ADPI_084: The In's And Out's Of Cost Segregation With Yonah Weiss

Apr 26, 2019


Episode Transcription:

 

(0:00)

Hey, what's going on guys, welcome to the Active Duty Passive Income Podcast. Thank you so much for tuning in. Again, if you have not hit the subscribe button, make sure that you go ahead and do that, you do not want to miss some of the awesome content that we have flowing on this stream. Alright, if you guys are tuning in for the first time, this might be a little bit of a heavy topic, I definitely recommend that you go back a few episodes and just kind of catch up on some of the easier ones on, you know how to get started in real estate investing or how to invest in real estate as a family, whatnot. But this topic is going to be amazing, and this episode is awesome. We've got an awesome guest today he's going to talk to us about one of the more advanced tax topics that comes up when you start talking about multiple investments or when you start talking about bigger investments such as multifamily. All right, so make sure that you have your notepad because there's a lot of awesome content that you're going to get from this one particular show. And also make sure that you reach out to Yonah because him and his team are doing awesome things out there and I cannot wait to introduce him. So without further ado, let's kick it.

Introduction

(1:24)

Hey freedom fighters. Welcome to the Active Duty Passive Income Podcast. The only place where military members, veterans and their families learn how to build wealth through real estate investing. I'm your host, Mike Foster, and I'm here to show you how to stop wasting your benefits. Now get off your ass, step up to the firing line and make ready for today's lesson.

Today’s Guest: Yonah Weiss

(1:50)

Shooter stand by, Hey, what's going on guys? Welcome to the Active Duty Passive Income Podcast t. We have an amazing guest here with us. His name is Yonah Weiss for Madison Specs, how you doing Yonah?

I am doing amazing this morning. Thanks so much, Mike for taking the time and having me on the show.

Thank you so much for coming on to our show. We really appreciate, you know your expertise. Yonah is going to teach us all about cost segregation. He's an absolute expert at it. And he's helped hundreds of people out there. And we're super excited to have you here. You and I because we know that you're that you're an expert here with us. But before we get into the cost segregation stuff…

Could you give us a little background information on you and how you got started in Real Estate investing?

(unknown)

Sure, absolutely. My pleasure, Mike. So really, my background is in education and teaching I spent many years teaching various levels all the way from, you know, elementary school all the way up to college level. So, but recently got involved in real estate about four years ago.

When I want to learn everything there was to know about real estate I just kind of jumped in and got a real estate brokers licenses of all commercial mortgages and, you know, some other things. So, I got involved in a few fix and flips out of New Jersey with a with a partner. And, you know, most recently I've been involved in, you know, on the service end to incarceration. This has really taught me a tremendous amount about real estate in general having you know, speaking with and following you know, real estate investors actively investing over the past couple of years. It just have tremendous amount of education on that side, and I'm, you know, hopefully getting back involved into the multifamily investing shortening.

Wow. All right. Awesome. Awesome. So a lot of different, different experience throughout real Yeah, sure. You've definitely seen it and I mean, and from the cost segregation standpoint, which we're going to get into in a little bit. I think that's very valuable because you've seen all the different types of investments, so you know how it kind of breaks down.

What exactly is cost segregation?

(4:07)

It's a dirty word, right? It's like what is this thing right and that's really good will get me all the time. Like, what is this? Why is it called was such a strange name? And it's really, think about it, isn't a strange name used to be called component? depreciation. Right? Which makes sense. I mean, that's really what it is. Yeah, it's allowing you to depreciate a building instead of over a straight-line period, which will define in a moment is breaking it up into compartments or into components or into you know, segregating out those costs. So this the jumpstart into what is the background, what is depreciation, and it's all comes down to anyone who owns real estate, besides your personal residence if it's a business broker, or investment property or investing, you are allowed IRAs gives you a deduction from your income tax or not property tax. Very important. A lot of people think, oh, tax at No, it's not property techniques, income tax savings, you get a deduction called depreciation. Right, which is basically the IRS saying that your property value from the day you buy it has a lifespan. Right? Okay. So from the day you buy that property or placed in service efficiently, how it's called, so you can make it It's only when you start putting residents in there is when it's placed in service. But normally speaking, you're buying a property that's up and going right up and running. That price of purchase is your basis. That's called what your depreciation, so the IRS says, Hey, that property only has a life of 27 and a half years for residential multifamily properties and for commercial properties has a life. It hasn't been ow you have 39 years I guess commercial properties are like older or something then you know they have they live longer right? Longer than multifamily? I don't know.

Yeah right. They got like some, you know the fountain of youth or something like that right? I don't know. I don't know what's up with those arbitrary numbers but think about it like this right? We don't everything wear and tear right things go down in value as time goes on. So there's even basically what's called a tax benefit based on that original purchase price. So depreciation works like Miss simple Street, what's not straight-line depreciation, which everyone does before we get into castigation, which is like, as a friend of mine likes to say it's like depreciation on steroids, right… conservation is depreciating can probably meet that age. Right? I can't even appreciate I said what it means appreciation in general, it's like this take the purchase price of the property.

Definitely with the actual value, even if it's me, you know, really undervalued but you're buying a replacement, it doesn't matter what that purchase price is establishes that value is subtract a certain amount per land, land does not depreciate. And you know, sometimes it's 10% 15% 20%, whatever it is that you left over with whatever is called the property value. That's your appreciable basis. And you split that up over 27 and a half years, or 39 years for commercial and that's your production every single year. Okay? it's straightforward, right? If you have a million-dollar property, turns out do the math here deduction is about $30,000 a year off your income tax, which lowers your tax liability, right? Right. So if you make $100,000 on the property, maybe you bought for a million dollars to making you know, good returns, your net income in operating income is $100,000. Right? It's pretty good returns.

You're going to take off, right off the bat $30,000 from that you're only going to get taxed on the remaining 70. So that's what depreciation is, comes in cost segregation, which is depreciation on steroids, basically. And the IRS says, not just the building depreciates. Okay, there's actually things in the building and stuff outside the building that depreciate, but at a faster life, not 27 or 39 years, actually over five years, or 15 years. So the only way you can actually depreciate those assets. If you have an engineer once the IRS guidelines, it's called the conservation audit techniques Guide, which you can google if you want to, you know, if you have insomnia or something, you want to fall asleep, you can read it.

You know, it's a great way to understand everything there is to know about conservation, but basically it's a way to understand why it's so important to have an engineer or firm like Madison Specs or like many others, you know, firms that are out there in the country doing this, an engineer has actually been engineer or concert professionals who has well versed in the tax code itself. So it's like the combination of those two, not just an engineer, but the construction background, but the tax knowledge as well.

Right, what the textbook says about how the property depreciate, and they'll take stuff like in the building, it's called personal property stuff, like, you know, carpeting, or fixtures, furniture, appliances, you know, would work all kinds of things that are either property, certain types of electrical and plumbing, things like that, that actually are not part of the structure of the building. Right.

So it doesn't appreciate the same life as the full structure which has a very long life. Things like carpeting furniture have a much shorter life, the IRS acknowledges that it says yeah, these things appreciate over five years now. If you can get some… I want to come in and write down or allocate basically all those costs, then you can depreciate that amount over a five-year period. Okay? So it's basically like taking like 20% or 10% of 3%, whatever it is of the value of that building and front-loading appreciation that amount into the first five years. Hmm, dang. Okay, cool. And I think you mentioned something too, about having someone come out there. So this is not correct. You that can go out and price this stuff, right? You want somebody to say like a contractor to go out and buy the stuff for you?

Well, actually, we have like, that's why I said we have a whole team of engineers that specialize in this property and they will assess the business to take a survey of every little detail in the building and outside the building to and how much square footage and property there is, you know, how many pictures how many everything every tiny detail, come up with a summary… value of that, and then apply the industry standard values of all of those components. And then that gets those numbers that depreciate over a faster life. Got it?

Okay, awesome. So right. So we're talking about all these different individual items. Yeah. That you want to make sure you take advantage of. And this is everything right? from light fixtures to sofas, you said right, so all the pieces. That's incredible. So as far as someone going and talking to a specialist or no lighting specialist, a CPA, this is not something that CPA would do.

Well, that's the thing. It's something that a lot of CPA is especially if they're real estate savvy will know about right, but because dyers require someone with an engineering background or expertise to actually perform of the study and we prepare like 100 page long study, which has all the details and all the sources in the tax code, you know, from that survey. So the IRS requires that so that means, yeah, your CPA will hopefully know about this, right. And some of the larger firms like the big for the top of the country are so big, they actually have engineers on staff that do this, because they're talking about have large institutional, you know, clients that need this for their, you know, commercial properties. They'll do it in house. But most accountants cannot do this on their own they'll need to use a third party firm like ours, or you know, like you would you know, speak to your CPA about it and they'll rent maybe recommend someone or you know, if someone like you know, like me and you right, we got in touch with you guys just one under contract on a property right. So you gotta find out what is out there you who are the firms out there that are doing that, and then you can go bring that information, discuss with your CPA. See if it makes sense.

Okay, cool. So yeah, so there are like you said, there are very specialized individuals that you need to go entities that you need to go find with that engineering background that will be able to take care of this for you. Okay? Valuable, super valuable, guys, make sure you're taking notes, right, because this stuff will definitely save you money in the long run. So, um, so I just want to ask you a question about huge Right, exactly. Huge amounts of money. Yeah. And so , especially with this new tax law, right, where now we have bonus depreciation.

Does that bonus depreciation count towards the items that were depreciating? You know, via cost segregation?

(unknown)

Exactly. Yeah, exactly. So just to give a background what bonus depreciation is, and it means that anything that depreciate less than 20 years, you cannot take 100% of that bonus depreciation of that depreciation in your number one. Instead of spreading it out like we talked about five year was about five-year property or personal tangent property like all the fixtures, furniture, carpeting, etc. That's usually over five years that's included in the bonus depreciation. Also there I didn't mention it, but 15-year property, which means assets, or 15 years, which is usually land improvements. So think about like landscaping or if you have pavement, right the amount of pavement that you have parking spots, right, if you have signage with fencing around the property, even playground equipment or a swimming pool, stuff like that, that amount of value of that depreciate over 15 years, which is a much faster rate than a 27 or 39 year. So you can you can get a lot of that earlier on. So that's also under 20 years when you get a… it's really combined bonus appreciation is like it's just combined with process creation. It's allowing you do when you segregate out or separate out all those costs and figure out imbalance that appreciate faster, instead of spreading it over five or 15 years. You can actually take it all in one. You're number one.

Wow. Okay, that's, yeah, that's, that's a man. That is definitely Yeah. Awesome…

You can get all that back now, right? Are there any benefits for spacing it out? Is it better for you, as an investor, to take all that bonus depreciation out of the first year? Or do you think it's wiser to space it out?

(unknown)

Well, it really depends. And that's a great question, Mike, because it really depends on everyone's individual situation, right? It may not make sense even to do the cost segregation because think about it, you're getting what you're doing is we're accelerating these deductions, get more deductions earlier on, as opposed to spreading it all out. So if you don't need extra income tax deductions, let's say not making money, let's say your property is you know, vacant or whatever, you know, make money from it doesn't make sense to take extra deduction because it just going to put you in the negative, which you know, is not the end of the world, you don't lose that it goes into passive loss which you can carry forward, you can use that in future years. But it's, you know, it's much wiser to actually plan it strategically so that you're, you know, as close to zero or zero, you know, add zero, but not too much in the in the red to too much in the negative is actually having too much negative could be like a red flag IRS, they may not, you know, you're taking tremendous amounts of loss and like, why, why are you doing that? Right.

Okay. Now that makes sense. And so you mentioned about passive loss. I kind of want to know, when we had Tom Wheelwright on the podcast, we were talking about a little bit, but I want to kind of deep dive that more too.

With the passive loss, if you do experience loss, say like 10-20k on paper, that carries forward into the next year… So if we don't experience any loss and that next year, we will at least have that loss that we carried forward with that year. Now what happens if we do have more loss?  Does that loss get carried into the next year?

(unknown)

Yeah, yeah, any loss that you have the passive loss carries for me this stays with you forward until you sell the property. So if you let's say you hold that you have so big of a loss you know, are every year you're needing a passive loss that will move forward with your it's like an imaginary bank account, right? Okay, that like stores those extra deductions for when you need them, right. It's like, you know, like you get that extra life right you know, the video game, right? Like, yeah, I got all these taxes I gotta pay Wait a second, I got the passive losses. Let's, let's bring it in right out of it. Okay, what that offset whatever income you would have, that can set you back down when you go and sell the product.

Actually that whatever's left over that you didn't use yet is released and now you can use that actually to offset capital gains or to offset depreciation recapture tax and stuff like that. So there is a benefit to it, you know, all the way but again, it's not a great idea to over extend your yourself and take too much. Right now that makes sense. And so you said you'll trigger the IRS and that point too, right. So maybe I'm not saying you will, but you will but you're more likely to maybe experience not if you're taking too much loss each year. You might be right. Okay. Okay. Nice. That's super valuable. Because again, taxes are is not really a strong suit of ours. So we don't have you know, many experts that we've been able to talk to you about this, this is huge. So do you see people typically use cost segregation for single family homes? Are you more see it for those multifamily properties, whether it's knows the smaller multi families like to and maybe 10 or, or is it? 50 plus? Right. So that's it? That's actually a really good question as well. And we usually see, and the truth is our firm is much more of a commercial real estate firm. We have you Madison Specs is actually was one division of a larger company, Madison commercial real estate services, and we're a national title agency with a 1031 exchange, you know, quality intermediary company. So we have a bunch of services specifically oriented for commercial real estate. But that being said, you know, our focus more on the commercial. And just, if you think about it, I'll just give you a illustrate example of, you know, at what point does it make sense and I get this question asked a lot. And usually my rule of thumb is I'll say, if a property is purchased for more than a million dollars, it usually makes sense because there's enough benefit there. When it's less than that it's really going to be more of an individual you know, question got work it out what that being said, it makes sense more the more units you have, it's going to make more sense to single families. Generally speaking, even if it is worth a million dollars, right, a single family may not get a tremendous amount of benefit. And if you think about it, right, just illustrate for you, right, we're talking about finding all the furniture and all the fixtures, right? Well, that five-year property that we're going to accelerate, so typically on a multifamily property, you know, a large multifamily unit, it'll between about 15 and 25% of the of the basis of that purchase price will be allocated to this five-year category. Right, right. Why do you think about a single-family home? Right, there's no one sitting Okay, there's like one, you know, set of security camera or whatever, right? There's like one of everything, right?

Okay, so the value is going to be less, the percentage is going to be much less. Whereas if you have 100 units, where you got 100 things, there's more value in the property per unit, because, you know, we're getting all of that depreciation pinpointing on that five-year property. So whenever there's more units, there's going to be generally speaking more of that five-year property allocated to the possible property.

Right. Okay. Wow. All right. And so…

Let’s say you're budgeting your depreciation because you don't want to take too much on the loss. How does it work? For example, let's say you were taking from units 1 through 50 in 1 year… can you just go and take depreciation from units 51 and 100 later on, like in like 2 or 3 years, or whenever you need it?

(unknown)

Yeah, well, no, actually, if the property is purchased and one time, right? It's all one depreciation schedule, it has to be depreciated equally, right? So you can you can choose to do the conservation method, you can choose maybe even more conservative with it. They're actually different ways that getting too complicated, there's different ways of calculating appreciation. Okay, I'll double declining balance 200 declining balance or 150 declining balance, which basically means you're, you know, front loading a little bit more into the first year to have depreciation. So there are ways to schedule it so that your appreciation will be more equal. As much as possible.

Okay. Yeah. Wow. All right. This is yes to do it. Yeah. Right. Exactly. So if so, if I'm a client, right, let's say I'm going up to your company, sir. And I know nothing about it.

What questions would you recommend that someone should ask, going to a company like yours, for the first time?

(23:00)

Yeah, well, the, you know, the great thing that we'll do and I'll kind of flip the script, right, which is that, you know, there are questions that you should ask but the first thing is right, you want to find out, you know, is this going to be beneficial for me, right? You can learn all about right you can read books, you can listen to this podcast, you can listen to whatever articles about it. But the end of the day, is it going beneficial for me right, am I going to get anything out of it? Well, we do as a service have three complimentary service is run off me estimate, which is like an analysis of the property appreciation, what it will look like, if you do run a full cost of Asian study, what that will look like versus and will… You're on the same page versus if you just straight-line regular depreciation. So you can actually compare apples to apples. And you can see, hey, you know, do I need all these extra reductions? The great thing about cross aggregation is, and one question I would ask you kind of segue into what you mentioned is, you know, are you a real estate investor? Are you listening professional? And on that being said, not just are using professional by the IRS terms, which I'll touch on a second. But are you planning on continually investing? Or are you just going to buy one property? And that's it and hold it out? Right? If you're going to buy one property and hold it out, it may make sense to just keep it balanced, right? You may not need those extra deductions early on; you might just want to keep it balanced life ownership. But if your plan is to purchase more than one property in you know, next year, year after what have you. So what do you care about more than anything? When you want to purchase a property? What do you need to buy a property? need capital? You need capital, right? You need cash, my friends. So if the IRS is telling you Hey, guess what? You can, you know, you always all this money taxes, right? Because you made an income you gotta pay income tax, guess what, here's a way that you actually don't have to pay on right now. Right? Keep it keep the money you may I don't dance like painters later, right? It's like It's like an interest free loan, right like think about it. So yeah, if I'm buying another property next year or the year after, so I may be taking extra deductions now. Right, which maybe if you all have less deductions, but from the second property, you'll have more deductions then and then it'll balance it out constantly to the point where you know, you have people like you know, people who are really doing real estate right are not paying taxes are not paying Income Tax legally. Why? Because they're getting those extra depreciation deductions, making sure that they're constantly keeping their tax liability to zero.

Awesome. Wow. This is amazing. Love a lot of awesome information here. And, guys, I really hope that you guys are taking notes because this is super valuable. Okay, cool. So, I mean, I know I'm like my head is like swimming right now because this is so valuable. And I don't even know where to go. where to go next…

I am a professional investor, and my plan is to buy more and more properties each year. I want to take up as much cost segregation upfront as I can because each one will offset the next year. Now what happens when I stop? For example, if there is a downturn, I run out of capital, I don’t have any investors to back me, etc., so I go on a 3-year hiatus. Now what happens at that point? Just the losses keep carrying forward or is there anything that I need to worry about at that point? Or do it with strategies or something?

(unknown)

Absolutely, right there. And there are multiple strategies. And one thing you may be familiar with something called a 1031 exchange, right, which look back up a second, when, when you sell a property and this is very important to note, you sell a property, the IRS hits you with an extra tax. Right. Besides the capital gains tax, we all know about there's something called depreciation recapture tax means, yeah, which means that when you sell a property, you have to know pay a tax on the amount of depreciation, who took over the course of ownership of that property. So depreciation isn't like you know, just this gift totally I mean it can be and there are definitely ways to make sure that it is you're maximizing it right but you know it comes with a you know a caveat It comes with the fact that wouldn't sell a property now you have to pay a tax on that about now the tax even pays less than have you not done appreciation and not taken actual depreciation in the beginning so you already have the you know, the spread of whenever, you know, I made now what I would have paid now as opposed to paying it later. So that's basically finance one on one right time value of money, right? If I have, I'd rather have the money now in my pockets using spending best make money with that money, then have that money five years from now, the truth is, it's going to be with inflation, and you know, there's a lot of factors to consider. Appreciate you attack is a bummer, right? You know, but gotta face it. Well, one way to get around that is by doing a 1031 exchange qualified exchange where you can sell property and instead of buying a new property busy exchanging into a second property by doing that you can defer your capital gains tax from the sale and you defer that depreciation recapture tax as well. So basically, that's one strategy to keep it moving forward.

Um, you know, there's a new strategy that people have the opportunity zones, which is a brand new tax law was still trying to figure out still trying to get you know, real legislation on it because it's still a bit even though it was passed over a year ago like the IRS will have not given like guidelines. I'm clear cut guy will be thinking kind of ambiguous guidelines by, right, you know, some people will interpret it like this, and some people interpret it like that you kind of just gotta do whatever, you know, see what you can do.

Okay, so that's awesome know that they appreciate that you mentioned about so depreciation recapture tax, which I mean, it's crazy because now you're getting a tax on that other on that depreciation that you've already taken. So I mean, it really just reinforces that whole point that when you buy properties, you really want to hold them, you want to hold them for the long term because, you know…

When you sell, is there any expiration on that recapture tackled, let's say if I held the property for 20 or 30 years, maybe pass it on to my kids at that point, does it go away or is it still something that will come back to haunt you whenever you do decide to sell?

(unknown)

No, it actually will go away after that point. And you know, if a person passes it on to his children, when, when a person dies, right, which is actually, you know, you know, think about death is like this way, you know, way, way the future but you know, you know, you never know life is short. Life is short. I mean, you probably have much more than most people are your listeners, right can relate to this because being on active duty, right, you're faced with that. I mean, it's a fact of life, unfortunately that, you know, too many of us face. But that being said, when a person passes on the properties that they own, are now given to their inheritance to their children, and is an amazing tax thing that happens, right, which is that it now gets a new basis. Right We talked about the basis of the property depreciation the property based on the purchase breath, let's see water property 10 years ago for $50,000. Right? Right now 30 years from now, right when a guy dies, and now that property is worth, right $5 million. Okay, now 30 years passed, and he depreciated the whole thing, right, there's nothing left she ation. But now he passes it on to his children, the children get a new basis it's called a step up in basis it's like as gift they purchased it for the fair market value. So now they get this property and they get depreciation $5 million business so that's the cool thing happens but when if a person were to just get the property to their children before they die, right, don't do that. Because you miss out on this whole this whole thing? Right? Right when you get there's also tax right. Okay. There's inherits and taxes...  Well, bye. It's not the same as you know give tax and the depreciation That's right.

Okay, guys awesome. And that's amazing, right? So they get so that depreciation gets eliminated you can depreciate it at a new step up. And right. Yeah, they just transfers over. That's amazing guys, so make sure that you guys are taking notes. And seriously make sure you contact Yonah because that is awesome. Very effects are you we're definitely gonna talk. Okay, but let me let me just stop. We spoke very briefly about what a real estate professional real absolutely, we got to go into that. Yeah, I just want to touch on that because a really important point is actually making a distinction and make some definition and actually just post up very active on LinkedIn.

Right. So if you're on LinkedIn, definitely find me and connect with me over there by posts pretty regularly on there. I find that's like, the best platform for me. I'm not really so much on so many other social media channels, right, but they didn't for whatever reason, like beside me, I have a great anyways, I posted yesterday in this great kind of quote from I don't remember Animal Farm, he had to be a high school drama author everything everyone had to read that in high school, right? So he's got this great quote right that all animals are created equal. Right, but some are more equal than others. And that's why I kind of put a play on words yesterday, it's like news post, check out afterwards that all taxpayers are created equal, right, but some taxpayers are more equal than others, right and real estate professional is that and there's an unbelievable tax advantage that someone who is a real estate professional has, and that is you can use depreciation, or these passive deductions that we're talking about the cost of your nation to offset all of your income, your passive income and your activism. Whereas someone who's not a full-time real estate professional sports, they are, so you can only use those depreciation deductions to offset the passive income. So we need the income generated from the real estate. Right? So what exactly do people need to do to qualify as a real estate professional? Because I know there's a lot of ambiguity regarding that. So there's basically two rules. And that's it. There's two rules, number one, and the tools apply to either you or your spouse. So only one of you needs to qualify for this to take advantage of this by joining me, okay, so this is very important. If you or your spouse, you have two qualifications. Number one is that you spend more than 50% of your time in real estate materially in real estate business. Right? So we'll define that in a second what that means what you do as a business, but more than 50% of your time second mortgages that has to be at least 750 hours a year of material work, right? You have to track you have to actually prove what you're involved in this. So think about 750 hours a year, basically breaks down and do the math about 1516 hours a week. Okay? It's not a lot of time, okay? But it also doesn't mean that you can just retire and do nothing. If you want the status, right? Doesn't have those things involved, right? Not just buying and selling real estate, brokerage, if you're a real estate broker, right, or you're involved in construction, or you are in some other real estate business, that you actually own a portion of the business or a portion of real estate, right, managing, redeveloping property managing right and developing, constructing rehabbing all these things, those hours count towards this status. So if you have even if you have a W two job right which

You know, you're going to be talking about a large amount of hours, right? Talking about 1800 hours a year to lot 40 hours a week, let's say right 30, about 40 hours a week and worried that job is possible. Not easy, right? Not easy, but it's possible to still qualify for the status. Because if you work more than 40 hours, more than 50% of your time in those real estate activities, and I have a client, he does, like 30 properties, and he manages them all. And he does the renovations himself. And he spends his whole weekends you know, nights and weekends, you know, involved, he can track his calls and track everything. So yeah, I'm involved in properties, right? He's mad. So what does that do? That can offset all those with two income, right? Pay no income tax on that either to get those deductions if he gets those extra deductions.

That is awesome. Oh my goodness. So and I just want to highlight a point here just to make it relevant to the audience. Guys. If your spouse is at home and works from home and you're buying properties in your area. You know if he or she is able to manage it, you know from home that's a perfect segue into something like this right? Or even, you know, being a realtor, right? Because you said it's not just buying and selling. But you know, if you're constantly driving around going showing properties, all that it can count towards that, right. So That's right. That's right.

Yeah. So I mean, this is a perfect, perfect opportunity for some spouses that decide they want to work from home. They can use it to offset your W two income, which is really cool, you know, and then the depreciation bonus as well there so.

Wow, Yonah, this is amazing. I feel like we can continue this on and on. This is absolutely amazing, but we are running out of time, so I gotta bring you into our bonus round. But we'd love to have you on the podcast again. So to discuss some more stuff.

So last three questions. And this is just so our audience to kind of get to know a little bit more about you, but

What is your favorite book?

(39:00)

My favorite book, I studied Bible constantly and really a Jewish text them big we just Jewish person. So I studied Jewish texts every day and I spent 15 years full time, like 18 hours a day like studying stuff I'm very deeply involved in many excellent Palmer Bible and all that.

All that good stuff. Wow. All right, that's awesome. I love it. All right, good to go. That is amazing. For like the next question…

Who is your biggest hero and why?

(unknown)

My biggest hero. You know, I've actually been a few podcasts and the same questions as I give a different answer every time because, you know, it really makes you step back and think right Who is your and really many people can have a different effect on you for many different reasons. So today, I'm just like what came to mind right now is actually my spiritual mentor, I've never actually said that he is my hero. Because obviously, that goes without saying, right but I can see give me so much of the past 20 years of my life, a tremendous amount of guidance, both in the material world and spiritual endeavor. So I just like to mention in person.

Awesome. All right. All right. Well, that sounds solid and must be amazing because you are definitely stand up guy. Sounds cool.

What are three nuggets of wisdom you would like to share with those who are just getting started in Real Estate investing?

(40:32)

Number one, be humble. Right? a humble person that is someone who can learn from anyone. Okay? If you think you already know something, there is not a way to really learn more. So you have to have humility to learn and admit that you don't know something. Right? That's, that's, that's number one, right? Because real estate is it like in anything but real estate especially there's so much knowledge that it takes to really be good at it to really excel and you just got to constantly learning and learning from others. I’m somebody that I just you know, I really this goes along with the same thing, apprentice, apprentice spend time, even if it's not paid time, like you know whether you know you consider that an internship or not, doesn't matter like apprentice, give your time over to someone who is much better has a lot of experience in this so you can learn from them hand in hand, you know, on a daily basis, to learn from someone who's already doing what you aspire to do, right, as they find someone you can apprentice under…

And the third piece of information and I just to go back on that second one you know I saw a great quote recently which is that you know when you're if you cheat on you know if you copy someone's passing baseboard college or whatever on test right it's you know it's unethical regular happening so what if you copy someone in business right your copy someone in profession right now you consider you consider successful, right so crazy because you know because it's more about what you can do right and how you can further grow yourself in your business.

So that's number two and number three, I would say a nugget of advice. I mean, I guess its cliché but like, you got to work hard. Right? Nothing comes for free. Nothing comes for free nothing and if it sounds too good to be true is right boys are you should do some more… Digging to make sure that we legit because they might also be illegal.

All right. All right. You want to thank you so much for your time. This was absolutely amazing. I definitely am excited to get you back on the podcast if that's something you'd love to do. But where can where can our folks get in contact with you?

You can reach me on LinkedIn. Like I said, I'm very active on bigger pockets as well, which is a great forum for real estate investors to reach me directly an email, I guess, why is it Madison specs? Com? That's a great way to reach me. Um, yeah, feel free to you know, reach out anytime, like I mentioned, we give a free estimate on your property so you can see the numbers. Does this make sense for your situation to do a cost segregation or not? And that's pretty, pretty much a no brainer. You know, once you have those numbers in front of you, either does or doesn't make sense.

Awesome. Now that sounds great guys, make sure that you go and take advantage of, of the service. Sounds amazing. And like I said, so we will definitely be talking after this. Alright, so thank you so much again for your time and really appreciate it. It's been a pleasure.

Thanks, man.

Conclusion

(44:19)

Wow, that was absolutely incredible. I haven't honestly not even sure I can fully comprehend everything that I just consumed that day. But hey, you know what, listen, that's exactly why we're hungry for this information. We go out there. We do the research, we get educated. We network, and we take action. That's right. All right, guys. Make sure you guys are going out there and even need to listen to this podcast 234 or five times, then do it. Hey, that's what it's here for. You can constantly go back and listen to it and it's free. Yeah, can't beat that. Anyway, thank you so much for your time. And thank you so much, Jonah for coming onto the show. Make sure that you guys go and subscribe because if you don't, you're going to…

Awesome folks that are coming on the podcast. All right. Hey, and if you're ready to take action, make sure that you hit up www dot active duty passive income calm to find out how you can grab your first turnkey or how you can get involved in one of our many mentoring programs. It's going to be great. All right. I'm out of here.



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