in an email god bless you hang in there don't give up um republicans suck democrats suck they all suck uh trump did dumb things biden's doing dumb things it's okay keep your emotions down my job is to take whatever law is passed and help you and right now congress and as you know ann biden is trying to pass an infrastructure bill if there's anything that's in there that's going to help you tax and legalize i'm going to share it on our broadcast next week so all right well we're now into our questions and again by the way please subscribe on youtube or facebook oh and i want to give you the workshops i won't give you the dates but if you go to markjaykohler.com we're doing chicago i think it's october 2nd um then i'm off no no or is that dallas that's dallas freaking i'm gonna see i'm gonna get in trouble if i don't look so here's my handy dandy mark color calendar that'll go on sale for all of you if you want this year's version in december yeah it's dallas dallas is october 2nd and then i turn around the next week and chicago is october 8th and 9th and these workshops couple hundred bucks for a day this is not like four thousand dollars mastermind whatever and you get the inside scoop and all this crap no it's a full day with me basic and a second day advanced dallas i'm combining it into one but um tax write-off it's a wonderful workshop to network i cap it it's gonna sell out i've been doing it for 10 years this will be the 11th year then we'd go to dallas on the second chicago on the 8th and 9th orange county oc the orange county that's november 5th and 6th november 5th and 6th thank you darren yeah then i go to honolulu hawaii i do it for you and i of course i don't want to go it's miserable over there there's so many clients in hawaii yeah i'm joking this is a great tax write-off come to hawaii and that will be on november 19th and 20th okay so honolulu hano lulu boy i'm struggling today uh november 19th and 20th that's the week before thanksgiving bring your family over have your board meeting take a tax write-off love it when you have the youth workshops around that time too yeah i'm doing some youth workshops we're doing the summit in october in phoenix ah there's so much and then my live virtual is december third and fourth so december third and fourth will be right here in the studio ooh probably be in the new studio huh corey third and fourth the virtual anyway if some of you would like to go i know it'll be a huge value i've told people if i'm not if i haven't wowed you by lunch i'll give your money back you can leave i mean it has money back guaranteed if i have not wowed you by lunch you can leave you know i had one client in the last 10 years that did it it was in sacramento i remember it vividly and uh he wanted me to get more into the technical stuff he and his wife wanted me to get more into the technical stuff faster and he didn't like my jokes he's like just go to it and you just wanted like kind of like a classroom drink from a fire hose and i was like i'm sorry i want to make it a little more palatable and fun and i've got to build on basics to get to the advanced and i'll blow your mind he's like no i just want to leave i said all right i gave him his money back only one student in 10 years but that's why so yes you're gonna have to put up with some of my dumb jokes and i'm going to build basics to advance okay let's do some q a i don't have my glasses i'm going to need some help here okay corey are you telling me i'm just going to read the ones right up here okay these are all for you folks we got about 30 40 minutes max and we're just going to go through questions now by the way if you see a darren charrington commenting on questions that's darren right here let's share to the screen here with darren corey if we can switch cameras so we get both of us in here and so if you'd see darren typing he's gonna um be answering questions and i'll ask for his feedback as well he's an attorney in our office his his probably expertise i would say is crypto yeah right now everything for me is crypto yeah yeah so which is fun i love it yeah i love it i don't have the alienware here today i've i'm switching over the ipad so i don't have to haul it back and forth but you know it's at home mining so okay that's right both both darren and i have mines my mine is in my wrath i'm mining in my rock baby making money i can look at my nice hash account right now what is bitcoin at today anyway let's see it is um it is at what the heck why am i not seeing that better okay 47 000. but i've getting my nina might this is my mind right now in my roth ira okay question number one uh by the way did you want to say anything on real estate any general comments or just dive into questions what do you have there was actually a really good question that i liked from facebook um essentially somebody said that they found it let's see here sorry that's okay okay they found a duplex okay that is under 40k wow which is awesome and he says fully occupied but they don't have the money to do it okay so down in tijuana they found a duplex for under 40 grand right and they don't have the money to buy a 40 000 duplex right okay now the first thing that comes to mind to me is a couple things well you go first you brought it up no let's let's hear it i want to hear what you're doing okay the first thing i would say is if you're seeing a duplex for 40 grand i want to know what market you're in that could be no i'm okay with low income housing i've got a section 8 rental in south chicago i'm cool with that um but if you got a 40 000 duplex are we going to try to rehab it are we going to really increase the value are we in a really trashy rental scenario where this thing's going to get beat to help we got to be being careful buying a 40 000 duplex i run on i want to know the metrics and why we're doing it right that's my first concern right number two is if you don't have money for a 40 000 duplex we maybe need to look at what's going on in your life do you have an emergency fund are you in credit card debt are you what is your side hustle how's your day job look what are you doing for health care because now a lot of times a thousand dollar deal they want cash so that's a fair point i don't have forty thousand lane if it's a fixer up or two uh some banks might be more hesitant to loan true something like true and so that could be part of it as well that could be part of it but so if i i can get that if someone you're like yeah mark we're doing okay but i don't have 40 000 in cash laying around okay fair enough my answer to all this if we know that you're not in financial straits yourself and it's a good deal those are first two hurdles i have right um third partner with someone yeah i mean really darren me and corey could help on that deal we could go four ways yeah i'm not saying we would i'm not trying to make a deal here on the this isn't shark tank but i could come in with 10 grand from a roth darren could come in 10 grand in cash corey he could sell his piece of crap car out there and come in with 10 right no oh i think you're right his car is nicer than mine that's why i'm teasing him ladies he's single by the way my wife had to drop me off because one of my cars is not working today so yeah we're both we got to take the millionaire next door approach you're not going to go out and see a mercedes or beamer outside i i i'd rather put my money in other places than my car but that's me some of you want to have a nice ride that's cool so anyway but you can partner let's create an llc that has four partners and they could be iras they could be people they could be roth they could be a a lender that is going to throw in money as a lender not a partner so we and then we take this llc and we go buy this little duplex and maybe we have a budget for rehab so i don't know interesting yeah we set up the llc where the rental is absolutely yeah get the llc set up where the rental is the other thing is i love the partnering but i also love that mark brought up the retirement accounts because you have people out there that want to put retirement accounts into real estate and into rental properties but the problem is there's prohibited transactions and they don't know how yeah and they they can't go in and work on that property and so they are looking for partners and they might have the funds there and available and just need somebody else to be able to run the deal if this is a i if a concept many and some of you have never heard of go to um any of your podcast portals that you like whether you're on an apple phone or an android you might use the app stitcher go to directed ira podcast yeah we have um the first five to ten podcasts we did sequentially that explain the whole strategy yeah and you'll freaking love it so which updates episode six all right so now so i've got my rental and my home and he says are the tax strategies going to be the same or tax advantages uh they are very different first your home you're going to get a mortgage interest deduction if you don't do the standard deduction which is been increased substantially so more and more millions of americans are going with the standard which this year so you don't even take interest deduction on your home the um standard this year is 12 550 if you're single if you're married is twice that it's 25 100. so if you do the standard deduction you're not even going to write off the mortgage interest on your home uh you can write off rental uh sorry rental property tax um up to ten thousand dollars with your mortgage interest uh but here's the deal why i want people to buy a home is not so much the tax strategy is you're not paying rent to someone else that's a good thing um darren why don't you take a stab here tell us i mean what are the tax advantages or differences from owning a personal home versus this rental up here i'll list them as you go through them but if they want to buy a rental they're going to get different says big time what are you what are your thoughts yeah absolutely so i um i think the big thing with the rental property is that you now have a small business great and so you can start opening up all of those types of tax write-offs you open a whole can of worms baby absolutely absolutely so travel travel um we love recommending buying a property where your kids are going to college or things like that where you like to go or where you like to go yeah buy them where you travel it could be an airbnb even absolutely and then you can go and check on the property and while you're visiting your children or other things you can check on the property be able to write off some of that dining auto expenses for fixing it up right now rehab is different than um just general maintenance yeah but you can be able to write off some of those expenses okay we're just going to say and i've got 25 write-offs that i talk about in my workshop so we're going to we're you got a small business with a rental that's a big deal um you're going to get depreciation that's the big one and i think the next thing i'd add is you're going to get growth you're going to get future equity by having a tenant pay the mortgage for you and this thing's going to go up in value cash flow cash flow and i'm going to see these three things the tax write-offs the future equity and the cash flow is going to be completely a different advantage than owning your own personal residence right and the goal here again is just quit paying rent to someone else if possible okay there was another question on there where someone said how do i buy crypto in my ira or 401k wow now i was just going to go to youtube and just see if i have the best fastest way to get to my video on that so i'm gonna go crypto um crypto mining kohler i'm just going to see what comes up just so we get because i've got a couple really good videos there there we go right here how to mine crypto in your ira um how to save taxes mining and crypto and trading crypto so a lot of different um avoid paying taxes on cryptocurrency so i've got probably three or four videos i'd recommend you guys oh look at i'm already diving into it here um i've got several videos on youtube if you just type crypto crypto mining kohler you're gonna see my video playlist um really really good so get over and check that out but the basic strategy you take an ira over it and i'm and i want you to comment here darren i'm just going to throw out the generals yeah so we got an ira at wells fargo whatever so you're going to you're going to say i'm going to move my ira i'd love to move a roth but i'm going to move it over here to a self-directed custodian now that's a trust company that allows you to self-direct they've been around for years the one we love is directed ira.com and what you're going to set up is not a crypto ira you're just going to set up a basic roth ira and this account now when you move your ira to a different ira here there's no tax there's no penalty and this could be a 401k even you know you're just going to move the old 401k the old ira the old roth whatever and you're i'm going to call it a sidderp a self-directed retirement account so you have this sudup self-directed retirement account or retirement plan mark which video are you referring to again oh my gosh there's so many um i that one right there how to mine crypto and a roth that's a good one can you put the link in the all the feeds thanks corey so there's a feed everybody that i mean in the feed you'll see the link what you do next is you open an llc owned by your suderp your retirement account you fund it and this account this llc is actually going to be a holding company this llc is going to open your mining company which we're going to want to be a c corp and this is going to open and create the mine and buy the motherboard the cpu the video cards and we typically set this up with nice hash and another wallet now you can do all sorts of mining i get it you techies out there but this corp is going to be funded with the money that came from your retirement account so the retirement account kicks up the money we bring this down to 100 bucks i really just want to zero this out then we push the money up here we buy the mine and we start mining is this makes money we have to pay tax on the mining at 21 there's no way around it then but whatever mining money i make i kick it back down here and hold it in this company buy whatever coin i want never pay tax again now that's a roth strategy which i would highly encourage you this is what i'm doing i've got a three video card mine um i'm making about an 80 return with my mine and all of this crypto is growing tax free forever anything you'd add to this and i'll put it in red any thoughts or comments here yeah i think the biggest thing is just make sure that you get this set up before you buy the equipment oh good i i've had people come in they're like oh i just bought the miner now i'm ready to set up the retirement account and stuff and it's like oh okay well once you own it personally you can't switch it over so set this up first and then you can really do whatever you want nice hash is a great way to go it's easy a good way to set it up and just move it down to the llc you don't want to hold it in that c corp okay cool corey let's leave this up i want to hit tabisha's and das who does ha vu's question first deja vu deja deja is that what it is yep i don't know how to say all that i'm such an idiot all right deja vu everybody's like kohler is a freaking idiot okay thanks everybody for your patience deja vu says i don't know how to spell deja vu is that how you really spell it no no thank you okay thank you i'm redeemed all right do i have to pay capital gains tax if i buy a house and turn it into a rental no you don't i mean when you turn it into a rental you don't now when you sell it someday you're gonna pay capital gains so upon sell or you do a 1031 exchange kick it down the road or you borrow against it do an equity strip and buy another rental and pay no tax or you buy the whole darn thing in a freaking ira preferably a roth no tax so we've got all sorts of ways to prevent the tax when you or minimize it or kick it down the road when you go to sell the rental but i think you're good now this question was for darren does the loan originator mortgage lender qualify for a rep status for real estate professional status is that what he's asking i think so hi darren does the loan originator mortgage lender call quote okay i think what he's saying is if i'm a if i'm a mortgage officer do i qualify as a real estate professional okay everybody this is good this is a chapter in my book the tax and legal playbook where i talk about real estate professional so if we go back to our diagram here and so here is the revocable living trust and if you've got a day job or a small business and you make more than 150 grand agi adjusted gross income first that's great congrats if that's going on in your life over here if you start buying rental properties they're going to cash flow appreciate and kick out losses now let's look at this they're going to generate cash flow and i'm going to let you answer the question i'm just putting in context for everybody will this person down here that's a loan officer qualify as a real estate professional now not everybody has to i'm not saying everybody's got to be a real estate professional but will he this person deja vu no tabish qualify as a real estate professional so the rental properties are going to generate cash flow which we love they're going to appreciate which we love but what's unique about rental properties is they're going to kick out losses on paper and we love paper losses because as an accountant as a tax attorney we can take these paper losses and write them off against all your other income until you make 150 throwing things around can you grab that for me darren thanks until you make 150 grand in agi then you don't get that write-off anymore you lose it or it carries forward that's the good news so you're either going to build a bucket or you're going to get the write-off this trick here is if you or your spouse so if this guy is married if either one of you are an rep a real estate professional then there's no bucket all the losses millions of them right off your other income now everybody was ticked off when donald trump only paid 600 in taxes they said how did he do that because he's using the same strategy i've been teaching for 20 years and that is donald trump buys hotels that generate losses that wipe out his income on apprentice that's all i did i want you to do the same darn thing if you're a realtor or a developer and you buy rentals i can wipe out all your income that's what trump did it's a legit strategy all of you can do it so the golden question everybody to be chefs if husband or wife is a mortgage officer do they qualify as a real estate professional so they can trump this all right get that traffic [Laughter] okay what do you think so yeah let's go over the requirements for real estate professional good first of all i'm gonna put it in red yeah your primary occupation needs to be in real estate okay number one primary occupation would that include an own a loan officer i think that's the question yes do you want some help on that answer no i think it's close um loan officer yeah yes i would say yes if they own 10 percent or more of the company or they're a sole proprietor if you are a w-2 loan officer at wells fargo or wells fargo anywhere you are not a real estate professional you have to be independent like a entrepreneur loan officer and then you would your primary occupation but you have uh contractors realtors yeah there's a great distance right well and even with contractors right you're gonna need to be a gc you're not gonna be a subcontractor plumber or electrician or something like that good call it's gc yeah love it the other thing is number two you ought to do both got to do both people one and two you have to spend at least 750 hours a year doing it doing it okay so that's about 13 to 15 hours a week okay now that's not managing your rentals that counts toward the hours but it also counts like this primary occupation counts towards that and and i think i better say the third requirement is you materially participate and there's seven rules on how to do that in the rental you don't you can have a property manager and qualify but there's seven tests so you have to meet one of those seven yep yep so primary uh so the answer to dabish is yes a real estate lender individual would qualify as a real estate professional if they own 10 of the lending company or more or they're just an independent loan officer receiving a 1099 with their own s corp if you're a w-2 working for someone else nope okay where should we go okay ryan lee actually was asking some questions and he he had a few in there um so his first question though is his parents have a property and what is the best way for his parents to be able to pass that on to their children okay uh parents have a revocable living trust that's the bet that's step one yeah and they have rental property yeah okay so we're going to assume an llc and rentals what do you i'm going to put darren you on the spot what do you think is the best way to get this to the kids they're over here and have them get stepped up bases i think the best way is to write as you i mean you pretty much just drew it out have it in the llc for that asset protection keep it in the revocable living trust and then send it out to the kids okay so through the will and the trust so everybody kind of gets the sense here we're going to bequeath or we're going to list the kids yeah unless the kids is the beneficiary of the trust when both parents die so if that mom dies dad gets to keep the rental income dad dies mom keeps the rental income but with both mom and dad die the kids get the property stepped up basis they can sell it tomorrow with no tax do not do not put your kid's name on freaking title and do not make them an owner of the llc those are the two worst things you can do it's going to jack it up for taxes and asset protection no no no just make the kids the beneficiary of the freaking trust let the trust own the llc and let the llc own the rental boom all right now ryan you only get one question per open forum there's so many questions here so i hope we chose the question you like sorry ryan um okay corey you stop all right we have patrick doyle look at that fish oh my gosh it's huge you know what that's from what movie look at the size of that fish fugitive oh okay right huh i've seen that like once what i have to say i'm sorry tommy lee jones is in the apartment of the accused killer yeah and he's questioning him and goes look at the signs of that fish anyway i remember we borrowed some from somebody on vhs unfortunately i don't vhs for some of you that don't know what that is that's a video cassette yeah i know i don't have a vcr anymore i used to watch them on 8track i'm just joking all right patrick doyle says do real estate losses on paper hurt my chances of buying or getting loans on future rental properties patrick great question so if we look at our diagram here look it i've got these paper losses over here now let's think about it patrick if you're not a real estate professional are these losses going to hurt you at all in your 1040 no no they're going to be sitting over here in this bucket so that's first answer that's an easy one so if you're making more than 150 grand you're not even getting those benefit of the losses right now you can cash them in someday in the future but no problem number two i would say that rental losses on your 1040 tax return can be a problem if you have an inexperienced lender most lenders that know what they're doing and this is where networking and finding a good lender is absolutely critical in the rental property business a good rental lender is going to do add backs for depreciation they're going to do add backs for depreciation what do i do with my hands i don't know what to do ricky bobby okay yeah it's good for the economy hurts no one helps everyone that freak anybody out freaks me out okay all right okay so okay if i have losses and they're going on my 1040 a good lender is going to add back depreciation and they're going to count the rental income on top so that way a lender takes into account and really wipes out the effect of the losses on your 1040 so you can go get loans i had to do this just this last week because i'm getting a loan on my steel building and so because i'm wrapping the mortgage on the duplex in front into the loan for the steel building give me some love yeah so the lender was like i need all your k1s i need all the losses i need all your tax returns and he starts doing his magic because he's a sophisticated lender so if you go into the 25 year old at the bank and ask for a loan on a rental property they're going to ask for your w-2 and there's me fannie mae and freddie mac guidelines they're going to blow it up so find a sophisticated lender and you're going to be fine yeah i think that's the biggest thing i get so many people who call in and they're like hey i tried to get a loan and they said no and i'm like well how many lenders did you go and talk to one yeah go talk to a few people right because you got these people who are just trying to fit you into a box you know they want to sell it off to the government just get rid of it if you can find a good portfolio lender somebody who can actually underwrite it it's going to be a different story i like it okay now let's see uh agent omega's back welcome back from last week show us the complete trifecta ultimate setup oh my gosh agent omega okay should i corey yeah can i do it let me see if i can get over to it it was on here last night okay it's not on that one i think i know where it is oh here we go is it on this one can i do the master trifect uh this isn't too bad these are the summit slides right yeah this is a pretty good one they can't really see it can you focus in on it okay cory's going to try to work his magic so this is a slide um that's pretty advanced it can get them more comfortable um if someone a little frustrated cory's trying to do a little bit of focus here but this is a diagram that we set up for clients all the time if you call my office and you get a trust or an entity or just need a consultation for at least an hour my tax attorneys like this amazing darren cherrington they're gonna build a diagram for you and then over here we usually do a checklist of what you need to do so agent omega this is a pretty good example sometimes i have limited partnerships more rentals out here we might have a domestic asset protection trust this is about it yeah sorry everybody but that's that that's a good example of kind of what we're doing all right back to the white board all right next question kevin and kevin andrade says mark or darren can you touch on bonus depreciation for example if i'm an llc wife is a realtor huh here we go okay oh now see darren kevin knows what he's talking about so his wife is a real estate professional that's a big deal um kevin he's just kind of a regular loser so but his wife's a real estate professional so hold up cory i got to read the rest of his question holy crap it's kevin there we go good job okay and i make 50 grand a year net profit can i use profit net profit 50 000 net profit can i use bonus depreciation to wipe out the earnings versus doing an s corp uh okay what i think kevin gave me limited facts but i think i know where he's going ooh this is a tough one why didn't i read that question freaking kevin jerk okay okay here's your revocable living trust he's got is he talking about bonus depreciation not on rentals he didn't say the word rental anywhere in there right okay so i'm not going to worry about the rental side he's got either a sole prop or go back up to kevin i want to try to interpret what he's saying okay he's either got a sole prop or he has an s corp and he's got typically 50 grand of of net income if i'm an llc wife is a realtor so i don't know if he's saying his wife owns the llc what the wife has to do with it that's kind of i think that's a red dress in the matrix has nothing to do with the question and make 50 grand net profit can i use bonus depreciation wipe out the earnings versus using an s corp strategy the answer is no kevin just said rental yes well what the freak does that mean rental yes [Laughter] kevin you need a console here's what i'm going to do is i think because uh s corp has nothing to do with a rental or maybe he's saying he's got bonus depreciation over here or maybe can an office and he wants to offset 50 grand net here and not be an s corp here's the answer kevin either way okay everybody and i'm just toying around with you kevin here just having fun um here's what kevin's asking everybody he's asking about bonus depreciation which is where you get to write off equipment or a car fast truck fast that's what bonus depreciation is bonus depreciation really doesn't have anything to do with a rental unless you do a cost seg analysis and you would not be doing a cossack analysis for 50 grand of net income to deal with not worth the cost so kevin i'm just assuming you're talking about equipment or a vehicle and you're going to bonus depreciate the crap out of it which means you get a fast write-off and he says he's got a rental and his wife's a real estate professional so what i think he's doing is he's trying to bring the loss over here to this side to wipe out this income so he doesn't have to do an s corp can't do it here's the reason why the s-corp analysis of whether you pay self-employment tax is before you bring losses over from a rental now if you've got equipment in the sole proprietor let's say a car truck and you can bonus the crap out of it and generate a loss or wipe it out before profit here yes you could avoid the s corp for another year so you would do the bonus depreciation here and skip the s corp bounce but if you're trying to bring bonus from over here that's after the fact so you're gonna have to do the s corp thing then you get the bonus right off like it absolutely i think the biggest thing is you know a lot of times on our diagrams underneath this trust we're gonna have your 1040 right so we got to look at where is this depreciation actually happening so when it comes out of the s corp you're paying self-employment tax up here yeah then it comes down to 1040 and that's where the depreciation is going to come down and offset it this is where you're mixing up the margarita is down here yeah so we're bringing in the loss over here after your net income of your escort but if you have bonus depreciation up here i might be able to avoid the s corp for another year okay cory what question you want i like the crypto questions go back up a little there was another crypto question this one was pretty good okay all right okay ian dietler you want to read it yeah sure ian asks i just set up an llc to buy a rental i wanted to know if i could use a ten thousand dollar personal loan i received from a local credit union deposit it into my llc bank account and use it for a down payment thank you mark j coleman wow ian thank you ian mr ian digler i appreciate that okay so he set up an llc to buy a rental so he has not purchased yet and he wants to take 10k from a personal loan he got somewhere and injected into the llc to go get a long-term loan to buy a rental what do you think you like it if it makes financial sense i like it yeah i think this looks good yeah so you could get you get get 10k 10k from mom uh get 10k from your ira um go steal 10k no i'm just joking i would never recommend that but go get 10k from somewhere inject it in the llc go buy a rental now where you get the 10k might cause the bank a little heartburn yeah because they might say is that season money where did you get it blah blah blah and again you got to jump through the freaking bank hoops but uh no i like them okay um where are we at vaughn says why did the irs change the w-4 for employees making it so difficult because it's the freaking irs and really vaughn it's because of all this uh injections of stimulus money you know some people have gotten money um through unemployment some people have gotten the stimulus check of a thousand here two thousand there blah blah blah they have to kids they don't have kids did they get the child tax care credit there's so much money the government's throwing at you which is a whole other political conversation i won't go there the w-4 has got to help interpret that so the government knows how much to withhold or tell the your employer how much to withhold from your paycheck so if some of you are filling out a w-4 and want to throw something out the window quit taking money from the government that's why they're doing a bond all right um how are we doing on time too corey [Music] one or two more questions should we give away some books today do you have some winners okay you take your time while we answer this question i want two males two females is the best you can decide and i'll give away a cpa book i'll give away four books here cory's gonna tell us who our winners are just tell them the first uh first first few people to actually say give me one then i'll give it to him really okay that's probably he said do a countdown okay you ready oh dear an account i'm going to count down to 10. no i'm going to count to three should i post and then as soon as they post yeah yeah i'm gonna count to three and the first four people to say i want a book get a book one two three whew the race is on all right i gotta answer a question here okay cory can you go up for me so i can look at the answers oh darren said start amy here's our winners we got amy brandon we'll come back and announce our winners here in a minute um eva look you look so adorable okay i need a question i did something wrong give me a question okay go up go up a little bit yours are good okay oh let's do quan i like khan quan jeff con jeff jeff okay says should i start a holding company in wyoming before starting an llc selling bike parts my wife is a w-2 and i am a disabled i'm disabled presently and don't own a home yet we rent but we have a high fico score i'll let you answer why don't you give your take first now everybody let's say holding company in wyoming i have a bike parts llc my wife is w-2 and i'm presently disabled we don't own a home yet we rent but we have good credit oh i've got a lot to say what do you want to say first yeah let's start with the trifecta okay we want to go we want to try to figure out okay is this left side or right side is it ordinary or is passive whatever he's doing okay we've got a part here for mom i mean white w2 over there and then with a bike parts store that's going to be ordinary that's going to be ordinary so that's a business so it's going to be on the left side that's short term versus long term right so we have an llc yeah and i'd set up that bike part store in that llc where you're doing business okay and in the state where you so yeah so if they live in arizona or new jersey we're gonna set up this in arizona or new jersey wherever you live that's where you set up your llc there is no freaking wyoming llc involved the only time we use wyoming is for a holding company for assets when you start kicking a million bucks you know you start getting there you got 5 or ten rentals you've got some crypto worth some millions whatever then we set up a wyoming holding company and then set up your llcs above that and this is an extra layer of asset protection that's an advanced strategy in my tax on legal playbook all right yeah nick has some other stuff what else you want to hit yeah there's some videos on charging order protection it's okay i want to look for cop go youtube kohler cop cope cop okay what else you want to talk about i've got one yeah okay he says he's disabled now that is a big deal because if you're disabled and you're getting disability benefits you starting a business not a good idea it could limit your disability benefits just as if he went out got a job because the disabled benefit insurance company or if it's state or federal or whatever it is they're going to go whoa whoa you're disabled how'd you go get a job you already know you got to be careful there now if any of you are in that situation the first thing you do is find out from the insurance company how much you can earn or how many hours you can work a week before it affects your benefits so jeff that's the first thing i do is i'd find out when do my benefits get affected if i make money or work so many hours all right i've had clients come to me and go hey mark i need an s corp and we set them up an llc and an s corp in the whole nine yards and then they call me up furious three months later this happened in my career about 10 years ago furious going i just lost my disability benefits because you set up a business for me i'm like you didn't tell me you were disabled oh but i mean it was a big fiasco you going out and setting up an llc under your name jeff could affect your disability so i would set up the llc under your wife's name and you just happen to help her run it she can have a w-2 and an llc stay away on paper run that business with your wife but in her name now i'm not trying to play games to get away with something screwing over the insurance company because i want you working it's healthy i want you earning money but find the boundary so you don't screw it up and i think that's a really important point but you do not need a wyoming entity to go out and make this bike part store effective and if you've got a fico score that's great watch some dave ramsey videos bud i don't want you going into debt for anything you don't have to so cherish that fico score and be careful all right and my winners are thank you corey we have will you put five names down here all right i'll give away or should i give away the grand prize is the first person to say something get a grand prize okay hand it over everybody this is my eight steps workbook 99 on amazon 60 videos qr codes you can start right now it gives you a business plan and a marketing plan on word in word you can start using it you will love it took me two years to develop it amy myers you are the winner my fair lady so corey let's make sure she gets eight steps i'll put that here okay and uh i think corey chose you amy because you look cute and corey's single so i'm just saying so just throwing that out okay oh she's married look at that bow she's with he's kind of he's got ripped biceps too i'd just stay away cory yeah yeah i'd stay away okay now our next winner is alisa maltz tax on legal playbook girl let's give you a tax on legal playbook now for all of you that are winners i need you to you got to email corey corey you got to send them your contact info so we can mail you the book uh so we need your mailing address corey mark j kohler dot com now for you uh unethical people out there that are gonna play like your amy and just send us your info don't do it be honest so he will confirm who these people really are okay the next winner was quentin mason i'm gonna give you a what your cpa isn't telling you book very very um fun to read it's a story gets you addicted to tax planning it's a good one that is quentin so that's the cpa book brandon i'm feeling it brandon brandon smith i'm going to give you the what your c i'm sorry the self-directed ira handbook best-selling book on self-directing retirement accounts written by my partner matt sorensen i will even sign it for you you're gonna love it and okay that's frank phillips says 6 000 emails later of course what 6 000 emails later what i'm going to get [Laughter] frank funny funny okay and the business owner's guide to financial freedom folks these are all great books you can get them in a bundle at my website at markjaykohler.com at a discount so if you want to get a bundle of these books go to my website or you can go to amazon and one off them so that's kathleen kathy lemmer kathy lemmer you are the winner of financial freedom the business owner's guide to financial freedom my most recent book which i love okay everybody thanks for being here next week i'm going to be out of town on thursday are we gonna do this should we get get some guys in here let the let darren and the team run the show i don't know we'll see maybe i'll run yeah corey will run the show yeah we'll have cory up here we'll talk we'll talk to her if you guys want to have darren maybe we can get matt sorenson on here uh to help run the show we'll see how it goes everybody don't give up on the american dream keep working hard and thank you for being here please subscribe share this video i work so hard to present something helpful and i really really love you and don't forget our workshop sessions chicago orange county honolulu and dallas they're on my website at mark j kohler.com oh and here's the special if you're still watching flash 50 if you sign up for a workshop and in the um promotion little box put in flash 50. it can be lower caps higher caps doesn't matter um five zero flash fifty all one word save fifty bucks on any of the workshops one day or two day and uh and we're gonna sign up mark at marchetholder.com and this will be good for the next couple hours two or three hours so two hours we're doing two hours flash 50. thanks everybody have a great week see you around

Channel: Mark J Kohler

Views: 57,943

Keywords:

Id: exF2q7ZoXT0

Length: 69min 27sec (4167 seconds)

Published: Thu Aug 26 2021