Podcasts about schedule e

Andy Frye EA and Daren Gress EA will dive into the trends of Schedule E: self rental rules they will cover entity bonus, strategies and pitfalls.   For more information about the episode visit us at prontotaxschool.com or email us to support@prontotaxschool.com

Tax season is in full swing, and in this Tax Tuesday episode, Anderson Advisors attorneys Amanda Wynalda, Esq., and Eliot Thomas, Esq., tackle numerous listener tax questions with practical advice. They discuss the Section 121 exclusion for primary residences, explaining how married couples filing separately can each qualify for the $250,000 capital gains exclusion. They outline strategies for converting personal residences to rental properties using S-corporations and installment sales to maximize tax benefits. Amanda and Eliot clarify 401(k) withdrawal rules, explaining when penalties apply and options like the Rule of 55 and hardship withdrawals. You'll hear recommendations on optimal entity structures for real estate syndications, explanations of the short-term rental "loophole" for active income classification, and when to use trading partnerships versus simple LLCs for investment accounts. The episode concludes with a breakdown of key Tax Cuts and Jobs Act provisions set to expire in 2025, including individual tax brackets, standard deduction changes, child tax credits, and bonus depreciation, highlighting potential impacts for taxpayers.   Submit your tax question to taxtuesday@andersonadvisors.com Highlights/Topics:   "I understand that you can sell your primary residence and receive an exclusion from capital gains taxes on the first $250,000 if you're single and $500,000 if you're married filing jointly. However, I can't find any rules regarding if you're married filing separately. Could you please confirm if married filing separate also qualifies for the exclusion? Also, could you talk about how making improvements adds to the basis?" - Yes, both spouses filing separately can each get the $250,000 exclusion. Only one spouse needs to be on the title, but both must use it as a primary residence for 2 of the last 5 years. Improvements (new floors, additions, HVAC systems) add to your basis, which reduces taxable gain when you sell. "Can I use both cost segregation and bonus depreciation from an S-corp you sell your personal residence to for the Section 121 exemption? Also, what is the accounting treatment if you sold your personal residence to an S-corp using an installment sale?" - Yes to cost seg, no to bonus depreciation (not allowed for related-party transactions). For accounting, record the property as an asset on the S-corp with a liability for the note owed to you personally. You'll recognize all gain in year of sale (which is actually beneficial to utilize the Section 121 exclusion), and interest payments will be recorded as interest income. "Do I have to officially quit my job and be retired to take disbursements from my 401k? At what age can I take disbursements from my 401k? Are there any negative tax implications from taking early disbursements?" - You don't need to quit your job to take distributions if you're 59½ or older, though your specific plan may have different rules. Early withdrawals before 59½ incur a 10% penalty plus ordinary income tax, unless you qualify for exceptions like the Rule of 55 (if you leave your job at 55+) or hardship withdrawals for specific situations. "What is the best entity for tax purposes to invest in real estate syndications?" - A Wyoming LLC (disregarded) or partnership is typically best. This gives liability protection while letting income/losses flow directly to your personal return (important for using passive losses). Avoid S-Corps (reasonable wage requirements) and C-Corps (trap gains/losses on corporate return). "Regarding bonus depreciation and the short-term rental loophole, are either the 500 hours or 100 hours and, more than anyone else, material participation tests prorated for the year? For example, if a property is purchased and put into service in November, those hours would be difficult to achieve." - No, these hours are not prorated. You must meet the full hour requirements between purchase and December 31st. Consider using the "substantially all participation" test if you personally perform nearly all work needed, even if under 100 hours. "If I purchased an investment apartment and repaired windows, floors and incurred other miscellaneous expenses to make it ready for renters, can I write the expense off on my Schedule E? I didn't receive any income for that apartment as of yet." - You can only deduct expenses after the property is "placed in service" (available for rent). If not in service yet, these costs must be added to the property's basis and depreciated. The $2,500 de minimis rule lets you expense (not capitalize) individual purchases under $2,500, but only after the property is in service. "I'm starting to do wholesale investments. I'm still a W-2 employee, yet I will resign soon. Is it recommended that I start my LLC now, and why?" - Yes, start your LLC now for liability protection when entering contracts. Begin with a disregarded LLC in the state where you're wholesaling. Once established and generating consistent income, consider making an S-Corporation election to save on self-employment taxes. "I have a trading account, but I do not actively trade in it. Should I set up a trading partnership for it?" - If you're not actively trading, a simple Wyoming LLC for asset protection is sufficient. For active traders with significant expenses, consider the limited partnership structure with a C-Corporation general partner to shift some income and deduct expenses that aren't allowed on personal returns. Resources: Schedule Your Free Consultation https://andersonadvisors.com/strategy-session/?utm_source=the-best-entity-for-real-estate-syndications-and-maximum-tax-benefits&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=the-best-entity-for-real-estate-syndications-and-maximum-tax-benefits&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq Clint Coons YouTube https://www.youtube.com/@ClintCoons  

We have now hit 237 episodes of Tax Tuesday! Today, Anderson Advisors attorneys Toby Mathis, Esq., and Eliot Thomas, Esq., discuss topics including depreciation strategies, with detailed explanations of how bonus depreciation differs from cost segregation analysis. The conversation also covers real estate professional status requirements, home office deductions, and the strategic use of management C-corporations to maximize tax benefits. Other key topics included the limitations of 1031 exchanges for partnership interests, tax strategies for international property purchases, meal expense deductions under current tax law, and the benefits of a stepped-up basis for inherited properties. You'll hear practical strategies for leveraging existing properties rather than selling them and included insights on how to minimize tax exposure through various investment structures and borrowing strategies. Send your tax questions to taxtuesday@andersonadvisors.com. Highlights/Topics: In 2024, I spent most of my time managing rental properties under our LLC (not in a C or S management corp). I will claim real estate professional status for 2024 tax returns. What home office expenses can I deduct from rental income? Should we consider creating a management C corporation to maximize deductions? - You can deduct a portion of home expenses (mortgage interest, property taxes, utilities, etc.) based on either square footage or number of rooms method. Is 100% bonus depreciation available in 2025? Is this the same as cost seg? - Cost segregation breaks down property components into different depreciation schedules (5, 10, 15 years) while bonus depreciation allows immediate write-offs of qualifying components. If you meet 750 hours as a real estate investor and own both commercial/non-residential real estate property and residential rental property, could you use Schedule C or Schedule E on your tax return? - Generally, long-term rentals go on Schedule E regardless of real estate professional status. Schedule C might be used for short-term rentals (average stay less than 7 days) with significant personal services provided. Does selling a partnership interest in a hotel business qualify for a 1031 exchange? How can you save on taxes on capital gain when you sell your partnership interest? - A partnership interest generally doesn't qualify for 1031 exchange (though the partnership itself could exchange the building). If I inherit a property and now use the property as Airbnb, do I need to depreciate the value of the property? - You should depreciate the property because the IRS will assume you took depreciation when you sell and tax you accordingly (recapture). You'll get a stepped-up basis at inheritance value to depreciate from. Can you comment on food and meals? When can those be expensed and how much? -  Business meals are generally 50% deductible. Company-wide events like holiday parties or open houses with unrestricted attendance can be 100% deductible. Entertainment expenses are no longer deductible. I'm a full-time employee receiving W2 income and own two rental properties which I manage myself. Can I use the qualified business deduction (QBI)? - Yes, you can potentially qualify for the QBI deduction. The safe harbor rule requires 250 hours of rental services, but you may still qualify even without meeting this specific threshold if you can prove it's a trade or business. How can I avoid capital gains if I sell my rental home in the U.S. to purchase a multi-family home in Costa Rica? - Options include: living in the property for 2 of the last 5 years to qualify for primary residence exclusion, leveraging the U.S. property instead of selling, harvesting capital losses to offset gains, or investing in tax-advantaged opportunities to create offsetting losses. I have two rental properties in SoCal owned since 2009 using straight-line depreciation. If I 1031 exchange these properties into replacement properties of slightly higher value, can I start depreciation over and do it correctly? If I 1031 these properties into replacement properties of slightly higher value, does that mean I can start depreciation all over and do it correctly? Getting more tax benefit. How does this affect my basis? What about any recapture when I then sell later? - In a 1031 exchange, you'll have carryover basis from the relinquished property. The basis in the new property will be its purchase price minus deferred gain. Instead of selling, consider leveraging existing properties to buy additional real estate for more depreciation opportunities. What are the benefits of the step-up basis evaluation for a person's residence and investment property? - When inherited, properties receive a stepped-up basis to fair market value at death, allowing heirs to depreciate from the higher amount and potentially eliminate capital gains tax on appreciation that occurred during the deceased's lifetime. Resources: Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=bonus-depreciation-in-2025&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=bonus-depreciation-in-2025&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis  

Join my Facebook group, Tax Strategies for Real Estate Investors, and become part of a community with 11,500+ high-level real estate investors ► Join here: ⁠https://www.facebook.com/groups/taxstrategyforinvestors⁠ In this episode, I sit down with Brenna Carles from The Mortgage Shop to break down the biggest mistakes real estate investors make when filing taxes and applying for loans. We dive into the differences between Schedule C vs. Schedule E, how to avoid overpaying in taxes, and how to qualify for more loans to expand your property portfolio. Brenna shares practical advice on loan strategies, partnerships, and even how to shift debt to maximize your borrowing power. If you're looking to optimize your financing, this episode is packed with insights you can't afford to miss. Timestamps: 00:00:00 — Intro 00:00:37 — The importance of Schedule E vs. Schedule C for real estate investors 00:03:36 — Why Schedule C can block you from qualifying for loans 00:04:17 — How Schedule E can increase borrowing capacity for investors 00:07:15 — Key deductions for Schedule E filers (T.I.M.D. method explained) 00:09:40 — Real case study: How one mistake cost a client $18,000 in extra taxes 00:11:31 — How Brenna manually verifies loan eligibility to avoid last-minute surprises 00:14:49 — The myth of "just trust your accountant" — Why you need to check their work 00:16:04 — Using Form 8825 for partnerships and how it works like Schedule E 00:19:47 — Strategy alert: Why you should shift bad debt into your spouse's name 00:22:27 — How to shift loans from your personal name to an LLC using DSCR loans 00:25:31 — Avoid analysis paralysis — How to take action without overthinking 00:27:28 — Why making calculated risks can lead to life-changing wealth decisions Interested in working with me? Apply here: ► https://taxstrategy365.com/apply?el=podcast Let's connect! ► Instagram: ⁠https://www.instagram.com/learnlikeacpa/⁠ ► LinkedIn: ⁠https://www.linkedin.com/in/learnlikeacpa/⁠ ► Twitter: ⁠https://x.com/LearnLikeaCPA⁠ ► Facebook: ⁠https://www.facebook.com/learnlikeacpa⁠ ► Tiktok: ⁠https://www.tiktok.com/@learnlikeacpa⁠ *None of this is meant to be specific investment advice, it's for entertainment purposes only.

It's our last Tax Tuesday episode of 2024! In this episode, Anderson attorneys Amanda Wynalda, Esq., and Eliot Thomas, Esq., address several listener questions on a variety of tax topics. They cover the tax implications of moving into a rental property, including how it affects capital gains and depreciation. They discuss the possibility of using an LLC as a management company for rental properties, allowing for contributions to a personal IRA. Eliot and Amanda also explain how negative cash flow from rentals can affect deductions and tax filings, the importance of staying organized with rental property expenses, and the consequences of transferring ownership in a 1031 exchange. Other topics include options for offsetting passive income with retirement accounts, consolidating LLCs under a Wyoming holding company, deductions for 529 plans, and the stepped-up basis for gifted stocks. Tune in for expert advice on these and more! Submit your tax question to taxtuesday@andersonadvisors.com Highlights/Topics: What are the tax implications of moving into one of our rentals? Bought the property 13 years ago, have never lived in it, taken expenses and depreciation on the returns or should we just rent it from ourselves through our property manager? - Just moving in, no real tax consequence. Once you move in you're not paying capital gains. The 13 years will be considered ‘non-conforming use'. Don't rent it to yourself. I own three rental properties. Can I use that LLC as a management company? Take a 10 to 15% management fee and use that money as an earned income to allow contribution to my personal IRA. Would that contribution be deducted from my rental income as cost to the rentals and Schedule E? When is the deadline for the contribution. My LLC has some expenses too. If my net income is only $3,000, can I still contribute $7,000 to my personal IRA and deduct that amount? - You're running passive rental income through a mgmt company to make it ‘active' income, yes you can do this. You need a management agreement that you actually pay before December 31st. Can I use negative cash flow as a deduction towards income /capable gains? I'm in California and nothing cash flows for at least a few years. If I'm negative $1,000 or more cash flow, is this a deduction against passive income or capital gains? - Capital gains come in when you sell the property. You can pull passive losses from other properties you own. What expenses are incurred for rental properties or tax deductible and what is the best way to stay organized when keeping records of bills and expensive for rental properties to make it easier at tax time? - Google IRS Schedule E page 1. There is a list there to refer to. Good bookkeeping is essential. Can I transfer the ownership of a property owned by an LLC tax as a partnership that I purchased as a replacement property in a 1031 exchange or will that trigger a taxable event? - Yes you can transfer, but it will trigger a taxable event. My wife receives income from multiple sources, real estate rental, consulting, etc. We plan to set up a C Corp to consolidate the passive income and offset some of that income with retirement contributions into a solo 401 (k). Unfortunately, we did not set up the C Corp in time for the tax year 2024. What options do we have with respect to retirement accounts to offset her passive income for 2024. What can we still do? - Consulting is not usually passive income. Can multiple individual LLCs mix of small business and rentals be consolidated into one tax return under a Wyoming holding company? If so, is that a recommended practice? Adding in a small business? - For rentals this is a standard protection structure, one property per LLC. You can add the active, but we would not recommend it. How much can we deduct with a 529 plan for our kids?- Some states may give you a deduction, but at the federal level there is no deduction. If I gift my stock to my aging dad and become the beneficiary the stock when he passes will I get the stepped-up basis after I inherit them? - This is fantastic. Yes, you can do this. This is great, but they have to live for at least one year after the gift, and you have to make sure he's actually going to leave it to you upon his death! Resources: Schedule Your Free Consultation https://andersonadvisors.com/strategy-session/?utm_source=consolidating-llcs-under-a-wyoming-holding-company&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=consolidating-llcs-under-a-wyoming-holding-company&utm_medium=podcast Bookkeeping Packages from Anderson Advisors https://bookkeeping.andersonadvisors.com/ Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq

In this episode of Tax Tuesday, Anderson Advisors attorneys Clint Coon, Esq., and Eliot Thomas, Esq., discuss essential tax strategies for business owners and investors. Topics covered include late S election strategies, the best approach for payroll and officer compensation, and the benefits of Solo 401(k) plans over Roth IRAs. You'll hear about how to tackle tax implications for cryptocurrency staking, offshore trusts, and real estate professional status. Additional insights include structuring holding companies for real estate investments, deducting rental expenses, and handling business losses. Tune in for expert advice on navigating complex tax decisions.   Send your tax questions to taxtuesday@andersonadvisors.com. Highlights/Topics:  "I'm considering a late S election effective January 1st of 2024." Okay, so we're going back in time here for an LLC. "I understand it's late in the year to get everything in order. I've heard others recommend an option to avoid payroll for 2024 by issuing a 1099 miscellaneous as officer compensation in lieu of a late payroll, then get payroll set for 2025. Would you suggest this 1099 approach, or is there still time to get payroll done for all of 2024?" - We don't advise this here at Anderson. We want you to roll the proper W-2 payroll. Yes, there's plenty of time. “What type of businesses do I need to set up a Solo 401(k) or Roth IRA?” - Look at the Solo 401(k) and use the Roth component built into the Solo 401(k) versus doing a Roth IRA because it gives you a little more flexibility in the control of those funds. "Can you review the contribution rules for a Solo 401(k) and for an IRA in 2024? For instance, when you defer income at year end and make a company match, then also the IRA contribution if possible?” - You can contribute up to $23,000 as the employee, and then the employer can contribute up to 25% of your earned wages "I invested in a cryptocurrency a few years ago. I have been staking it directly on the network, and in return, I receive a staking reward. How is the crypto activity taxed?" - The staking is usually considered ordinary income. That means it's going to be taxed at ordinary rates and very likely is subject to employment taxes. “I've been considering opening an offshore trust that owns an offshore LLC that engages in forex day trading business in the Cayman Islands. I only pay taxes on distributions received from the trust that way, I can grow capital outside the US. Am I on the right path here? And are there other consequences that I should consider?” - The way the US taxes individuals is that when we say worldwide income, it's not the income you earn in your own name. It's also the income that you earn through entities that you hold an interest in. "I have a real estate professional status." (We call it REP status for short.) "I have invested in both traditional, rentals, and syndications, both use cost segregation and bonus depreciation. Can I claim the paper loss from real estate syndications together with our other rental activity after electing to aggregate all real estate activity? Is it allowed to claim all losses, or the ones from syndications disallowed?" - You have to work over 750 hours in a real estate trade or business that you ‘materially participate' in. That could be I sell houses, real estate agent, things like that. I manage houses, anything like that, and that has to be over 50% of your work week. Typically, it's difficult to do if you have a W-2 job.  "I own three separate holding companies, LLC taxed as a partnership for my real estate." We'd always recommend that, some oil, and mineral rights. "A second taxed as a partnership for active real estate flips." We might have an issue with that. "S-corporation for technology consulting." "I saw Anderson videos on holding a passive brokerage account, not active trading, in an LLC for asset protection. Where do you recommend I'd place this? Would it go into one of these other LLCs or some other holding company? I would prefer to avoid an extra annual federal tax filing if possible." - I would keep it completely separate because you've got this one set up for the oil, this one set up for the real estate, this one here is our active business. Putting your brokerage, your savings account into any of those entities just wouldn't make sense to me. "I have a primary residence that I plan to rent after one year, which would be in December. If I put it into service this year, can I deduct expenses that were needed to make it ready for that rental, such as a cost seg for this year?” - It's a question of when it is placed into service. If we've already placed it in the services and we start, depending on what we're doing to improve on it, if it is just an improvement, that's still just going to go to basis, and we would depreciate it now that it's a rental. “Clint recommends using a partnership holding company for residential real estate investment. "Do I need to start a new IRS filing submission with a partnership holding company or keep it on my existing Schedule E, personal IRS filing? I have 25 investment homes, so I'd like to minimize the amount of work for this change. I'm not sure how to do this accounting change." - You can write out 25 little boxes down here that all lead up to just one entity, Wyoming holding. We'll make them do all 25. "I have a relatively new corporation whose expenses exceed income," so we've got losses. "Can these expenses be used to offset income in 2025? If so, how would I indicate this on this year's tax return?" - If we have more expenses than income, it's a loss, it can carry forward into the next year. Resources: Schedule Your FREE Consultation https://andersonadvisors.com/strategy-session/?utm_source=staking-crypto-how-are-rewards-taxed?&utm_medium=podcast Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=staking-crypto-how-are-rewards-taxed?&utm_medium=podcast Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis

Send us a textBy focusing on the details that matter most—like occupancy rates, net operating income (NOI), and even factors like competition and CapEx—Scott provides a roadmap for presenting your project as a sound, profitable investment. With a rundown on add-backs, market trends, and the importance of lender-approved due diligence, Scott explains how to secure funding and establish your credibility with potential partners.WHAT TO LISTEN FOR2:24 - Key Elements for Lender Confidence12:29 - The Power of Schedule E in Negotiations14:48 - Add-Backs that Boost Value23:08 - Maximizing Profits for Loan ApprovalLeave a positive rating for this podcast with one clickCONNECT WITH USWebsite | You Tube | Facebook | X | LinkedIn | InstagramFollow so you never miss a NEW episode! Leave us an honest rating and review on Apple or Spotify.

Understanding self-employed borrower income can be challenging, especially when it comes to S-Corporations. In this episode of Loan Officer Training, we tackle the complexities of analyzing income for borrowers who operate as S-Corp owners, guiding you through key strategies to confidently assess their financial stability.Learn how to interpret K-1 forms, identify distributable vs. retained earnings, and accurately assess shareholder wages, all while taking into account the nuances of S-Corporation tax structures. We'll cover essential documents like the 1120S tax return, Schedule E, and financial statements, providing practical tips on identifying income trends, evaluating debt-to-income ratios, and recognizing red flags in S-Corp financials.Packed with real-world scenarios, this episode equips you with actionable skills for working with self-employed clients, helping you make informed lending decisions and streamline the approval process. Whether you're a seasoned loan officer or new to self-employed borrower analysis, tune in to elevate your expertise and close more loans with confidence.Join The Mortgage Calculator at https://themortgagecalculator.com/joinAbout The Mortgage Calculator:The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!Our team of over 350 licensed Mortgage Loan Originators can assist our customers wiCatch all the episodes of the Loan Officer Training Podcast at https://themortgagecalculator.com/Page/Loan-Officer-Training-Series-Podcast Catch all the episodes of the Loan Officer Training Podcast at https://themortgagecalculator.com/Page/Loan-Officer-Training-Series-PodcastLoan Officers for Unlimited Free Non-QM Leads & Trainings Join The Mortgage Calculator at https://themortgagecalculator.com/joinThe Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes! Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access...

In this episode of the Tax Smart REI podcast, Thomas and Ryan dive into real estate tax strategies by addressing audience questions from their public community and Facebook group. Covering crucial topics, they guide listeners through the complexities of tax planning, especially for short-term rental owners, and how they can leverage tax rules to minimize liabilities. Here's what they discuss: - Understanding when to use Schedule C vs. Schedule E - Short-term Rental Loopholes and Real Estate Professional Status - Travel, Meal, and Home Office Deductions - Year-End Moves & Capital Gains Strategies To become a client, request a consultation from Hall CPA, PLLC at go.therealestatecpa.com/3KSEev6 Register for the Year-End Tax Impact Event: go.therealestatecpa.com/3zVWP7E Join the Tax Smart Insiders Community: go.therealestatecpa.com/3Xx1Cpd Checkout Thomas's new YouTube channel: www.youtube.com/@thomascastelli The Tax Smart Real Estate Investors podcast is for general information purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Information on the podcast may not constitute the most up-to-date legal or other information. No reader, user, or listener of this podcast should act or refrain from acting on the basis of information on this podcast without first seeking legal and tax advice from counsel in the relevant jurisdiction. Only your individual attorney and tax advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this podcast or any of the links or resources contained or mentioned within the podcast show and show notes do not create a relationship between the reader, user, or listener and podcast hosts, contributors, or guests.

Welcome to the Know Your Numbers REI Podcast! In this episode, host Chris McCormick, CPA and Certified Tax Planner at Better Books Accounting, dives deep into a crucial topic for short-term rental investors: the biggest tax mistake that could cost you thousands of dollars. Are you aware of the correct tax treatment for your short-term rental? Many investors and even accountants make the mistake of placing short-term rentals on Schedule C instead of Schedule E, leading to unnecessary self-employment taxes. Chris explains the implications of this mistake and how to avoid it, ensuring you keep more of your hard-earned money. In this episode, you will learn: The difference between Schedule C and Schedule E for short-term rentals What constitutes "substantial services" and how it affects your tax treatment The potential tax savings you could achieve by working with a qualified real estate tax professional The importance of timely tax planning and preparation If you find this episode valuable, please share it with a friend, give us a five-star rating, and subscribe to our YouTube channel for more insightful content. Join us as we help you navigate the complexities of real estate investing and tax planning! •••••••••••••••••••••••••••••••••••••••••••• ➤➤ To become a client, schedule a call with our team or fill out a contact request form ➤➤ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.betterbooksaccounting.co/contact⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ •••••••••••••••••••••••••••••••••••••••••••• Connect with Chris McCormack on Social Media Facebook: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.facebook.com/chrismccormackcpa⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.linkedin.com/in/chrismccormackcpa⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.instagram.com/chrismccormackcpa⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join our Facebook Group: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.facebook.com/groups/6384369318328034⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ → → → SUBSCRIBE TO BETTER BOOKS' YOUTUBE CHANNEL NOW ← ← ← ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.youtube.com/@chrismccormackcpa⁠⁠⁠⁠⁠⁠ The Know Your Numbers REI podcast is for general information purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Information on the podcast may not constitute the most up-to-date legal or other information. No reader, user, or listener of this podcast should act or refrain from acting on the basis of information on this podcast without first seeking legal and tax advice from counsel in the relevant jurisdiction. Only your individual attorney and tax advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this podcast or any of the links or resources contained or mentioned within the podcast show and show notes do not create a relationship between the reader, user, or listener and podcast hosts, contributors, or guests. #ShortTermRentalsTips #SubstantialServices #TaxAdvice #ScheduleC #ScheduleE #CommonMistakes #InvestSmart #AirBNB #SelfEmploymentTax #PassiveIncome #TaxTreatment #QualifiedCPA #AccountableAccountant #FinancialPlanning #AccountingForRealEstateInvestors #RealEstateTax #RealEstateTaxTips #RealEstateInvestor #KnowYourNumbers #BetterBooks #ChrisMcCormack

It's been 6 years since we've had TenantCloud join us on the podcast, and a lot has changed since then! In today's episode of the #DoorGrowShow, property management growth expert Jason Hull welcomes Mark DeHaan from TenantCloud to talk about how it can help property managers collect payments, advertise properties, and screen potential tenants. You'll Learn [03:03] TenantCloud update!  [06:46] How does TenantCloud compare? [09:34] TenantCloud integrations  [12:20] Scaling with your software  [15:56] Starting strong with Rentler  Tweetables “A lot of times when you get into rental real estate… you log into a property management system and you're like, "holy smokes, this is so overwhelming like I can't figure this out.” “A lot of property managers have all of these different tools. They kind of build their own Swiss army knife or stack of different tools and software.” “A lot of property managers have a challenge with financials and accounting.” “We love the rental real estate industry and helping people grow and make passive income and that's what we're all about.” Resources DoorGrow and Scale Mastermind DoorGrow Academy DoorGrow on YouTube DoorGrowClub DoorGrowLive TalkRoute Referral Link Transcript [00:00:00] Mark: A lot of times when you log into a property management system and you're like, "holy smokes, this is so overwhelming, like I can't figure this out." [00:00:07] And that's, I think the differentiator that we tried to solve.   [00:00:11] Jason: Welcome DoorGrow property managers to the DoorGrow show. If you are property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing in business and life, and you're open to doing things a bit differently, then you are a DoorGrow property manager. [00:00:29] DoorGrow property managers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you're crazy for doing it. You think they're crazy for not because you realize that property management is the ultimate high trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management business owners, and their businesses. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market and help the best property management entrepreneurs win I'm your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. [00:01:10] Now, let's get into the show. And my guest today is Mark DeHaan of TenantCloud. So Mark, welcome to the show. Good to have you.  [00:01:19] Mark: Yeah. Thanks Jason. Nice to meet you. Appreciate it.  [00:01:22] Jason: So we haven't had TenantCloud on the show for like six years. Back then, Joe Edgar was CEO. I had to look it up because I'm like, "I know, that they've been on the show before." [00:01:32] So I'm guessing a little bit's changed since then. So why don't we start by getting into a little bit about Mark. Tell us, tell everybody like, who are you and how'd you get into your entrepreneurial journey and then what led you to being at TenantCloud?  [00:01:46] Mark: Yeah, great. Yeah. So I'm based here just outside of Salt Lake city, Utah. [00:01:50] And I was a co founder of Rentler. And we partnered with TenantCloud, merged with them about five years ago with Joe. And when he exited, I ended up taking over as a CEO and running both Rentler and TenantCloud. And it's been a big journey by then, but yeah, my history was rental real estate. [00:02:13] And being an entrepreneur and really sacrificing and so forth. And it's been really exciting, and I love your audience because I think they can relate to, you know, being an entrepreneur and trying to grow in the real estate business.  [00:02:25] Jason: So for sure. I'm looking up Rentler right now, cause I don't know what it is. [00:02:30] What's Rentler? [00:02:31] Mark: So Rentler primarily focuses on listings and filling vacancies for landlords, small mom and pop landlords. Yeah. It does some payments and screenings and a few other tools and syndicates out your leads. And then TenantCloud is a lot more robust. It does the accounting, the maintenance, a ton of things that you can track with service professionals and your owners and reporting. [00:02:53] And so they came, they come together really nicely. And we just try to really focus on. landlords and property managers and using technology to make their lives easier.  [00:03:03] Jason: Got it. So what's what's been going on at TenantCloud since in the last six years? Like what what are you guys doing lately? [00:03:12] And you know, why should people use TenantCloud? Like, let's get into it.  [00:03:17] Mark: Yeah. So the last bit we've been growing tremendously. We're processing over a billion dollars in rent payments a year. Well over that. And TenantCloud really as its core is to help the rental life cycle and help owners, service professionals, tenants, and landlords really come together and leverage technology to run the business and the way we built it was with that in mind to really make things seamless and easy. And you can pay your rent with, you know, ACH, credit, debit, Apple Pay, Google Pay. We have a lot of things that we're working on to just make life easier there. We do screenings, have a ton of different bundles, options for you to do screenings and to protect your investment. And that's been really good to help people with income verification and criminal and background checks and of that nature. [00:04:11] Yeah and we do a lot of accounting. We will even file your Schedule E for you automatically. So the cool thing about TenantCloud is you don't have to have a degree in accounting. You can really log into our software and we're, we'll lead you along that process. And we'll do a lot of the tax reporting team management and you know...  [00:04:33] Jason: Can you explain what a schedule E is for those that might not be familiar with it. [00:04:38] Mark: Yeah, absolutely. So schedule E is you know, to report income or loss on your rental real estate. And that's one thing that you'll have to do. You'll get a 1040 form and, you know, the government will want you to file that. And sometimes that can be tough to do, but with our system we will track all of your expenses and all your income and so forth and help you file that form on your behalf.  [00:05:05] Jason: So for property managers, they're doing this third party for owners, this then becomes a resource for the owners that they're managing properties for. It will do it for them as well? [00:05:15] Mark: Yes, and we do have like an owner portal. So what's great is you can have your owners log in instead of having that back and forth. [00:05:24] We give them a login where they can have some view access to see their portfolio as well. So it just makes it easy for those property managers to work with their owners.  [00:05:35] Jason: Got it. Okay. Now what's different between a property manager using this tool or like owners just going direct and getting TenantCloud and bypassing the property manager? [00:05:46] Mark: Well, yeah, I mean, some owners can do that, but I mean, then they have to deal with a lot of the heavy lifting with the maintenance and managing all the units. And so with the property manager using our system, we make it easy for the owners to have access and you can send your distributions to them and so forth. [00:06:05] But it really comes down to the ease of use and being able to manage all your leads. Manage, you know, all your contracts, all your communications with your tenants and with it, it's such a affordable option. Like our lowest plan is 17 bucks a month and we don't do a lot of unit restrictions like other competitors where you can add a bunch of units on the system. And really make it affordable for you as a property manager. So, yeah, hopefully that answers your question there.  [00:06:36] Jason: Got it. Okay. So you would say TenantCloud's probably a lot more affordable than some of the competition that exists for property managers out there. So how would you say TenantCloud kind of compares to some of the big names in the industry like Appfolio, Propertyware, there's a bunch of these You know, and then I know Bodia just came out with RentVine and then Rent Manager, you know, these tools. So we've got clients using all these different tools. [00:07:03] So how does TenantCloud sort of fit into the mix and how do you kind of stand out among all these different tools because there's so many of them now.  [00:07:11] Mark: Yeah. So we started with the end user in mind where it was more of a business to consumer platform where you didn't have to do a heavy integration and you could just quickly create an account and more of a self service where it would be really intuitive. [00:07:28] If you were, you know, if you had one property up to, you know, 50 units, you could easily log in. And it was way more affordable than those bigger players. They have monthly minimums, and you'd have to spend months to integrate your stuff. Everything we built was to make it so, boom, within a couple days, you could get set up, and we would help you add your accounts, add your units, add your tenants data. And so we really tried to make it cutting edge where we used a lot of the technology to help you get set up a lot quicker. And so one thing that people really, they come over to us is. You know, they're like, "man, your platform is a lot easier to use because of the way you built it. It's just really quick to get it. I don't have to hire an accountant or get an implementation manager to help me use your software" because a lot of times when you get into rental real estate, you're an entrepreneur or you have a day job and then you log into a property management system and you're like, "holy smokes, this is so overwhelming, like I can't figure this out." [00:08:35] And that's, I think the differentiator that we tried to solve is that you don't have to have a professional help you use our software. You can just go ahead and get started and it will help you from day one.  [00:08:46] Jason: So basically, you're kind of one of your unique differentiators is since you started with the consumer in mind, instead of maybe a property manager in mind, you focus really on maybe the tenant and the property owner's experience being you know, really great, which once you started focusing on property managers, probably made a lot easier for the property managers. They're probably getting less questions. Maybe the reports are a little more clear. It's a little bit easier for them to figure out what they need, which has been a frustration. I've heard from a lot of software, you know, the owners find it confusing. They find their statements confusing. The tenants are like feeling things are confusing. Now a lot of property managers have all of these different tools. They kind of build their own Swiss army knife or stack of different tools and software. [00:09:34] How are integrations with TenantCloud or which things do you guys do really well that they might not need? You know, some of our clients might, for example, be using TenantTurner, even though they use Appfolio in order to get properties leased out and, or they might be, or to do self showings, or they might be using we've got a lot of clients getting going on this new AI maintenance coordinator called Vendoroo, or in the past, they might use PropertyMeld, you know, for maintenance coordination. [00:10:01] So they're stacking all these different tools because usually there's better stuff than what the property management software has internally. How does TenantCloud sort of go with this?  [00:10:11] Mark: Yeah, that's a great question. So TenantTurner is an awesome company and we have an integration with them. [00:10:18] Jason: Okay.  [00:10:18] Mark: And so we feel like we're a platform and we're doing more and more integrations with companies like you mentioned with maintenance. There's others out there that solve that problem. I mean, we have a maintenance portal, but we love to integrate other tools and make it so it's seamless and easy that you can do a show in coordination like a TenantTurner and so forth. [00:10:39] And so, yeah, that's a big thing for our users and we love to work nicely with other companies that will help benefit them.  [00:10:47] Jason: Great. So, TenantCloud has an open API that some of these companies can connect with? Yeah. Okay. Awesome.  [00:10:54] Mark: Absolutely. I mean, we have a partnerships team and they can reach out and we can, you know, when our users request certain things, we say, you know, that makes sense. [00:11:04] So absolutely. We love that.  [00:11:06] Jason: Is there a scenario or a situation in which you think. TenantCloud' s maybe not a good fit for certain property managers or certain types of management.  [00:11:18] Mark: Yeah, that is sometimes like multifamily or you're getting really a ton of units. You're going to probably need something a little bit more robust. [00:11:27] Now, we just launched reconciliation and some other features more reporting tools to help as we move up market because primarily we were focused on ones that, you know, had under 10 units and then we started growing. Now we have people that use us that have a few hundred doors and they love it. [00:11:46] They love the ease of use. They love the cost. They love that it's not restrictive, but some of that trade off is like, "Hey, you don't have some of these other customizations that you know, maybe a Yardi or some of these bigger players have." And so I would say if that's the case, you know, you'd have to wait a little bit as we continue to add more of those robust features for the upmarket bigger players. [00:12:08] Jason: It sounds like TenantCloud is a great place for a property manager. And it's small to start, especially when they're getting pushed back from places like Appfolio or Buildium, saying you have to have a 200 door minimum stuff like this. Is TenantCloud something that can scale with them up to maybe a thousand doors? Are they going to run into some capacity issue or some challenges if they continue? Because switching software is hard.  [00:12:31] Mark: Yeah, it is. And we do have some that have a thousand doors and some bigger ones and they love it. And I think it's just the way you approach your business and how you can adapt. [00:12:41] I mean, you'd save a ton of money and the way that every property manager is different. You know, I wish there was a standard in how accounting worked in the industry and how things did with money in, money out and so forth. But so sometimes people say, "well, I'm just so used to how these older systems work," and that's fine. [00:12:59] But if you want to be more innovative and more customer facing and adopt, you know, the latest technologies on how payments are being transferred and so forth, then I think you'll fit in really good, you know, with what we have going on.  [00:13:13] Jason: Got it. Yeah. I know that's been an industry issue for a long time is they're not being sort of a standard in accounting and NARPM then released the NARPM sort of chart of accounts and the NARPM accounting standard that hopefully is starting to get people a little more on the same page. [00:13:30] It has kind of been an adoption challenge, I think, and some people are starting to get going on it. And then there's definitely some businesses that have been capitalizing on it financially to like help businesses get that dialed in and get their QuickBooks like mapped out. Related to that, a lot of property managers have a challenge with financials and accounting. [00:13:51] They've got the accounting they've got to do for the client, right? Which is usually done by their property management software. But then there's their internal accounting, their own books. And some of them try to run that through their software, which I think is a little crazy. Or some of them tried, like, will have QuickBooks or something else. [00:14:07] I've noticed this it is a common problem in the industry is like people having this accounting mess and not being focused on it. Some outsource it and I've had clients come to me that say they found out their bookkeeper or accountant wasn't doing things right for like three years. And then one of my clients was suing their accountant and won and like, but it's still a mess that has to be cleaned up. [00:14:31] And so, maybe you could touch on TenantCloud. I know you help with the owners and their properties and the accounting. I'm sure. How do they help with their business accounting? Is there any connection to like maybe quickBooks, or is this something that the tool helps with or how would this work? [00:14:50] Mark: Yeah. So we have an integration with QuickBooks and that helps. And then everything we do with the reporting and with all your financials, we just try to make it really easy between the owners and the property managers so that, you know, it's seamless, but I do feel like, you know, QuickBooks could help. [00:15:09] And, you know, primarily we're trying to do property management software. But you know, personal finance is a big part of that. We just are launching a cool product with our banking partner where we can now loan some capital to folks that want to grow some doors. And so with our payment system and our banking partner, people can quickly get a loan directly through our system and they could use it to then go buy their next rental property. So we're looking at more innovative ways. That just kind of reminded me on the personal finance, like, "Hey, I really want to go buy this next door, but I don't have some money." We can help loan that money to help you grow your business. [00:15:51] And that's going to be coming out here at the end of this year.  [00:15:54] Jason: Cool. Very cool. So how does how does this relationship with Rentler and TenantCloud benefit, maybe property managers that are looking to use your software. And this, your shirt has on it. So then you've got this relationship going there. [00:16:08] So how did these kind of work together? I'm curious.  [00:16:11] Mark: Yeah. So Rentler doesn't have a subscription. It's free to use. And so if you're just like one unit. And you're just barely getting in. Let's say you're moving and you just need to rent out your basement apartment or you just have one property, you can use our payment system, do screenings and you can list your property, syndicate, get your leads, fill vacancies. And it's like super light. I mean, it would probably be very similar to like a Cozy back in the day, or like a Zillow Rent Manager just something there to just boom, do that. And then as you graduate, as you go, "Hey, I really want to do more accounting or actually property management software." [00:16:51] Then you graduate up to TenantCloud and when you list with TenantCloud, it will post on Rentler, but Rentler was primarily, you know, a listings and filling vacancy. So that's how that works.  [00:17:02] Jason: Is there an easy upgrade path from Rentler to TenantCloud or?  [00:17:06] Mark: Absolutely. Yeah, there is. [00:17:07] Yeah, we have a fantastic support system. Pretty much 24 seven support. We have chat, we have people you can call and we'll help you. Most all of our support have been in property management and ran their own property management companies. And so they're really helpful to. to guide you and what you need for your business. [00:17:26] Jason: Got it. Okay. Very cool. So, well, this is very helpful. Anything else that people should know about TenantCloud if they're working on making this decision right now between all these different software that exist out there?  [00:17:38] Mark: Yeah, I'd say we have a free trial and give us a shot and there's a lot of great things coming down the pipe. [00:17:44] So just ask our team, you know, Hey, if we don't have something that we probably will have it coming soon, but yeah, give us a go and you'll love it and we'll make your life a lot easier.  [00:17:56] Jason: Very cool. Awesome. Well, Mark, how can people find out more about TenantCloud? How can they get in touch with y'all? [00:18:04] Mark: Yeah, they can log on TenantCloud. com. We do a webinar every Thursday and they can learn about our system. And they can sign up for that on our website, TenantCloud. com. They can reach out. We have a great sales team, account management team that will give you a demo. You know, We'll do a consult free consultation on your business and help you out with that. [00:18:25] So we're happy to help we love the rental real estate industry and helping people grow and make passive income and that's what we're all about.  [00:18:34] Jason: Awesome mark. Thanks for coming on the DoorGrow show giving us an update on TenantCloud and everybody check them out at TenantCloud. com. Thanks for coming, Mark. [00:18:43] Mark: All right. Thank you, Jason. Appreciate it.  [00:18:45] Jason: You bet. All right. So if you are a property management entrepreneur and you are either struggling to get leads or to add doors to your property management business, reach out to DoorGrow. We might be able to help you and we've been able to help lots of our clients add hundreds of doors to their portfolios to help them scale their businesses. [00:19:09] And we would love to see if we might be a fit for you to help you scale as well. So check us out at doorgrow.Com. And if you are a fan of the podcast or you follow us on YouTube. Make sure to like, and subscribe and make sure you're plugged in and make sure to join our free Facebook community by going to DoorGrow club. com. If you go to doorgrowclub.Com, it will redirect you to our Facebook group so that you can join. Make sure you answer the questions clearly because we're really careful about who we let in. We reject 60 to 70 percent of the people that apply to join that group every month. It's for property management, entrepreneurs, property management business owners. [00:19:54] That includes those of you that are starting a property management business, just let us know that in the questions. So answer the questions. Join that and make sure you're asking questions inside the group and you'll by joining the group. We will also send you a series of free gifts to benefit you including a fee bible and some other resources that I think would be really useful to your business. [00:20:18] And you can also then schedule a call with our team. So check that out doorgrowclub.com. Until next time, everybody. To our mutual growth. Have an awesome week. Bye everyone [00:20:28] you just listened to the #DoorGrowShow. We are building a community of the savviest property management entrepreneurs on the planet in the DoorGrowClub. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead content, social direct mail, and they still struggle to grow!  [00:20:54] At DoorGrow, we solve your biggest challenge: getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today's episode on our blog doorgrow.com, and to get notified of future events and news subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow Hacking your business and your life.

Today, attorneys Toby Mathis, Esq., and Amanda Wynalda, Esq., delve into listener questions around topics like the benefits of LLCs for real estate investors, income-shifting tactics, and the implications of the Tax Cuts and Jobs Act on small business owners. The conversation also delves into the complexities of Qualified Business Income (QBI) deductions, using self-directed IRAs for real estate investments, and the tax implications of transferring appreciated property into LLCs. Submit your tax question to taxtuesday@andersonadvisors.com Highlights/Topics: Have you attended an in-person or virtual Tax and Asset Protection Workshops? Anderson Advisors has done a great job of creating all the pieces of my estate, but I have no idea how to put it all together. All right, that's a great first one. In particular, how do the holding LLCs flow into my personal tax return and how does the LLC tax as a C-corp get reported on my personal returns? - if your entire structure is disregarded and you're reporting your rental properties on your Schedule E, page one, you would continue to report that exact same thing on Schedule E, page one. Can I expense my breeding stock as a dog breeder rather than do depreciation? - They have a seven-year useful life, as “business property” Can you please speak about QBI and how it is often missed by business owners? W-2 employees are not allowed to use it. Who else? On the one hand, S-Corps can claim 20% right away. Is this true? - C-corps are separate entities, this is geared to the small business owner As a real estate professional, can I also take the depreciation expense from syndications? How do I use my self-directed IRA to invest in real estate? - if you have a self-directed, then you can invest in what's considered, I guess, non-traditional types of investments, including real estate What is the tax impact of moving an appreciated property into a LLC? - you have like four choices disregarded partnership, S-corp, C-corp. But there's no such thing as LLCs for tax purposes. So we need to know a little more information. What are the differences between an HSA and an HRA Health? - HSA is a health savings account and an HRA is a health reimbursement account. So there's actually a number of differences. I have been depreciating my rentals for tax purposes. How can I benefit or switch to cost segregation? - They're business property and so residential real estate is depreciated on a 271/2 year useful life and commercial is 39 years. How should I set up my stock investing to avoid huge tax penalties? Penalties, yeah, don't worry about the penalties, it's the tax liabilities of making too much money. Do you have to be an LLC to get all the tax benefits from purchasing investment properties? - If we're talking about all the tax benefits, probably. But you don't have to have an LLC to own rental property. Resources: Schedule Your Free Consultation https://andersonadvisors.com/ss/?utm_source=aba&utm_medium=podcast&utm_content=how-to-use-your-self-directed-ira-for-real-estate-investing Tax and Asset Protection Events https://andersonadvisors.com/live-tax-and-asset-protection-workshops/ Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq Clint Coons YouTube https://www.youtube.com/@ClintCoons

Today, experts Toby Mathis, Esq., and Elliot Thomas, Esq., explain valuable tax strategies for real estate investors, traders, and various income earners. You'll hear about the optimal tax classifications for short-term rentals, using retirement funds for real estate investment, and the transition from W-2 to 1099 income for tax benefits. Additionally, Eliot and Toby discuss maximizing deductions through trading partnerships, the benefits of Health Savings Accounts, vehicle write-offs, and home office deductions. Submit your tax question to taxtuesday@andersonadvisors. Highlights/Topics: Is short -term Airbnb and VRBO (short term rentals) under Schedule C or Schedule E? - if it's just bare oversight management, etc. That might put it on Schedule E. Schedule C is if you have more substantive activity you're putting into it. I was told I could use my company assets of 401k to loan money to buy real estate investment. Is that true? If so, how? - its true, one is allowed to take a loan out by law, if your plan allows for it. If you don't pay it back it becomes taxable income. How how can I position my child's college tuition as a business expense? - let's say your child's handling the bookkeeping for your corporation, and they're taking accounting classes, then you can deduct the classes related to what that child's already doing in the corporation. What percentage of gains do I need to pay tax on if I trade for it, if I trade forex and if I put money into a holding LLC? Can I minimize it? - often it's gonna be section 1256, and You get a treat 60% as a long-term capital gain, and the other 40% is gonna be short-term capital gains, which means you're at your ordinary tax bracket rates. How do I deduct expenses if I have a W2 and a 1099? - generally speaking, on a W-2, there's nothing you can deduct business-wise against. If you had expenses that you incurred in order to get your W-2 income, they took that section away with the Tax Cut and Jobs Act back in 17. I just started my small business of being a mortgage broker. I own a single family rental about an hour from my house. Can I take a tax deduction for mileage expenses if I use my vehicle for both businesses? What about taking deduction on one car for mortgage and take deductions on the other car for the rental property? - We're going to recommend your vehicles be titled in your personal name. Usually we're going to deduct that mileage. If I purchased a property to rent it and I have it as an Airbnb and I did a lot of work in 2023, can I claim all the expenses for 2023 tax year, even if the house was not rented at all in 2023 because of work is estimated to be complete in quarter one of 2024. - You can in 2024, but we can't go back to ‘23, when the expenses were incurred, because it wasn't placed in service yet. Can I make charitable contributions from my business LLC income and take it as a business tax deduction? Due to the standard deduction, I can't deduct them from my personal return. - If it's a C corporation, then the C corporation can deduct up to 10% of its net income. Used to be 25% during the CARES Act but they've moved it back to the traditional 10% of your net income Started regular 15-year depreciation for capital improvement of rental property in 2021, didn't know any better. I switched to bonus depreciation and claimed the remaining amount in 2023. Are any home improvement projects tax deductible? - At its base level, no. But if you happen to have a home office, and you have a C corporation or an S corporation, then any your home improvement projects, yes, they will be deductible in the sense that if it's directly related to the office Resources: Free Emergency Estate Planning Kit https://aba.link/nzj Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=how-to-report-income-from-a-short-term-rental-property Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq Clint Coons YouTube https://www.youtube.com/@ClintCoons  

This episode of Tax Tuesday, Toby Mathis, Esq., and Eliot Thomas, Esq., cover topics including paying your children from your business, when you can write off meals as “business” - (hint: it all comes down to ‘intent'), and how often you should meet with your CPA. Submit your tax question to taxtuesday@andersonadvisors. Highlights/Topics: "Does my S-corporation where I am the sole owner and sole employee have to issue a 1099 to me as an individual?" - In general, you're S-corporation, you're an employee, so you would get a W-2. It's what we call reasonable income. "If my husband and I, both shareholders of our C-corp, discuss business over dinner, are we able to be reimbursed for our meals? Is there a list of reimbursable expenses for employees/owners of C-corps that is easier to read than the tax code?" - If the intent was to talk about business, then generally speaking, you can deduct it "Can I sell my solo 401(k) held property, do a 1031 into another investment, and then buy the property back with an LLC?" - first of all, we wouldn't have a 1031 going on with a solo 401(k). We don't have deductions, we just have cash in cash out with our retirement plans. "How are taxes handled differently with capital assets versus repairs, maintenance, and labor of rental properties?" - Every time you lay out cash for one of these repairs or labor, that's going to be an immediate deduction for the full amount. "How do I get tax benefits from paying my children for doing work in the business?" - basically you can just pay them out whatever entity you have. "Are the costs of education specifically related to starting a business deductible, specifically paid webinars or courses taken online. I've read that they are, but apparently many say they are not. Is there some special way to categorize them so that they are deductible?" – If its in a C-corporation or an LLC taxed as a C-corp, we're allowed to deduct the training as training our employees, which you would be an employee of. "I recently purchased a small camper trailer to rent out, my camper rental side hustle per se. "Does this type of rental count as an STR, short term rental, as far as taxes are concerned? Some suggest filing Schedule C while others say Schedule E might be more appropriate. We are not going to use this camper personally. It is for rentals." - If you rent it for 14 days or less, you don't have to report it. It's covered under 280A subsection G2. If you rent it for more than 14 days, it is an investment property. "If I put my rental properties into an LLC, do I have to file both personal taxes and business taxes?" - how is that LLC taxed? It can be a sole proprietorship. It can be a partnership if we had another member, two or more members. It could be an S-corp, could be a C-corp. All those make a difference. "How often should I be meeting with my CPA a year?" - I'm going to really recommend having quarterly meetings with your CPA just to make sure everything's on track. "Can I file my taxes for my LLC as a corporation to get a lower tax percentage? I run short term rentals. I host short term rentals for other owners. I also run short term rentals in the properties I own. I have an S-corp with my husband and I work from home. My accountant said, I cannot deduct my home office expens - we never want to put appreciable real estate into a corporation, S or C, if we're holding onto it for a long time. "Can someone file their taxes through your company?" - Yes, you can. You have to be a tax client Resources: Request a Free Cost Segregation Study https://andersonadvisors.com/CSA/ Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=are-educational-courses-tax-deductible Anderson Advisors https://andersonadvisors.com/ Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq Clint Coons YouTube https://www.youtube.com/@ClintCoons  

Employment Situation The numbers for nonfarm payrolls blew away expectations as they expanded by 353,000 in the month of January. This easily topped the estimate for 185,000. Job growth was widespread as it grew in every major category except for mining and logging which saw a decline of 6k in the month. Two areas that remained extremely strong were health care and social assistance (+100.4k) and professional and business services (+74k). Other areas of strength included retail trade (+45.2k), government (+36k), and manufacturing (+23k). The previous two months also saw upward revisions with an upward revision of 117k in December and 9k in November. There was some concern that maybe this report was too strong and that it could impact the Fed's rate cut path. The major concern on the inflation front came from average hourly wages which jumped 4.5% and easily exceeded the forecast of 4.1%. While this could have an impact on inflation, it is important to remember that data doesn't always move in a straight line. Also, the average hours worked fell to 34.1 which was 0.2 hours lower than the previous month and would have an impact on total labor cost. I was also happy to see in a separate report that the Employment Cost Index increase by just 0.9%, which was the smallest quarterly gain since the second quarter of 2021. Looking at year-on-year, labor costs increased 4.2% in Q4 which marked the smallest rise since Q4 of 2021. Overall, I think this report shouldn't throw a wrench in the idea of the Fed cutting rates in the back half of the year. Job Openings It is looking like the economy could navigate a pretty remarkable feat with decelerating inflation rates, growth in the economy (albeit limited), and a resilient labor market. In the month of December, job openings rose to 9.0 million which easily topped the estimate of 8.7 million and marked a three-month high. This is well off the high of around 12 million that was achieved in 2022, but it still is a healthy level considering pre pandemic job openings were around 7 million.   Investment Grade Debt I was surprised to learn that the amount of investment grade debt was $168 billion so far in the month of January. One would think that these corporations would do everything they could to hold off until the second half of the year when rates should be lower. Investors would have to go back 34 years to find this much debt issued in January. It makes one wonder do they know something we don't know and maybe rates won't be falling? I still remain very confident we will see rates fall in the second half of the year. Liquid Cash As of the third quarter of 2023, cash in money markets and CDs has reached an all-time high of $8.8 trillion. The last peak for CDs and money markets was reached in 2008 when it climbed above $6 trillion. At US lenders, total deposits fell to $17.4 trillion from the peak of $18.2 trillion, but when you combine the two you have around $26 trillion of liquid money. The question is, as rates fall where will this money go and how much will be transferred to longer term investments like real estate and equities? I don't believe we will see much action here until probably the last quarter of 2024 and even more likely happening in 2025. However, as an investor, I would rather be investing early than late because that will hurt your long-term returns. I think investing in the right equities on sale over the next six months will provide good returns when you look at December 31st, 2025. Financial Planning: Tax Filing Review With tax season coming up, it is helpful to review your tax return before filing to catch any mistakes. Some of the most common errors include misreporting 1099-Rs, missing rental expenses, incorrectly reporting capital gains, and missing IRA contributions. Any time money leaves a retirement account a 1099-R is generated, even with Roth accounts. However just because a 1099-R is generated, does not mean the distribution is taxable. Roth withdrawals and more commonly rollovers to other retirement accounts are not taxable. We have seen cases where a non-taxable distribution is reported as income due to the receipt of a 1099-R, so if you had retirement account distributions in 2023, make sure you're only paying for taxable withdrawals. With rental properties it is common to have insurance, property taxes, interest, HOA or management fees, and depreciation all listed as expenses. If any of these are missing or seem low after reviewing the Schedule E, it may be necessary to go back and recount all your rental expenses to confirm you are receiving all possible deductions. When selling assets like a business or property there is no 1099 generated, so it is helpful to double check how a taxable sale is reported on the Schedule D. We've seen sales reported as a short-term gain instead of a long-term gain which can result in substantially more taxes. Lastly if you made any contributions to pre-tax retirement accounts like an IRA or SEP, be sure these contributions are reported and deductible. When making a contribution to an IRA, a Form 5498 is generated, but this form isn't available until after taxes are due. This means you have to remember to report the contribution because there will be no tax form showing it. There's many possible errors or omissions when filing a tax return, but these are some of the more common ones to keep an eye out for.

Hey, Wealth Warriors!

Are you a real estate investor who is not getting all the losses on your tax return related to your investments?  If the IRS is limiting how much of a deduction you can take on your Schedule E for Rental Properties, and you're not sure how to get around this issue, I've got you!  Today I spill the tea on what to do to capture these losses and get the benefit of your passive losses in 2023. I hope you enjoy the episode! Tiffany   Next Steps:

We've reached quite a milestone - our 200th episode! For today's Tax Tuesday, tax experts Toby Mathis, Esq., and returning guest Jeff Webb, Esq., CFO of Anderson Business Advisors share their expert advice on tax strategies and navigating economic uncertainties, with a focus on rental property and financial diversification. You'll hear about the complexities of non-recourse loans and taxation, myths and strategies for day traders, taxes on land flips, the best time to do a cost seg, and more. Three lucky listeners will receive copies of our ebook in the episode. Submit your tax question to taxtuesday@andersonadvisors. Highlights/Topics: Is there a minimum net income where it would be beneficial for a single-member LLC to file as an S corp rather than a disregarded entity? - It depends on individual circumstances, but if your income is quite low, you may be able to save a bit if you file as an S-corp. Can my rental income be directed into a self-directed IRA and what are the advantages to doing that? - Yes, rental income can be directed into a self-directed IRA which offers several tax advantages. I don't understand the difference between owning rentals as a real estate professional (REP) or non-REP. And what, if any, disadvantages are there when buying a rental inside a Solo 401k using a non-recourse loan? - REP status offers tax benefits, while non-REPs face limitations. Buying a rental inside a Solo 401k with a non-recourse loan can limit potential deductions. How is the land flip taxed? Does land have to be held for a year like a house? - Land flips are taxed as ordinary income and there is no requirement to hold for a year. Is it acceptable for the IRS to trade futures from a 501c3 or a family foundation entity? Does the entity need to pay capital gains? –Yes, futures trading is allowed but can carry unrelated business income tax implications. If you form an LLC for rental property, is it best to report the activity on Schedule C or E? –Generally, it is better to report rental activity on Schedule E for tax purposes. When is the best time to do a cost segregation study? – The best time is usually after renovations are complete but it depends on individual circumstances, some you don't have to wait on, like a pool. We fix and flip luxury homes and are thinking about keeping some to rent. We have held some in the past. We have an LLC but the accountant is saying to go to an S corp. - we disagree, investment property should not go into an S corp, it should go into a land trust/LLC. We are setting up a family trust in Florida and watch your video about trust Wyoming. The attorney says we don't need Wyoming, is this true? – The WY trust is a revocable trust. If you're working on a living/grantor trust, your attorney is correct. Transitioning to an S corp may provide tax benefits. What is the best way to pay my children who actively trade in our fix flips bookkeeping? – Consider establishing them as employees and paying them a reasonable wage for their work. I understand anyone can gift to anyone in a year an amount not to exceed $17,000 per person. Can I gift from a family limited partnership Units not exceeding that amount, giving them a percentage of the LP units each year? Does it avoid the generation-skipping tax? – Yes, but your gift from your interest in the LP…it can be a viable strategy for tax purposes. Send us your questions, and check out the event schedule listed in the resources section. Resources: Infinity Investing https://infinityinvesting.com/ Email us at Tax Tuesday taxtuesday@andersonadvisors.com Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=when-to-conduct-cost-segregation-studies Anderson Advisors https://andersonadvisors.com/ Anderson Advisors on YouTube https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw Toby Mathis YouTube https://www.youtube.com/@TobyMathis Toby Mathis TikTok https://www.tiktok.com/@tobymathisesq    

On this week's podcast episode, we brought back a guest we've had on the #DoorGrowShow before, Joe Edgar from Tenant Cloud. Property management growth expert, Jason Hull sits down with Joe Edgar to talk about the many new features that have been added to Tenant Cloud to benefit property managers and what is next to come for the software. You'll Learn... [01:35] An Introduction to Tenant Cloud [06:44] The Different Systems PMs Need [14:11] Integrating Different Property Management Tools [17:36] Tenant Management and Roommates  [27:43] Accessing and Transferring your Data [31:55] Are Completely Remote Showings the Future? Tweetables “Listings are important because of course, as soon as you have a rental, what do you need? You need a tenant. Nothing worse than vacant property.” “So there's a relationship in all of those that you really have to harbor and that's where making sure you're connected to your tenants and you're connected to managing service for them is important because then they will reach out to you to buy one where if it's a bad experience, they won't.” “You're busy doing all this work, but then actually going back and making sure you're making money at what you're doing is often the last thing they look at.” “You have two choices in life... You can be reactive or you can be proactive. ” Resources DoorGrow and Scale Mastermind DoorGrow Academy DoorGrow on YouTube DoorGrowClub DoorGrowLive TalkRoute Referral Link Transcript [00:00:00] Joe: Because that's one of the hard parts is you're busy doing all this work, but then actually going back and making sure you're making money at what you're doing is often the last thing they look at. They worry about because they're trying to provide to customers, their owners. Yeah. And the tenants, good quality customer support. And so that's where it's the hard challenge and making sure they're all connected in a nice, easy way.  [00:00:20] Jason: All right, we are live. Welcome DoorGrow Hackers to the DoorGrow show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you're interested in growing in business and life, and you are open to doing things a bit differently, then you are a DoorGrow hacker. DoorGrow hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you're crazy for doing it. You think they're crazy for not because you realize that property management is the ultimate high trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management business owners and their businesses. We want to transform the industry, eliminate the bs, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I'm your host, property management growth expert, Jason Hull the founder and CEO of DoorGrow. Now let's get into the show.  [00:01:25] All right, so my guest today is Joe Edgar. And Joe, it's been a while since we've had you on the show here, so.  [00:01:33] Joe: Yeah, definitely has. Glad to be here.  [00:01:35] Jason: So Joe started a company called Tenant Cloud. And today you're going to be talking about property management and real estate technology in 2023. So, Bring us up to date, man.  [00:01:47] Joe: Yeah, it has been a while since we first launched, I think back in 2016 was a real focus on the DIY landlord and trying to support that general group. And as it really has grown into-- our biggest following is now really property managers focused in the single family rental space. So, that distinction has come down to really the difference in logistics. And so, as many know in property management, if you're managing multi-family, then you usually have somebody on site, but if you're managing single family rentals, there's just too many properties. And so Yeah. Ends up being a logistical nightmare. And so that's really where we end up fine tuning our solution is all around the logistics, managing those single family rentals and helping you grow your business.  [00:02:30] Jason: Cool. So what have you been up to since then? I'm sure you've made some updates to Tenant Cloud.  [00:02:36] Joe: Yeah, there have been a lot of updates especially since then. I think some of the best things that really help a property management company really get going is the fact that you can sign up for Tenant Cloud and in just a couple of minutes for free. There are some paid solutions, but just on the basis of free, you can set up your own company website. From your company website, you can have its own listing portal. So all of your listings that you're going to manage, it can have applications and so tenants can find you. They can apply for a rental. You can manage that application, you can send it back for more information. You can charge a management fee or not. Lots of customization inside of there. You could have multiple bank accounts. If you have different owners, you can, send an agreement to an owner have them sign it. They have their own portal so they can own their own reports. And then of course, the more traditional stuff on top of that, which is, just managing the property itself. Everything from maintenance to just general communication with your tenants. And so all those things kind of fit in there. I think the most fun thing that we have that really brings a lot of value worth mentioning is if you follow the industry, we're starting to see these silos and vertical step up. I think the biggest mover now is co-star who is looking to buy move.com, which is realtor.com. And so they're really trying to have that niche. And then Zillow of course, exists. And then you have Redfin who's putting together a lot of other sites. And those are all around listings. And so listings are important because of course, as soon as you have a rental, what do you need? You need a tenant. Nothing worse than vacant property. So, we built this thing. We have so many tenants that come to us. Our affiliate sites, College Pads, and Rentler, are all really bringing us lots and lots of leads.  [00:04:25] So having all of these leads, we decided to go the extra mile. We said, what if we offered all of them the ability to basically say what it is they're looking for. And by telling us what they're looking for, we can then match them with all of the inventory of vacancies. And so we take users who are already, they came to us for the purpose of trying to find a home. And we have all these property managers who are trying to find tenants into their rentals. So we built this thing called premium leads, and really you could think of it as like Tinder for tenants. Okay. And so what happens is the tenant will put on what they're looking for. They're like, "I want Southwest Austin. I'm looking for, $2,500 a month, a two bedroom, one bath, a yard, a fence." Say the general things they're looking for. And the second you turn on premium leads as a landlord, it will take all of your properties, even if they're not listed, it'll have them already matched, but they won't see it. The tenant won't see it until you actually make it live by listing it. And immediately all of those show up for the property manager. So the second you turn on premium leads, you have potentially, like, I love turning it on because it's such a nice feeling to like list a property, immediately you have like 15 leads, you're like, "That's great," and you invite them to apply. So you just invite them to apply and that sends real invites to those tenants. So those tenants now got a personal invite from you and you can go through, the tenant goes through it. If they like the property, they can swipe left and ask more questions. They can fill out a rental application, maybe schedule a showing, anything like that. Or if they don't like it, they swipe left and they move on their way.  [00:06:03] Jason: So they'll swipe right if they like it. Yep. And left if they don't, and then it's swipe left if they don't. Got it.  [00:06:08] Joe: Yeah. So it's a very non-abrasive way to approach all of these different tenants looking for leads. And so it now is the largest lead generator inside of our solution. So we integrate with Zillow, we integrate with realtor.com, many of the Redfin solutions, but it now outperforms all of them. It produced about 60% of the leads on Tenant Cloud. Wow. So it's a really nice way to go and find and fill your tenants. So again, everything, it's really about bringing all of those things that you have to property management into one easy solution at a low cost, help you save time, grow your business.    [00:06:44] Jason: So if somebody already is like knee deep in another property management software, can they still use the premium leads? [00:06:50] Joe: Oh yeah, for sure. It's easy. I mean, that's what's nice is it's segmented off. We have a lot of property managers who do multi-family and multi-family is a different beast. We have a lot who hack us and use us for like multi-family, but as I said, the single family rentals has a logistics problem and I can explain why we're so different in that space. Sure. But when you get into multi-family we know where the space and we know the industry. And so if you're in multi-family more traditionally after one of those larger property management solutions, and most of that is in part because multi-family is 95% owned by institutional investors. And institutional investors need data. These large rates. And so we're not designed for that big stuff. We're really out to help smaller property managers kind of, grow their business and not answer to large rates. So the way the data flows separates us pretty substantially. And so that's what would make a unique thing. So on the logistics problem you have, maybe you have one maintenance person, but a lot don't. And so the key feature is if you were a property manager, you already know, it's like how many property managers can manage how many units? You have the math and it's generally around a hundred units per person.  [00:08:04] And you can get some that are starting to get more efficient. They're getting into like duplexes and triplexes where they get down to, maybe the 85 to one. But normally about a hundred. And a hundred's a good number because if you're also a broker, then you also know I'm managing these properties because I know about 5% of them will bring me additional business annually. Either my clients are selling or my clients are buying, or my tenants are looking to buy. Right. So there's a relationship in all of those that you really have to harbor and that's where making sure you're connected to your tenants and you're connected to managing service for them is important because then they will reach out to you to buy one where if it's a bad experience, they won't. [00:08:43] And so having a nice solution on their phone that they can easily sign a lease, they filled out their application, they can pay their rent, they can view everything that's in their power, is great. Then in addition, if anything happens, they can go to their phone. And there's four simple questions that breaks 1500 problems with a home down into four simple questions that are icon based. And so they select them and they can take a picture and a video and it goes direct to the property manager. And the property manager now has the choice because we can't say, not all tenants are accurate. Not all tenants know how to fix anything. And so, whatever they say the problem is, it could be something different. And so I've had this on my own experience where it's like, I find out the roof keeps leaking, but I'm like, you realize it hasn't rained in weeks. And you find out it's the air conditioner. It's like catching condensation. And so you know what they say the problem is and what it actually is is not always the case. And so it's nice. You get the maintenance request, you have a picture, you have a video, you have a small explanation if they wanted to add it to it. And if you have a service professional that you work with, you can send it to them or you can change the category. You can schedule it from there. [00:09:50] And once you assign it to them, they can now communicate directly with the tenant, but you are privy to all the messages. And now they can schedule this outside of it. Or you can plan for them, but they can schedule outside of you having to do it constantly. Now, that's one method. It can also be if you're in a property management office there's one here in Austin I just talked to. They have 50 rentals, so they're growing theirs. They're managing on behalf of about 10 owners. And so that's not big enough on their level to have a maintenance person on staff. And so they contract everything. And so what's nice is inside of theirs, they can actually use it inside the maintenance request. They can get a quote and that quote goes out to all service professionals in the local area that can then send in bids on behalf of that. And you can run it in two different flows. You can say, "okay, well I'll make the decision," depending on what you have with the owner. Or you can send the different quotes to the owner to pick one of them. [00:10:44] And so there's lots of different ways to manage that. But now once you connect them, you can then do the same thing. You're like, okay, I like your bid. You do it, I'll schedule you. You're in. And then you have privy. And then there's a way the tenant can say, well, it's not done exactly. And they say it is done. So you kind of do a lot before you actually have to go on site. I mean, when I was doing property management, the worst thing was most of the site visits are not what they said. And they're things like, "the lights are out," and it's because the light bulb is burned up. It's like, well, that's not, you just wasted a lot of time for me to drive across town. There's two hours of wasted time to do this. And so having those logistics are great. That's the heart of Tenant Cloud. But then on top of that, it's like, okay, well the logistic problem and getting on the phone and scheduling is tough. Then I got to account for all this. [00:11:30] And accounting is the next piece. So when the tenant goes in and enters that, we have those categories of which they're selecting by icon based for maintenance requests. They're matched with both revenue and expenditure and capital expenditure categories inside the accounting automatically. And then in addition, you can keep track of any assets. And by that I mean if you have a refrigerator or an oven, you can store all those in. So if a maintenance request comes, you can actually look up any piece of equipment like a fridge and it can tell you, show you all the maintenance requests it's had. It'll find correlations like things. You're replacing this motor every year so you can make those decisions on like, we probably should just get a new fridge. But then inside of that, all of those are matched with the IRS 1040 Schedule E categories. And so what is great is you as a property manager who is going to be doing your 1099s at the end of the year. Your contractors, if you were to bid it inside the system, you can pay them and they can invoice you. So if it's someone you don't know, then of course they'll create an invoice for you after the work. But it's someone you do know and they just, you're figuring out what the bill is on the side. You can message them on the side or directly in the ticket, and then you can pay them directly. What's nice is when it comes to accounting time, your owners have a very clean, simple 1040 Schedule E already done for them that has all their costs laid out, that you didn't have to go back and do anything extra, has all the receipts matched to it. Each one goes all the way down. And each property manager, as a refer to, are these "additional opportunities." There's lots of ways, depending on how you have a relationship with your owner to set up those additional opportunities. [00:13:06] For example, you could just charge like, I have a 10% fee on top of any cost for maintenance I do. And so that would be added into maintenance requests. So that's already being done. Or you could have it, we have a flat rate that we charge for tenants. I mean there's lots of ways to set it up for your property management company to make sure they're accounting for their revenue as well. Because that's one of the hard parts is you're busy doing all this work, but then actually going back and making sure you're making money at what you're doing is often the last thing they look at. They worry about because they're trying to provide to customers, their owners. Yeah. And the tenants, good quality customer support. And so that's where it's the hard challenge and making sure they're all connected in a nice, easy way. And everything kind of flows in a simple recurring way that is predictable and you know for sure how it's going to work is an important part of growing your business. And so then that passes through to the owners can fully see their reports. You have your reports for your 1099s and all of it happened behind the scenes without you really looking at it. So the heart of it is to be kind of a logistics and accountant, a back office person to help you, a small property management company kind of grow. [00:14:10] Jason: Cool. Cool. So the maintenance coordination piece, solving that logistics challenge, can that be used by companies that are also using another property management software already?  [00:14:20] Joe: Yeah. Sorry, I kind of went on a-- I digress. That was your question before. You can kind of go on and use whatever piece you want. So we have lots of larger ones who are doing multi-family and they have found that they get all our leads at Tenant Cloud. So they still use their traditional property management software to answer to the beast above them for accounting. Yeah. But they get all their leads and manage all their rental applications through Tenant Cloud. And for their business, they get to keep the application fee. And so it's nice because they can set all that up and so they run everything there. So all the applications you can do a background check, you can do a full one, you can do a partial one. So there's lots of different variations you can do in there. And so it's nice for them because they manage everything on there. Once they actually do a lease, then they actually put them in their other property management software and do it on there. And then some are slowly kind of converting into Tenant Cloud as it does more for them. As they see, they're like, well, why don't we just move here? But in a lot of the wreaths they don't. But on slower ones, yeah, you can manage just leads.  [00:15:15] We have a really nice CRM tool built in. And so because we give you a free website and then we distribute your listing to so many different places, we set you up on a unique text number. You don't know what it is, it doesn't matter to you, but what's great is it does matter to someone looking at your rental. And so to find your listing on any site, and then, if I have a rental application, that's an easy one. I'll fill out the application that goes through the system and you get a nice, clean application. You can request more information, whatever you want to do. But when it's just a lead, which is how most of them come in. They'll send you a message and they can do it via text straight from the listing. They hit a number, they send you a text, and you can respond to them via text, right in your Tenant Cloud account. And so that's where you can take all the different messengers, have it in one place, nice and simple track notes, maybe it's, maybe the one they're looking for is not available now and you want to use it for later, so you just tag it. [00:16:08] But yeah, there's different parts of Tenant Cloud that you can use for just different parts of your business, depending on what you're doing.  [00:16:13] Jason: So what you're saying is on the tenant side, there's basically CRM for tenant leads and that you can manage that communication and you can do it through text message because the listings have that number on it. Exactly. And then on the maintenance coordination thing, which also sounded really cool that piece can be used standalone as well, is what you're saying?  [00:16:31] Joe: Yep. Correct. Okay. Each one is really segmented Now if you use them altogether, of course, they just make life easier, but sure. But yeah, you really can use each little function separately. Now, if you wanted to come from another software, you can easily upload your data. So we have tools for that. And if you ever wanted to take Tenant Cloud data, this is one of the things, it has been our company's motto from the beginning, that we are not making business on holding your data randsom. And so you can easily take your data at any time you want and use it and flow it anywhere. And so some of those have been good. We have a QuickBooks integration, so that makes it seamless. But we have others who use some other unique accounting software, and so we've made that so you can just pull your data and put it in anything else that you want as well. So there's lots of reasons to have that, but that's an important thing before you use one, you're like, I want to know that I can get all my data out of it. because you're uploading images. Yeah, you're uploading tenant information. I mean, it ends up becoming your record retention for a lot of stuff that you're doing on a legal basis. And so it's important to have all that, but to also have access to where you can get rid of it on a digital form, but store it somewhere still. [00:17:36] Jason: So if we were to look at the Tenant Cloud ecosystem or, system as a whole, we've got, the tenant lead sort of CRM in communication for taking care of the vacancy situation. We've got the maintenance coordination piece, we've got the accounting piece you've mentioned. What other major?  [00:17:53] Joe: So there's tenant management. Tenant management is just one where you want to have all your information about each tenant. It may flow from the application but then once you have it, you want to message them. And so you could have tenants all on one street and you need to message them and say, "Hey, street clean, street sweeping on this date. So you can message a part of them. Or you may have all your tenants at large, you have a policy change you're going to do, or you may have two cities and you say, okay, in this city this is changing. And so just helping manage all of those tenants and having a place to keep both private and information that you share with the tenant is really important. [00:18:29] So there are things like, for instance, if you enter an accounting or you send us something, it's nice to know that it's live. And it's also nice to know that they have seen it. And so when you have a message, you can see for sure that you see, as we all know a hard part, but a reality of property management is that you will end up in a court, every so often with a tenant. And so making sure you have an easy place to account for all your timing and what you did with a maintenance request. And all of your messages in regards to just your relationship in general in one place is really important. And so to be able to pull it out and show dates and to be able to show what was seen and what wasn't seen is really important. A nice, easy process to kind of print it out and, bring it to court. As you will know, it's a huge part. And unfortunately that's part of the business, but it is one that you really, if you're going to grow your business, it's an important part to have, early. So there's tenant management. [00:19:20] We have a whole calendar scheduling piece, and that's really important because it's the next piece that I'll talk about is as you grow your property management business, in the beginning it's usually just you. And that's fantastic because that is definitely where you're like, I need to grow this. And then you bring out, and sometimes it's a significant other. That's fantastic if you can pull that off. Right. And so there's two of you, right? And often they'll use the same logins, right? Because they're like, there's two of us. So we're talk, we see each other enough that we'll do stuff. But once you have that first real hire, it's a different business. Because now you really don't have the same, it's a professional relationship and you don't have that same thing where you're like, we do need to, like who's doing what. Yeah. And so even though I say it's this calendar function, we have a team feature. You can go in and add team members and you can change all the settings for each team member. [00:20:10] And so it could be like it, you can assign them specific properties and so they're only able to see stuff on properties. You could limit them from accounting, you could limit them from certain settings. And so there's lots of ways, depending on what the team member is. For instance, you could have accountant, you could have a property manager just doing marketing, and you could have someone who, does maintenance. So just depending on what it is. But what's great about your team function is now you have a way to communicate with them. So very easily in a chat you can press a hash sign and find any of your properties in a message, and it will pull that up and then have a link to it. And then at sign you can find any one of your team members. And from a message, you can make that a task. And so all of a sudden tasks are running for everybody. And as the master account, you can see all the tasks going through on the calendar, and then you can message, each other about different tenants or any type of messaging that goes on there. And so you'll find, and then the system itself will self-generate tasks for you. For example, ones you should, they're obvious, that is like, all right, I have a lease. I want to know two months in advance before this lease expires.  [00:21:12] Tell me, cause I need to renew it. It could be, I talked to this tenant and they're going to schedule something, they send a message and from that message, they're going to pay rent two days late. But I get it. And so boom, you have a task, you're going to have those reminders come up. And so that's really that angle from trying to get the system knows a lot of the things that you automatically need to do. So they're already in there. For instance, every six months you need to check smoke detectors you need to do servicing before winter. There's cleanup. So all those things can be automatic inside of that calendar, but then really running inside the team function really brings it to work because now you mix that with your maintenance team or whether they're outside or not, but it's assigning them and it really becomes a magic. So we built this kanban board where you can manage a lot of those tasks, especially when you get more than a hundred properties and you're trying to grow your business. You'll know exactly what I'm talking about. You're just like, "ah, I forgot." So you have two choices in life. When it gets that big, you can be reactive. Or you can be proactive. So we have tried to build a system to help you be proactive. And that's, it's telling you before you think about it. So then you're like, "oh yeah, I totally forgot about it." I do need to schedule you that. You move it into the next kanban board, you assign it to this person, run it there. And so it's really a great way for a team to come together and trying to do property management. And so that's one of the features. There's quite a few features, but another one I'll mention that's worth noting, that makes us different than other solutions as well is when you go down to single family rentals, a lot don't know-- many in this area will know-- but universities are very unique in that universities have a higher density of smaller property managers managing around the university than non universities. And so if you get out away from the universities, you're into these big apartment developments and so they're slightly different. And you get into universities and there's quite a few property managers that just service around that area.  [00:23:01] And so one of the struggles for the property managers is always how do they deal with roommates? And you have so many different ways to deal with a roommate. You could take one rental and I could rent out every room individually, or I could rent out the whole house and just say, okay, well I'm going to, I'll rent out the house to all of you, but each one of you are going to pay a specific amount. Or I can rent out the whole house, and I'm going to say, all right, I don't know. I don't care. You're all on the lease. However you pay, just get me the money. And so those are all very different structurally in how you set something up and it all the way down from receiving an application, vetting them, moving them in to sign a lease, and moving them out, holding deposits and the ongoing relationship.  [00:23:42] They're all different. And so what's nice is we really have thought through a lot of those, and they're not just on roommates. So we're starting to see this happen now in older care centers. And so, assisted living of sorts, they are now doing a lot of roommate features. And so these are older care centers that are using us for property management software. However, they usually the tenants are self-sustaining, so they don't need a nurse. They're just living inside of a center. And so the same kind of features. And so a lot of this roommate functionality is taken off and then really during 2020, like, when Covid kind of happened, it wasn't as popular. It was a feature that we had built in and we we thought it was really aimed for the college universities as college pads, one of our partners. And so we had built that in, but really starting last year. And my own take is that real estate went so expensive that you're seeing a lot of roommates pop in. And so a lot of people are procrastinating moving into their own place. Rentals are taking off and people are moving in together. So now you see this over pouring. So the last report realtor.com did it. However it follows what Wall Street Journal did. That theirs was, there are 2 million households formed again last year, which means we are missing 6.5 million homes in the marketplace based on them. And if we are missing 6.5 million and things are so expensive, you are saying we have no choice that roommates are just over pouring into everyone's lives. So what they didn't think was is now a single family home, an apartment, everyone is now dealing with roommates and it's created software problems everywhere. [00:25:24] One that we have already solved and thought through. That's a great feature because how you rent them matters. It's, it changes the entire relationship from being a customer support frustration. Like if they're each paying a separate amount and you're doing rooms, but you're treating it as a solution where they're all in the same one, you'll just mess up all, for everyone. And so being able to manage those on so many different levels is really nice because you can have separate leases. One lease that they all sign and they all share their invoice, where as soon as one pays all the rest of them see it and they can figure out how to pay. Or you can just say each one of you're paying and then somebody's else is out and they're done. Or you going to move one in and move mountains, move the deposit. So it becomes such a problem that it's one to be noted. But now in today's industry, were roommate renting is just a commonplace, so that's a feature worth talking about.  [00:26:11] Jason: Very cool. Yeah. Cool. All right, so we've got the maintenance coordination, the accounting, the CRM for tenant leads, tenant management and communication, you've got the calendar scheduling, which sounds like kind of team communication, and then you've got the Roommates functionality, so,  [00:26:29] Joe: so we have a whole document. So anything you can manage all your, so we have both PDF and from scratch. So if you want to build an agreement yourself, you can drop in, easy pop in auto fills on the template, or you can just add a PDF and build the template. We also have them available for every state and county if they're divided. So lots of stuff to do E-signature and create your own lease agreements and manage kind of all that in-house as well. And then notices, So you can build a template notice, send it to a tenant when you know, rent's due or something like that. [00:26:58] Jason: Nice. Very cool. Yeah. Well, sounds like you guys have been busy so.  [00:27:03] Joe: Very busy. Yeah, it's been fun. Yeah.  [00:27:06] Jason: Very cool. Well, yeah, I can see how this would stand out from some of the property management software. Now you had mentioned that people can migrate from their existing software. So how difficult, because this is usually really painful for people, Yeah, to transition. I've seen people go from AppFolio to Buildium or AppFolio to Rent Manager or switching to Propertyware or Propertyware to AppFolio. Like, so how difficult or easy is it to switch from one of these to Tenant cloud and are there some that are easier than others? [00:27:42] Joe: No. So we've tried to make it as easy as possible. So what we do is we give you a template. So if you go into upload, you can find the upload and then you download a template Excel file. And basically you'll take whatever data you can get. That's the hardest part really isn't so much setting it up in Tenant Cloud. It's more other companies aren't so willing to just give you data. And that's the hardest part is that if you can get the data from them, we give you a template that's really easy added in and once it's in, you're done. Your tenants are set up, all their information is set up. The lease is set up. If you have late fees that are in there, they'll be set up. All of it will be done. Your property will be set up and you'll be live and it'll be working. But it's all, it's really more a problem of like, which software relationship are you trying to get out of? That's a hard one because for us, and we have many that call and like, " well I just want all this!!" And we're like, fortunately Buildium won't give us that data. We can't call them on behalf of you. Yeah. So the only thing we can do is like they can give it to us. Yeah, exactly. So that's the hardest part in getting in, helping people migrate. Is just being able to pull all the information. They spent so much time, putting in another software but on our end, it's really easy to kind of set it up. [00:28:52] And that's the heart of it is because everything is connected. It's helping you do each phase of your life. Because if you ask a property manager, like, what's the hardest part of your job? Well it really depends like one on the season, on the time of the month, and what stage of the property is in. Because if it's vacant, of course it's like, I need a rental, I need leads. I got to find this. But if it's, if they're all rented, well now you're like, oh, I got fridges breaking everywhere. So it just depends on the job. So the software's always set up to help you in all of those sanctions of your life. And so uploading it is really easy because it connects to all of them automatically and you're kind of done. But yeah, again, the hardest part is getting the information. So, yeah, I wish I could say that was really easy, but that's a part we don't usually get to touch. So. Cool.    [00:29:35] Jason: Well, Tenant Cloud sounds pretty cool. I have not heard of too many people using it yet, and so I'm really interested in getting some feedback. That'll be really interesting to see. So it sounds like you guys have really been innovating in the space, so.  [00:29:49] Joe: Yeah, we've been trying to keep it as affordable as possible and get it going. We now have over a hundred thousand active property managers and landlords. Using it and over a million tenants. So it's been fun, but you'll look at how big the market is and there's 15 million DIY landlords and something like 18,000 property managers. And, it's a small slice. [00:30:11] There are many out there still using, Excel or, a back of the notebook to keep track of stuff. So it is more about getting the word out there and let them know that there is a nice, easy solution to use.  [00:30:21] Jason: Yeah. Very cool. So, now if they have a website, like say from us third party website or their own site or whatever are they able to get the rental listings?  [00:30:31] Oh, I love that you said that. Yes.  [00:30:32] An embed code to put into their site.  [00:30:34] Joe: Yep. So if they just give us, they can tell us now, I will give you a quick hack so there's a quick hack, but then we can also help them do it. And so the quick hack is we give you a free site and if you have a listing link, so if you just relink that listing of yours and use Tenant Cloud, it'll automatically go there because it's the relink. Right? However we can help you customize it. So the free one we give you is going to be an extension of Tenant Cloud, right? Yeah, it's our free version. But if you want us to host it, we do have to be given the credentials, but we can host it and then you'll have an active live site, and then there are parts of it you can turn off or turn on. So you could use, if you've already built one, you say, I want to host this, but I still want the listings on my native site. We can do that for you. We have quite a few that do that. So, and the listing functions nice. It gives you a map, it'll show all your rentals. So you have a sub thing that you can click and, see a preview and then you go to the full listing. And then on there is really where the CRM powers because it says, 'do you have a question?' Or it'll be like, 'schedule a tour' or 'fill out an application.' And so each one of those, so if they schedule a tour or have a question that goes right to your CRM. And so that's where you can respond to them how whatever format they want to respond. If they give you email, you can do email. If it's text, you can do text. Or if they create an account, they can talk actually through the Tenant Cloud app. But then of course they've got an application, it forces them to put that behind some closed information just so they're not  [00:31:55] Jason: I'm seeing some-- put it out-- Smart property managers switching from doing one-off showings for every vacancy constantly to doing open house dial. And is that possible using Tenant Cloud?  [00:32:08] Joe: You can schedule them as open house, but what we don't have and that what we want to do, and this really came about from Covid, is we've been working with a company, so it's coming out here in the future, but it's not there. And that is to be able to do remote showings. So the remote showings are slightly different than open house. What it is soon you'll be able to have where you set up, it's a door lock, it gives a specific code to a phone, and then there are two cameras set up in it, wifi, and then so you have control of all the doors and you have a camera view. And so someone can go in and quickly get a text number that's going to be live for 10 minutes and you can literally watch them. And give them a short tour before they go out and you can secure the place back up and know whether any new windows were left open or any doors. And so you like, do those. So that's been more of the answer we've done just because it is, if you do the open house it there, there's a lot of things that require onsite. So it's like, how can we help property managers again, with the logistics problem. Yeah. And logistics problem's the hard one because you go, you list the property. And half the problem is like only 50% of the people show up showings and you drove a long way to get there and you're like, Ugh. And so yes, to get as many people at a specific time is great. And so you can kind of set that up with your calendar. That's easy. But the real heart of it is like, how can I show this and actually just be right here on my computer? So I could do five showings at the exact same time from my laptop. And that's really the heart of what we're trying to get to, is that you should be able to do that during business hours, know that it's locked up and know who it is that went into the rental. And so that's part of it. They have to get verified in order to get a code. And so they're using their phone as part of that process. There's a picture and an id check as well. And so they're verifying themselves, which just helps keep honest people honest when they're setting up and doing a rental. So you're kind of doing a bit of vetting as you set some different things up. So, so that's more of where we're trying to go, is trying to get more remote.  [00:34:04] Jason: Cool. Cool stuff. So, well, I think everybody should go check it out. How can people get in touch with you or learn more about Tenant Cloud? [00:34:13] Joe: Yeah, I'm always easiest on Twitter, so, @Joe_Edgar_ , always accessible there. Tenant Cloud's the sites, t e n a n t c l o u d TenantCloud.com. And you can find us on all the social media. But yeah, definitely hope to check it out. It's, like I said, we have a base version that's free and then, other features that come on top of that. You can set up your bank account. Receive applications, list your property, move in a tenant, and collect rent online, and that's all free.  [00:34:42] Jason: So, Cool. Very cool. Yeah, I think that was the first episode we did with you. You, we were talking about how I think software for property managers will be free someday. So.  [00:34:51] Joe: Yes. I honestly think it's going to go that more and more features are coming to where it's like, the more of your business isn't there. Like some of the stuff I hope we get to, and I'll mention this just because more of the viewers are property managers, but if you remember that I talked about the maintenance request function and getting a bid. Well, I'm no stranger to property management. I own a couple of property management companies. And built the software off of that. And I know in our, one of them is fairly large, and so we have a maintenance crew, we have a turning crew, we have a painting crew. We now even have a a cabinet crew. We go through so many cabinets. We're like, we just need to build these ourselves. And so we have all these different crews and they're just doing us. But one of the biggest costs is the downtime. And so for them it's like each one of them is a side business. And so it's like we've been trying to like think of ways there, like how can we grow this? And I know I'm not alone. And so what we're hoping to get to is that all the property managers who use us are. They'll soon have a little flip that comes up that they can turn on to now get leads. And so they will be part of the ones like saying, Hey, we have a service that does carpet cleaning. And so inside of my normal property management, now I can actually go and service people outside of the properties I manage if I want to look to expand some of the businesses that I've now created. [00:36:10] And so, and it's unique because property management is different. Like if I go and if I say to a property manager, Hey I have a property I need to do a turn on. They know exactly what that means. And there's not just one contractor outside of property management that could do that. And so property managers are in a unique space where they're like, well, I know exactly what you need. I need to go do an inspection. I need to check the carpets, I need to check the walls. There's probably going to be some painting. I got to do a little plumbing. I may even have to do some hvac, I'm going to have to do a little landscaping. And all of that's tied into it and owning a property manager has built out some of the functions to be able to service that. It's not all the property management companies, but quite a few of them will do it as they grow, just because they're like, well, we're now in-house. We're doing enough of them. I've got one lawn mowing guy that's running or something. So, so it's a nice feature that we hope to really bring out to embrace our own customers, helping them now find and grow their business in other unique ways they never thought about. So.  [00:37:05] Jason: Awesome. Very cool. Well, Joe, thanks for being on the show. Appreciate you being here.  [00:37:10] Joe: Oh, my pleasure. Thanks.  [00:37:11] Jason: All right, so check out tenantcloud.com. Sounds like it's really cool software. I'm really curious to get your feedback on how it compares to whatever else you've been using or what you're using for those that are doing research lately. So, let us know in our Facebook group. So join our free community that's available to property management entrepreneurs on Facebook. It is DoorGrow Club. The DoorGrow Club. You can get to that by going to DoorGrowclub.com and it will redirect you to our Facebook group. Answer the questions and join the group and we will give you some free gifts as well and that can benefit your property management business. And, check us out at DoorGrow.com. We are the world's leading property management coaching mastermind. We are helping grow and scale property management companies rapidly. We would love to help you grow and scale your business, figure out operations, make your day-to-day easier, and take some vacations, people.  [00:38:05] Jason Hull: You just listened to the #DoorGrowShow. We are building a community of the savviest property management entrepreneurs on the planet in the DoorGrowClub. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead content, social direct mail, and they still struggle to grow!  [00:38:32] At DoorGrow, we solve your biggest challenge: getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today's episode on our blog doorgrow.com, and to get notified of future events and news subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow Hacking your business and your life.

Learn how to harvest equity without giving up your low, fixed-rate mortgage. Today, I discuss: conventional loans for single-family rentals, DTI, refinancing, accessing equity, student loan debt, and down payment requirements for income properties with Ridge Lending Group President, Caeli Ridge. Learn what's better for a second mortgage—the pros and cons of a HELOC vs. Home Equity Loan. You also get a mortgage market overview. We discuss changes in cash-out refinance seasoning requirements.  Caeli also describes where she believes mortgage rates are headed later this year. Resources mentioned: Show Notes: www.GetRichEducation.com/447 Ridge Lending Group: www.RidgeLendingGroup.com info@ridgelendinggroup.com Join us for tomorrow's free GRE Florida properties webinar: www.GREwebinars.com Ridge's All-In-One Loan Simulator: https://ridgelendinggroup.com/aio-simulator/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Will you please leave a review for the show? I'd be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free—text ‘GRE' to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith's personal Instagram: @keithweinhold   Speaker 0 (00:00:00) - Welcome to GRE! I'm your host Keith Weinhold. You can get a conventional loan for a single family rental with less than a 20% down payment. Learn why you might want to refinance today. Even though mortgage rates aren't as low as they were a couple years ago, how do you qualify for loans if you've already got student loan debt? All things mortgages and financing today on Get Rich Education, Speaker 2 (00:00:29) - You are listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   Speaker 0 (00:00:52) - Welcome to GRE from K Patis North Carolina to Hattiesburg, Mississippi and across 188 nations worldwide. I'm Keith Weinhold. This is Get Rich Education, the voice of real estate investing since 2014. Before we get into a great education on all things mortgages today, there is still a little bit of time left for you to join us on tomorrow night's G R E Live event. You can join us from the comfort of your own home. This is for new build single family rentals, opt to four plexes in Jacksonville, Ocala, and elsewhere in Florida. Purchase prices are still below 300 K on the single families. Yes, still in the two hundreds in some cases. I don't know how long that can last. Yeah, these are the property types that are quickly vanishing. Our investment coach Naresh Stars in that event tomorrow, he finds you the good deals with the national providers that are actually giving incentives despite the fact that the product that you're buying is in really short supplies.   Speaker 0 (00:01:59) - You're gonna get a good, solid, fundamental education on what makes a durable income property market and a arrest in the Florida provider are going to share with us just for webinar attendees. Those even better than two and two incentives. Yes, for you, the incentives on the webinar are even better than that 2% of your purchase price paid do you in closing costs cash and 2% of free property management. It is going to be even better than that. That's gonna be rolled out tomorrow night, May 2nd at 8:30 PM Eastern, 5:30 PM Pacific. It is free to attend. You can ask questions live, get your questions answered and get access to the actual properties should you so choose. That is the final reminder. So if that's of any interest to you, be sure to sign up now@grewebinars.com. I'm coming to you from the Mojave Desert today here in metro Las Vegas.   Speaker 0 (00:03:04) - It's Henderson Nevada. To be technical next week I'll bring you the show from Phoenix, Arizona. And you know what? It's kind of funny. Sometimes you hear people refer to this general area of the nation this southwest and they say they are going to the desert if they were doing what I'm doing. Well this unrepentant geography nerd will clarify that it is the deserts plural. Yes, Las Vegas is in the Mojave Desert in Phoenix is in the Sonora Desert. There are differences in vegetation type and others that distinguish the two. And the most obvious difference perhaps is the presence of the big iconic Saguaro cactus down in the Sonora that you don't find up here in the more northerly Mojave and perhaps the Joshua tree is the more distinct plant type here in the Mojave. Yes, we're talking about two gigantic pieces of real estate here. Much of it is baron. Two disparate deserts with their own distinctive flora and fauna. As you're about to learn about financing real estate today, let's remember that there is a cash out refinance and then generally if you're performing a refinance without pulling cash out, that is known as a rate and term refinance. Let's get into it.   Speaker 0 (00:04:30) - Well hey, well how do you qualify for more mortgage loans at the lowest interest rate available, Americans have near record equity levels in their homes. What's the best way to access that equity yet keep your low mortgage rate in place? And what about your student loan debt and how that factors into you getting a mortgage or getting a refinance? We're answering all that today with a GRE regular guest and though it's her first appearance back on the show this year, it's the return of the company president that's created more financial freedom through real estate than any other lender in the entire nation, Ridge Lending Group. It's time for a big welcome back to Caeli Ridge.   Speaker 3 (00:05:08) - Keith Wein. Hold. Thank you. You flatter me sir. I appreciate it. Love being here with you and for your listeners.   Speaker 0 (00:05:14) - Well yes, the president is back and everyone loves this type of president because it's not about being a Democrat or Republican. So hail to the chief, great to have you here. And Jaylee mortgage rates, they have settled down a good bit from their recent highs now they peaked back in the fall of last year. So with that and some of the other things in mind, why don't you talk to us about the big picture first, sort of your mortgage market overview.   Speaker 3 (00:05:40) - Interest rates is always top of mind for everybody. I think they're doing pretty well. I do believe I've been sharing with our listeners and and my clients on a day-to-day. I do believe that rates will continue to kind of increase here and there. There's gonna be some ups and downs. Of course the Fed has been very clear with us. Jerome Powell is gonna continue to raise the Fed fund rate just for anybody that doesn't know the two between a mortgage rate and a Fed fund rate while connected, not the same thing. So when they raise that does not automatically mean that we see the increase on the the 30 year mortgage bonds. I think that that's gonna continue to happen, but I think the pace in which it happens or continues to happen is gonna be a lot less aggressive. So I think that's gonna bode well overall.   Speaker 3 (00:06:21) - For interest rates. I know everybody is very, very interested in in are they going up, are they going down, when are they going up, when are they going down? I think that we'll continue to see a little bit of upward movement. I think it's gonna be sometime next year that we start to see interest rates come back down in any meaningful way. And remember gang rates go up much, much faster than they come back down unfortunately. So I think we've got a little bit of way to go. But I'm always the one saying, Keith, you and I have talked about this, um, many, many times you must be doing the math and that the rate as a function of the return of the investment isn't the most important thing. So I'll leave it there for rates. Otherwise, I think that the industry is doing really, really well.   Speaker 3 (00:06:58) - One big announcement that we had this year was that Fannie and Freddie both have extended the seasoning period of time to where a cash out refinance when leverage was used to acquire is applicable. So now you have to wait 12 months to pull, to pull cash out of a property using the A R V that after repair value if you use leverage to acquire the property. Quick distinction because this has been confused. If you paid cash for the property, your source and season funds, that still falls under what's called the delayed cash out refi and no seasoning is required. It's only when leverage was used to acquire the property and then they're trying to use an after repair value to pull cash out in hand. Is that 12 month seasoning rate and term is different. So that doesn't apply either.   Speaker 0 (00:07:45) - Okay. So if you make a purchase and then say it less than 12 months down the road, you want to do a refi but not pull cash out, is that still all right?   Speaker 3 (00:07:55) - That's absolutely fine. No seasoning is required and we can use the arv. It's only when you want cash in your hand that that 12 months is is applicable.   Speaker 0 (00:08:04) - Got it. Okay. That's really helpful to know. Just big picture before we winnow down, are there any other big substantial mortgage stories out there that some should know about? Um, it was only a couple weeks ago, there was a lot of misinformation going around on TikTok and elsewhere about 40 year loans from F H A without people understanding that's just for loan modifications and really other stories like that. Any other big picture things where you can help us see what's happening?   Speaker 3 (00:08:30) - It seems to be par for for the course? I have not. There's nothing that's come across my desk that I would say was newsworthy or noteworthy to share. I think we've got more to unpack here than any of that.   Speaker 0 (00:08:40) - Yeah and things sure are picking up here around G R e. People wanna buy more properties this year. It really slowed down toward the end of last year, right about when the mortgage rates were at their peak. So when we talk about getting loans, we think about leverage. Leverage is created with debt. Has anything changed with the down payment requirements for an income property? And we're largely here in today's discussion talking about one to four unit income properties. Properties that you don't live in yourself,   Speaker 3 (00:09:08) - Correct down payments have have remained the same. There isn't been anything that has changed there. Just to reiterate, for those that may not be aware on a single family residence, conventionally 85% loan to value is applicable. You can leverage all the way up to 85, you're putting 15% down. Keep in mind everybody that that will have pmi, private mortgage insurance attached to it, I would have you look at them side by side. The PMI factors actually pretty low and depending on the loan size it may only be 20, 30 bucks a month. So if you're able to leverage extra, it may make sense. You're gonna have to look at the numbers so that single family and then two to four unit on a purchase transaction different on a refinance transaction but purchase is 25% down or 75% leverage is required for those duplex, triplex, fourplexes.   Speaker 0 (00:09:54) - Okay, so as little as 15% down on a rental single family home. So you're getting up to six to one, seven to one leverage in that case. Sheila, do you find very many people doing that or would they rather pay the 20% down for a rental single family home and not have the pmi?   Speaker 3 (00:10:10) - I find that right now I think that it's less common than maybe it was because interest rates are up from where they were, uh, a year, year and a half ago. So more often than not we see the 20% down. But I still think it's worth looking at. I mean you're never gonna know unless you run the numbers right side by side.   Speaker 0 (00:10:25) - Okay, so we're thinking about how much cash we have to have put aside for a down payment in closing costs. And one thing that we need to do in order to qualify for that loan in the first place of course is some people get hung up on the dti, their debt to income ratio is too high to qualify for property and chaley. Over the past few months I've had a few listeners write in with questions and I thought, well I'll say that question until we have chale on again. And one of them really has to do with student loan debt. Student loan debt often contributes to one having too high of a debt to income ratio so that they didn't have to repay their loan. I know that Biden said that you wouldn't have to pay back student loan debt for a while, but can you talk to us specifically about student loan debt with D T I?   Speaker 3 (00:11:06) - There's gonna be a few pieces to share with everybody depending on whether we're talking about Fannie Mae or Freddie Mac and we won't know who we're gonna end up selling to after the loan funds. And they have slightly different guidelines between the two of them. Similar. But there are some differences as it relates to student loan debt regardless of whether you're in deferment or you've been told that you don't have to repay. If it shows up on an individual's credit report, the calculation will be as follows. They're going to take the outstanding balance times 1%, that's Fannie Mae's rule or the outstanding balance times half a percent. That's Freddie Mac rule and that will be the payment that we include in the debt to income ratio. Uh, I'll mention that the all-in one, which is a very popular loan right now. First Lean HeLOCK, maybe we'll talk about that here today. They will defer to Fannie rules so it'll be 1% of the outstanding debt pulling on the credit report even if it shows a zero payment listed. Now there is one caveat, if the individual has a letter, this happened maybe in the last six months and I'm trying to think about, there was a title, it's pretty rare. But if they're able to gain access to documentation that specifies that they are not going to have to repay that debt and we can take that documentation, then we can zero out that payment in the D T I.   Speaker 0 (00:12:22) - Alright, there's some strategies for how you can approach D T I with respect to any student loan debt that you have and what is the maximum D T I that a borrower can have?   Speaker 3 (00:12:34) - Conventionally and non qm, you're gonna get to 50% debt to income ratio for the all-in-one since we just touched on it, 43% is the absolute max.   Speaker 0 (00:12:43) - Okay. And on prior shows, Chile and I have discussed specifically with examples just how that D T I is calculated. If you're wondering, you can hear that in some past episodes Chile one one goes ahead and they continue to add income properties to their portfolio. Often I recommend that one does that with high leverage but not over leverage. How does one keep their D T I ratio down over time as they continue to add properties so that they can qualify for more properties in the future? Is there a good strategy for that?   Speaker 3 (00:13:14) - There is, and it's such a good question because as investors, right, our qualification primers are not static. They're going to change over time as we buy and sell and refinance. So it's very, very important, especially with the debt to income ratio that we're keeping an eye on it. And there's a few ways in which you can kind of strategize or optimize that D T I. The first is going to be the Schedule E, okay? The Schedule E is where all the rental properties are going to live once you've filed the annual tax return. The easiest way for the time that we have here today, Keith, is gonna be to tell the listeners, send us your draft returns. So on an ongoing basis we tell our active clients do not file federal tax returns until you send us the draft. We're going to run that draft through the pre-formulated calculation that comes straight from Fannie, Freddie and then we're gonna provide you with some feedback, one of which may be Mr.   Speaker 3 (00:14:03) - Jones, you forgot to include your insurance as a deduction and that's actually an add back that's gonna be to your disadvantage. Make sure that you put that in there. You didn't claim the full number of days of income for the property, you forgot to put depreciation on there. That's also an add back. There's a whole slew of things that we can look at and look for and give the individual that feedback so that they are filing at that optimal way while maintaining what the maximized tax credits are, right? There's a nice balance there. The more aggressive you are with the tax deductions, the more it can impact the D T I. So we wanna have eyes on that and work closely with the client and or their CPA is a very common part of what we do. So schedule E a little more complicated, that would be one of the the ways in which we wanna maximize debt to income ratio.   Speaker 3 (00:14:45) - Obviously not obtaining new debt, new consumer debt is is not gonna be to our advantage, right? We don't want more liability than we have income. Another thing is, is that when we talk about credit and a lot of clients that we talk to, they pay their credit cards off monthly, right? Maybe they charge up five grand, eight grand, 10 grand, they get a miles or whatever it is. It's very important to communicate with us to find out when in the month we wanna strategically pull the credit. Because what will happen is is that the day in which we take that snapshot, if there's a minimum payment due, a balance with a minimum payment, that minimum payment will be used in the individual's debt to income ratio regardless of whether they're gonna pay it off at the end of the month. That doesn't matter to us.   Speaker 3 (00:15:26) - There's a payment here, we gotta hit you for it. So strategizing on the day in which we wanna run credit might be another helpful way for D T I. And then finally, and there's probably a few other things, but I think high use would be, I don't like the shorter term amortizations. I think this is something else you and I have talked about many times, Keith, where people wanna pay off quicker, which is great if that's really what they wanna do, that's perfectly fine. I'm not sure that that would be my strategy, but whatever. Don't get yourself into a 15 year fixed mortgage because it's only gonna jack that payment. It's gonna really increase that payment. It's ultimately going to, for long-term optimization, hurt your D T I. You can do the same thing with a 30 year mortgage and not pay extra interest by accelerating the debt if that's what you chose. So those would be the the few things I'd comment on   Speaker 0 (00:16:10) - 100%. And for you the listener and viewer right now with what you just heard from chaley, you can begin to understand the value of working with a lender that works specific with income property investors rather than those lenders that are more geared toward primary residents, borrowers. Nothing wrong with them but they're in their lane during their thing. And you can understand why Chaley over there at Ridge is really a specialist to help you qualifying for as many income property loans as you possibly can and optimizing those loans as well. Chaley, when we talk about interest rates, oftentimes it's of interest to people to look at what are refinance interest rates like versus new purchase interest rates.   Speaker 3 (00:16:54) - I would say on average there's a variety of of variables that dictate what the rate is gonna be. Okay? I talk about this a lot. They're called LPAs loan level price adjustments. And a loan level price adjustment is a positive or negative number that attaches to the characteristic of the loan transaction. So purchase or refi, hash out refi rate and term refi credit score has its own L L P A loan to value, loan size occupancy. All of these come with a positive or negative number attached to them as it relates to purchase versus refinance. Generally speaking, let's take a rate and term refi where you're not getting cash out, you're just maybe taking an arm and making it affix. You're taking a higher rate and making it lower, whatever, maybe about a half a point difference. So if a purchase was at six and a half, the re rate and term refinance might be at 6 75 or 7%, cash out's gonna be a little bit different. I would add a quarter point to that and then if, if it's a two to four unit, add another quarter point on top of that. So those variables do make a difference.   Speaker 0 (00:17:53) - And maybe the listener might think, well why are you talking about refinancing at a time like this? If I wanted to refinance, I would've been more likely to do that about two years ago when mortgage rates read historic lows. But today Americans are sitting on near record equity, oftentimes it might be tied up in a low mortgage rate loan with that equity chaley. I talked to some people out there just lay people, people that aren't even investors and they have a big equity position with a really low mortgage interest rate loan and they seem to think that to refinance it, they would need to go ahead and refinance their entire mortgage and lose that maybe three or 4% loan, but they don't necessarily have to if they can do a second mortgage. So I guess really what I'm getting at and the question chaley is what is the best way to do a rate and term refi versus a cash out refi? And I know there are a lot of scenarios there.   Speaker 3 (00:18:44) - Yeah, lots of scenarios. So to your point, it is not necessary to give up a very low fixed rate mortgage if you want to harvest some of that equity. The ways in which, and I'm gonna have a plug after this for the all in one, but I'll get to that cuz I'm just such a big fan. But the ways in which you can do that both for your primary residents, a second home and an investment will be through a second lien mortgage, whether it be a heloc, home equity line of credit or a he loan, the HE loan is applicable for the rental properties. I do not believe, I hope somebody can give me alternative information, but I do not believe you're able to find second lean HELOCs for rentals today. I feel like those have really dried up if they're out there, the ones that I know of that used to do them are not doing them anymore.   Speaker 3 (00:19:27) - If they're out there and anyone's listening to this, somebody please let me know. Keylock for rental probably not an option. He loan for rental absolutely is an option. And this is guys a fixed rate mortgage in second lean position, just like your 30 year fixed first, this will be a 30 year fixed second interest rates are gonna be higher. And since we were talking about interest rates, I'm gonna say that they're probably anywhere from 10 to 13%, but they're smaller amounts. C L T V combined loan to value for a he loan on a rental would be 85% is what we have access to. So as quick math guys, if you have a value of a home of a hundred thousand and you owe on your first mortgage 50,000, the CLTV would be 85% of a hundred. So 85,000 minus the 50001st, which stays in place, you'd have access to about 35,000 in that example. And that would be access to rental properties that you just do not want to mess with that first lien mortgage different for owner-occupied. And I'll take your queue on when you want me to get into that.   Speaker 0 (00:20:26) - Yeah. Okay. So we are just talking about income property second mortgages there. Tell us about primary residences.   Speaker 3 (00:20:32) - So primary and secondary should be in the same bucket. You can leverage just 90% C L T B, same math as before but up to 90% And these are gonna be, you have HeLOCK and he loan. I'm gonna assume most people are gonna go for the HeLOCK, right? The open-ended revolving is definitely more attractive than a closed-ended fixed I believe in a second lien. And you know Prime is at eight I believe right now. Gosh, I should have checked before we go on, but I think Prime is sitting, it's an index. An indices like the Fed fund rate, that's an index two prime is at about eight. And then depending on the characteristics, those l LPAs that I mentioned, loan level price adjustments are gonna come up with a margin. Maybe it's 2% over prime or one or whatever it is depending on those things. So I would anticipate a HELOC and second lie position on a primary residence will be anywhere from eight to maybe 10%. More often than not is what you should expect. Interest only open-ended.   Speaker 0 (00:21:24) - And on the second mortgages, whether that takes the form of a HELOC or a HE loan, how long is the initial fixed rate period? Typically   Speaker 3 (00:21:32) - There are hybrids where you can fix in for a year or three years, et cetera. Those are available. I'm not sure that you wanna do that in a high rate environment. You probably wanna avoid any fixed rate right now if you had the option to get into it a couple of years ago, you're looking really good right now because you fixed in at at some ridiculously low rate for a period of two, three, maybe five years. I would tell people listening, fixing in on a HELOC right now is not gonna be your advantage when we believe that rates are gonna start coming down over the next year, et cetera. But for the HE loan, it's fixed for 30 years. Just like a 30 year fixed first lie mortgage, it's fixed, you have it four 30 years, it's amortized, it's closed ended. You're making your regular payments until you pay it off after the 30 year period of time.   Speaker 0 (00:22:13) - We're talking about how you can more efficiently borrow in this environment where people and investors have high equity positions and we have hopefully come off the mortgage rate highs from late last year. You're listening to Get Risk Education. Our guest is Ridge Lending Group President Chaley Ridge Morton, we come back. I'm your host Keith White Hole with JWB Real Estate Capital. Jacksonville Real Estate has outperformed the stock market by 44% over the last 20 years. It's proven to be a more stable asset, especially during recessions. Their vertically integrated strategy has led to 79% more home price appreciation compared to the average Jacksonville investor. Since 2013, JWB is ready to help your money make money, and to make it easy for everyday investors, get started at jw b real estate.com/g rre. That's JWB real estate.com/g R E GRE listeners can't stop talking about their service from Ridge Lending Group and MLS 40 2056. They've provided our tribe with more loans than anyone. They're truly a top lender for beginners and veterans. It's where I go to get my own loans for single family rental property up to four plexes. So start your pre-qualification and you can chat with President Chaley Ridge personally. They'll even deliver your custom plan for growing your real estate portfolio. start@ridgelendinggroup.com.   Speaker 4 (00:23:45) - This is Rich Dad sales advisor, Blair Singer, listen to Get Rich Education with Keith Wine Hold and above all don't quit your daydream.   Speaker 1 (00:24:03) - Welcome   Speaker 0 (00:24:04) - Back to Get Rich Education. We're learning about how to be a savvy borrower with President of Ridge Lending Group, Chaley Ridge and Chaley. One product you have there that's really flexible and has helped out so many people and helped save borrowers tens of thousands of dollars in interest or more is what's called your all in one loan. Tell us about it.   Speaker 3 (00:24:25) - This is a first Lean HeLOCK everyone. I'm such a big fan, it's not for everybody, but for the right individual, I don't know that there is a loan product to rival it. It's got all the flexibility in the world and as Keith said, the mechanics of this and the concept of this arbitrage, it's called Velocity Banking, infinity Banking. If anybody's familiar with those terms, that's what this does. It allows you all the open flexibility to sort of become your own bank where you have this line of credit. It is a first lien line of credit. So let's take a a step back and talk about those low interest rates that everybody has secured over the last couple of years. We were very lucky to have to two and a half, 3% interest rates. And I'm constantly having this conversation and I'm really trying hard to dispel the psychology of you can never do better than that when it's just not the truth.   Speaker 3 (00:25:14) - And mathematically you will be able to figure this out. I'm gonna plug our website here. There is an interactive simulator that will take you to the all-in-one simulator where you can compare your existing fixed first lien mortgage to the All in one and and the input data is very, very simple. No vials of blood here guys, but if the input is accurate, the results page will tell you very clearly if the all-in one will save interest and Trump over the 30 year fixed at two and a half or whatever it is, or if you're fixed rate mortgage is more to your advantage, it will be very clear there'll be no mistaking it from that. I think further conversations will be necessary for those that see some real value in the All In One. I won't go too far down that rabbit hole, it's a little bit more complicated than we probably have time for here. But the first Lean All In one is such a fantastic tool. I really encourage your listeners to go ahead and and check out at the very least the simulator and see how it applies to you.   Speaker 0 (00:26:08) - The all-in one loan operates much like a first lien heloc. I don't think we have time to describe it all. Like you said, you do have the simulator there on your website@ridgelendinggroup.com where one could see if their existing mortgage it compares favorably or unfavorably to the all-in one loan. But as we know with the first lien heloc, therefore one feature of the All in one loan is the option, not obligation, but option of making interest-only payments to keep your payment down.   Speaker 3 (00:26:34) - Yeah, this is where it gets a little bit tricky for some people when we start talking about payments FirstLine Open-ended HeLOCK, where it's called the All In one because you're replacing not only your mortgage with this revolving open-ended heloc, but also a checking and savings account and combining those two elements whereby simple depository income is being used at dollar for dollar driving down principle balance to save in daily interest accrual. I'm gonna give a quick example and then we can move on and, and I encourage everybody to do the simulator email us, let's talk through it. We'll take you by the hand. It's the learning curve's a little intense, it was even for me. But here's an example of velocity of money and kind of how the all-in-one works. So take a 30 year fixed mortgage and a 15 year fixed mortgage. Both of them started at $400,000 each.   Speaker 3 (00:27:22) - You lock the 30 year at 4% and the 15 year was locked at 7%. Without exception, everybody runs to the 30 year at 4%. I would've done the same if I didn't know the math when in fact the reality is is that you will pay $40,000 more on that 4% 30 year than you would on the 7% 15 year because the amount of time that you're paying on that mortgage is greatly reduced. And that's, I guess a, an easy concept. It's a, the first step of trying to define this for most people, they can kind of see it in those terms because they understand the amortized mortgage. It's the amount of time that you are paying interest. So if you're utilizing your depository checking savings and your mortgage and all of that money is going in there month after month before it's going back out the door for whatever your living expenses are. And then whatever's left over is, is stays in there. 24 7 access. Nothing changes about your current banking techniques or or strategies. It's all the same. But now you're in control. You've become your own bank. It's amazing. I can't say enough about it   Speaker 0 (00:28:24) - Talking about the all in one loan there. You sure can learn more from Ridge on that. Jaylee, is there really like anything else that I guess is noteworthy specifically in helping a borrower qualify for income property loans, maybe a common problem or a borrower hurdle that you see in there at Ridge?   Speaker 3 (00:28:43) - I would just boil it down to education. Just lack of information. It's not dear Google stuff. The guidelines and what's available. All of these things are changing on a consistent basis that real-time information's not available to them. So if I had to pick one thing, I would just say education. And I'm very proud to say that we really focus on that. If there's a value add about Ridge, I think there's quite a few. But the one that I think sticks out for most people is the education that we provide to our investors and shining a light and giving them a look under the hood and what they need to know, teaching 'em how to optimize their qualifications and all of the stuff that we've been talking about here today.   Speaker 0 (00:29:19) - Well that's a good point because when we talk about real estate investing, you're really, they're in one of the more dynamic and fast-changing parts of the industry as opposed to something like home construction where a lot of the methods haven't changed for 50 or more years, if you will. So yeah, it's really staying up and staying informed on that and engaging with a lot of the educational resources increasingly that Ridge has for you to help you stay on top of that as an income property bar yourself. And Shaley can tell us a bit more about that shortly. But why don't you tell us about all of the loan types, the mortgage products if you will, that you offer in there.   Speaker 3 (00:29:52) - That's another great value add about us. We have a very diverse menu, if you will, of loan products that don't just start and stop with the conventional. We're not a one size fits all. So we've got the Fannie Freddy's, we talk about that a lot. Our all in one, my favorite. We have a very diverse non QM product line and for those that aren't familiar with that term, QM stands for Qualified Mortgage. Fannie Mae and Freddie Mac are the, uh, epitome the definition of what a qualified mortgage is. There's a whole definition we don't need to go into today, but, so everything outside of that QM is now non qm. And within non qm, like I said, extremely diverse. There's things called the debt service coverage ratio product where we're not showing borrower income, we're just looking at the properties income offset by the new mortgage payment. There's bank statement products. If you can't show tax returns, we're gonna take deposits and average them asset depletion. If you've got large self-directed ira, we can come up with an income calculation for that. The list goes on. We've got commercial products for commercial properties, but also for residential properties. Cross collateralization. It's pretty diverse. We have a lot for everybody.   Speaker 0 (00:30:54) - When you excel in there, you've been such industry leaders at originating income property loans for investors were proportion of your businesses income property loans and what proportion is primary residence loans?   Speaker 3 (00:31:06) - A lot of people don't realize we can do both and we do both very well. But I would say that it's probably 70 30 not owner-occupied. To owner-occupied. A large part of what we do is the investor loans. But most of our investor clients come to us for their primary needs too because we already have their life on file and, and can get that done very competitively   Speaker 0 (00:31:24) - Too. , right? And you keep growing. You're in almost all 50 states now.   Speaker 3 (00:31:27) - I know. Can you believe it? We're in 47 states. We're not in North Dakota, New York, or Vermont, otherwise we're everywhere.   Speaker 0 (00:31:34) - Letter audience know how they can learn about your resources.   Speaker 3 (00:31:37) - There's a couple ways to find us our website, ridge lending group.com. They can email us, info ridge linen group.com. Our toll free is 8 5 5 74 Ridge 8 5 5 7 4 7 4 3 4 3. And while you're on our website gang, uh, check us out on our community. I have a live event every Tuesday, one 30 Pacific, uh, four 30 Eastern. Uh, lots of good information register and it's free. Lots of good information and, and education like we've been talking about here. Hope to see you.   Speaker 0 (00:32:05) - Oh, it's been a terrific and crucial mortgage market update. Chaley Ridge, thanks so much for coming back into the   Speaker 3 (00:32:11) - Show. Thank you. Appreciate it.   Speaker 0 (00:32:18) - Oh yeah, lots of good concise information there from Chaley. It's a type of content that can have you hitting the rewind button on your pod catcher at times. All right, so we learned that in a lot of scenarios there. Second, mortgages come with rather high interest rates that is prohibitive. But then on the other side, it's encouraging to learn, learn that on primary residences, for example, you can get up to 90% loaned value. That means you only need to keep 10% equity in your home. And as far as that all in one loan simulator, we'll put a link directly to that in the show notes for you. But like Chaley said, you might wanna reach out to them@ridgegroup.com and then they can help walk you through it. Thank you to Caeli for the generous contribution to your learning today. Until next week, I'm your host, Keith Weinhold. Don't quit your daydream.   Speaker 5 (00:33:15) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests on their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Get Rich Education L l C exclusively.   Speaker 6 (00:33:43) - The preceding program was brought to you by your home for Wealth building. Get rich education.com.

Hello brilhosos e brilhosas! Assunto polêmico no episódio de hoje. Você acha que é necessário ter inglês para iniciar um Schedule nos EUA? Me conta nos comentários sua opinião. Aproveitem muito, abraços!

It's Tax Tuesday again, and today we're mixing it up – this episode is hosted by Anderson Advisors' Michael Bowman, Esq, who welcomes two of Anderson's expert tax pros, Eliot Thomas, Esq., and Kurt Bergfjord, Esq. And as always we've got our talented and experienced tax advisors manning the chat questions in the office. On today's episode, the guys review all the documents and receipts that you should be gathering up in preparation for filing your taxes, and answer multiple listener questions around the pros and cons of C-Corps, S-Corps, Partnerships, and the audit magnet - Sole Proprietorships. The discussion also covers our episode title question - are there benefits to putting your primary residence in a trust - which is really only for asset protection and estate planning - there are no tax benefits to doing so. If you have a tax-related question for us, submit it to taxtuesday@andersonadvisors. Highlights/Topics: "Even if I show income on my tax return from rental and business activity as a sole proprietorship, and self-employed but no taxable income because I use my large net operating loss to cover all taxes, is my income still considered income or will it be a hindrance as far as getting an investment loan or home equity line?" – It depends - Some are going to look at this, it will ding you, and you won't be able to get a loan. Others will take it into consideration and analyze the tax return. "I currently have two LLCs in California that I file as a partnership. Should I create another LLC as a holding for both LLCs? And should that be disregarded or filed as a partnership as well? Of course, there is the additional cost of $800 for California as well. What's your suggestion?" – from the legal point of view, it might be a better idea to have that holding company and all those assets coming into it. "How can a full-time LP investor in private equity in real estate syndications as well as stock investor utilizing options for income, structure such as to offset income of these activities with expenses, syndication conferences, to vet sponsors, subscription services, travel for investment briefings, computer equipment, expenses, et cetera? Assets are held in a Wyoming LLC and property trust for the stocks. Would a management C-corp make sense having one ‘client?' I am aware of people in my circumstances that write off expenses on their schedule C, but I recall Anderson doesn't recommend that." – If we could utilize that management corp, maybe we can capture some of those benefits that you otherwise wouldn't be entitled to. "How is REPS applied to a tax return?" – If you are a real estate professional (REP)for all intents and purposes, then you can actually turn that otherwise passive income into non-passive income. I's going to be on Schedule E page one or Schedule E page two if you have a K-1 "We have seven rental properties set up with the ABA structure. My husband works full-time for the government. I manage our home and rental properties. Two properties are mortgaged, the rest are paid for. Now, both in our 50s, we're financially comfortable with a large cushion. We got retirement funds, mutual funds, properties, kids, education funds, et cetera, but we are getting killed in taxes every year. I feel like we are working to pay taxes. We don't live extravagantly, and still drive the same cars for 10–15 plus years. Taxes feel like a punishment for saving when we were younger." - Ideas to save on taxes include becoming a REP, depreciation, cost-seg study, there's even a nickname- “short-term rental loophole” "What are the tax benefits of putting my primary residence in a trust?" There is no asset protection, but if it's in the right kind of revocable trust, then we still get to take advantage of our section 121 of tax exemption from gains on the sale of your primary residence—$250,000 single, $500,000 married filing joint. "I want to be as anonymous as possible. What is the best business structure and ways to submit taxes? I do not want the tax info to flow down to my personal taxes." - When we talk about anonymity, anyone looking at your personal tax return is really not going to have too much of a purview into your business activities. “Should I do a cost seg for a condo?” It depends - Have you had it for a while? are you a REP? Are you renting it out? Have you been appreciating for a while? "What is the best corporate structure to have in place that can also allow for tax savings?" We've covered this - C-corp, S-corp, partnership, and then the worst would be sole proprietorship. "What tax incentives are there for real estate investors to not have to pay an absurd amount in taxes?" - REP status, short-term rentals, cost seg studies, 1031 exchange, keep good books! "As a real estate investor opening my first LLC, which is the best for me to use, S-corp or C-corp? - it depends - do not put appreciating property in a C-Corp, but C is good for short terms or flips. "I started my LLC last year to begin my search for buying a business or real estate. Currently, I am a W-2 employee while I get started. My question is, can I write off any expenses since I did not make any money in my LLC? We've incurred expenses, but I don't have any income.” - was it open for business, or are you in the exploratory phase? timing on when to deduct may be more important. Resources: Email us at Tax Tuesday taxtuesday@andersonadvisors.com Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/ Anderson Advisors https://andersonadvisors.com/

It's hard to not get the real estate investing bug at some point, it feels like everyone is investing in property and short term rentals. There's just an overall buzz around real estate right now as an investment! I think as more people are wondering what's going on with the economy, interest will pique even further. Maybe you're looking for places to put your wealth and real estate is on your radar... That's why I've brought Ryan Bakke on the show today. Ryan owns several businesses and works in the real estate field. He owns the Real Estate CPA firm where he advises over 150 clients on real estate tax strategies. His core mission is to help people build wealth, have an impact, and change their family tree. We're chatting about why real estate investing is so popular, especially short-term rentals. There are several tax benefits and tax strategies that can help you keep more of what you earn as an owner of short-term rentals! We're diving into depreciation, whether you need the Schedule E or Schedule C, and commonly missed deductions!   What you'll hear in this episode: [2:15] How Ryan became the youngest CPA in Illinois at the age of 22 [5:45] What inspired him to show up more on social media and educate in that space [7:30] What is a short-term rental? Why are they so popular? [9:00] Short-term rental rules from a tax perspective [11:15] What the material participation test is and why it matters [14:30] Should short-term rental operators be tracking their time spent in the business [16:00] Depreciation and how the tax benefits of short-term rentals operate [18:15] Determining the worth of your land vs. your building [20:45] Who is a good candidate for short-term renting and what are the tax advantages they can expect? [27:00] What if you stay in your rental for a period of time? How does that affect taxes? What are the rules? [29:15] Commonly missed tax deductions for short-term rentals   Follow Ryan on IG @learnlikeacpa Check out Ryan's Short Term Rental Tax Training: https://learnlikeacpa.mykajabi.com/a/2147527423/EYQHc2Bs His Tax Strategies for Real Estate Investors group: https://www.facebook.com/groups/1489227181430876 Learn More About Ryan: https://linktr.ee/LearnLikeaCPA    * Related episodes: 221. How Do I Use the S Corp Strategy? 226. Deducting Business Travel 231. Questions You MUST Ask Your Accountant Before Signing a Return   * Find everything you need at www.keepwhatyouearn.com! https://www.keepwhatyouearn.com/ * Questions about this episode? Text me!: https://my.community.com/shannonweinsteincpa * Chat about this episode in the Keep What You Earn Community – http://keepwhatyouearn.circle.so * Hire us: https://www.fitnancialsolutions.com/accounting * See how much you can save with an S Corp: https://www.keepwhatyouearn.com/keep-what-you-earn-s-corp-calculator * Find me on IG @shannonkweinstein * Meet me face-to-face on YouTube: https://www.youtube.com/channel/UCMlIuZsrllp1Uc_MlhriLvQ * Featured in Yahoo Finance! Read more here: https://finance.yahoo.com/news/10-bookkeepers-accountants-watch-2021-113800161.html   The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.

At "The Mortgage Calculator," we believe that loan officers should be equipped with the necessary skills to accurately calculate self-employed borrower income. That's why we have created a comprehensive training program to help loan officers master the Fannie Mae 1084 form.Our training program will cover everything from understanding the basics of self-employed borrower income calculation to analyzing the business tax returns, including the Schedule C, Schedule E, and K-1 forms. We will share proven strategies for identifying and analyzing various income sources and making appropriate adjustments for expenses and depreciation.#selfemployedlife #loanofficers #loanofficertraining #loanofficerlife #mortgageloanofficer The Mortgage Calculator Loan Officer Training Series covers an in depth training for new and experienced MLOs on different loan types. Our program features a live demo to not only structure a loan, but also the specific setup of a loan file in an LOS system such as Encompass.Loan Officers for Unlimited Free Non-QM Leads & Trainings Join The Mortgage Calculator at https://themortgagecalculator.com/joinAbout The Mortgage Calculator:The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programsCatch all the episodes of the Loan Officer Training Podcast at https://themortgagecalculator.com/Page/Loan-Officer-Training-Series-Podcast Catch all the episodes of the Loan Officer Training Podcast at https://themortgagecalculator.com/Page/Loan-Officer-Training-Series-PodcastLoan Officers for Unlimited Free Non-QM Leads & Trainings Join The Mortgage Calculator at https://themortgagecalculator.com/joinThe Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes! Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access...

Larry Bailey and Caeli Ridge hosted this episode, where Caeli reviewed a Schedule E from a personal 1040 Schedule E.Here is what we covered at this event:Reviewed a 1040 Schedule E as a Lender wouldEncouraged you to get your mortgage application into Ridge Lending Group in time to close this yearCheck out the video with the screen share and the documentation in the Community.You can join these live each week by following this link to join the call:https://community.ridgelendinggroup.com/events/live-with-caeli-each-tuesday-beginning-at-430-pm-et/listAs always, give Ridge Lending Group a call if you have any questions at 855-747-4343 or email us at info@RidgeLendingGroup.com or send a text to 503-836-8582Copyright ©2022 Geneva Financial, LLC, DBA Ridge Lending GroupNMLS #42056  |  BK #0910215  |  CA License #CA-DBO9556 | Massachusetts Licensed Lender #ML42056 | An Equal Housing Lender  |  All Rights ReservedPrivacy Policy |  Legal Disclosure |  Consumer Access | Texas Mortgage Notice

In part two of our latest series, Brandon Hall and Thomas Castelli break down the key tax forms real estate investors need to understand including Form 1040, Schedule E, Form 8582, 1065, and a lot more! Get a 14-day free Landlord Studio trial by visiting www.landlordstudio.com/realestatecpa Subscribe to our YouTube channel: www.youtube.com/c/therealestatecpa Join our Facebook group, the one-stop-shop for real estate investors to learn about tax strategy and stay up to date on changing tax laws: www.facebook.com/groups/taxsmartinvestors Enroll in the STR Tax Course today and learn how to save 5-6 figures in taxes using the STR Loophole: courses.taxsmartinvestors.com/ For an initial consultation from Hall CPA, PLLC visit www.therealestatecpa.com/become-client Follow Brandon on Twitter: @bhallcpa Follow Thomas on Twitter: @thomascastelli_ The Tax Smart Real Estate Investors podcast is for general information purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Information on the podcast may not constitute the most up-to-date legal or other information. No reader, user, or listener of this podcast should act or refrain from acting on the basis of information on this podcast without first seeking legal and tax advice from counsel in the relevant jurisdiction. Only your individual attorney and tax advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this podcast or any of the links or resources contained or mentioned within the podcast show and show notes do not create a relationship between the reader, user, or listener and podcast hosts, contributors, or guests.

Rental Real Estate irs.gov/ Schedule E. How to handle if we have rental property business.  Classifications, Type of Property: Single Family Residence, Multi-Family Residence, Vacation/Short Term Rental, Commercial, Land or others  We will discuss, what to put on your lease, the Landlord/tenant relationship.  Avoid Discrimination,Rights of Disabled Tenants, Reasonable Accommodations, Accessibility, needed Modifications Rental Applications and moreSupport the show

Today's Tax Tuesday episode is focused on bookkeeping. Toby Mathis hosts with special guest Troy Butler, Executive Manager of our bookkeeping department at Anderson Advisors, and some of the bookkeeping staff from Anderson including Patty, Ander, Matthew, Eliot, Dana, Trisha, Blanca, Landsey, Kiera, and Cindy, are all online today to help answer your questions.  You'll hear our advice on things like what bookkeeping software to use, expense reimbursement and mileage, grouping your businesses using “classes,” and even some detailed information on how you can become an Anderson Advisors client and the services you'll have access to. Submit your tax question to taxtuesday@andersonadvisors. Highlights/Topics: If I request an EIN so I can open up a bank account for my disregarded single member LLC, do I have to file a tax return or can I somehow inform the IRS the EIN is for a disregarded entity? – Any EIN should be on “a” tax return, but doesn't have to have it's own return. If I paid for something on behalf of my C-corp and it didn't have enough funds to reimburse me, how do I account for it? – First of all, if you paid for something on behalf of your corporation, I would make sure that I'm submitting a reimbursement sheet. I would do that monthly where I'm putting together everything I paid for personally, putting it on a sheet, and submitting that to my company for reimbursement. Step 1 - Do it monthly or quarterly. Step 2 - You can have a revolving line of credit.If it's an IOU, it's a loan. It's a liability of the company. It would be an asset to you as the shareholder. What is the best way to record, handle reimbursement for business expenses that were charged on the owner's personal credit card to avoid giving the IRS concerns about the legitimacy of the business?" – Again, you would want to submit those charges that were business related on a reimbursement sheet. What you don't want to do is you don't want to put that credit card that's in my personal name on your company's books. That can be looked at as co-mingling. It's a business expense that you're getting reimbursed for. Can I deduct other courses I take that are general business-type classes, not specific to real estate investing, and if they are for the purpose of helping me build my business? – General business if it's you're improving your current lines of business. I don't see an issue with that. What is the smartest tax advantage way to pay the kids for helping the S-corp? Can I reimburse myself for the payments I have made to them from my personal account? – There are a couple of options here. I am a believer in payroll. The reason for that is if they're on payroll, if they make less than the standard deduction as employees, they're not required to file a tax return. You can also pay them by putting money in their Roth - they'll never pay tax, or do a 1099. How do I not pay taxes at the end of the year?- This is what everyone wants to know!! My reply is, either don't make any money, live on borrowed money, have someone else make the money, or buy real estate as a real estate professional which unlocks passive losses. I have a three-member LLC taxed as a partnership. The members want to take a distribution each of $100,000. How is that taxed and how is it recorded in the books? – That's not a taxable event. It's a distribution. That's an equity transaction. The $100,000 is not a taxable event. The taxable event is the numbers that come on that K-1 and say, you made profit of “X” or you made loss of “X”. How does the Anderson bookkeeping service integrate with the accounting service, et cetera? – We work very closely between teams! …we have full service monthly, or quarterly “virtual” service that uses QuickBooks. Virtual bookkeeping is $995 for a year for the first set of books and then $495 for each additional set of books. Can you please discuss some big-picture strategies to help with bookkeeping automation, AI, we should be considering? Botkeeper is one AI we've learned about. They can't do complex things. It's much cheaper to use a human being right now. Maybe that changes at some point. What is the best way to keep track of miles? MileIQ is an app, it works well and creates good reports. There is also a function within QuickBooks works reasonably well. And Timr is easy to use, but it is $100 a year Best software for doing bookkeeping? There are thousands, and thousands, and thousands of accounting softwares out there. Most of them do a pretty good job. We use QuickBooks online for all Anderson clients. I'm trying to figure out how to property log and transfer friends from the property LLC to the holding LLC and vice versa. (1) how to capture my personal mortgage loan into the property LLC and then to the holding LLC? – It's an investment expense that I'm going to show on my Schedule E, which is going to allow me to take that deduction against my rental income if it's real estate. (2) how to record all transactions from the property LLCs throughout the year and distribute to the holding LLC for tax filing. –Like Toby's saying, for each tax return that you file, you need a set of books. But if you have entities that are disregarded to a holding company, they can be within one set of books. If you have 10 properties, you're going to have 10 classes on one set of books, and it's all going to flow up. Platinum members: Log on to our bookkeeping office hours, Thursdays, 3:00 Pacific Standard Time. We're live and answering all your bookkeeping questions! Resources: Email us at Tax Tuesday taxtuesday@andersonadvisors.com Tax and Asset Protection Events https://andersonadvisors.com/real-estate-asset-protection-workshop-training/ Anderson Advisors https://andersonadvisors.com/ Anderson Advisors on YouTube https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw

Rental properties could be Single Family Residence, Multi-Family Residence,  Vacation/Short Term Rental, Commercial, Land, Royalties etc.Detailed expenses should be kept on each property based on their property addresses.  Schedule E of the IRS will show the items to be included. In addition to the expenses outline on the form we will explain other items to be included.  Moreover we will discuss other expenses that could be included and items that have to appear in the lease agreement.Support the show

Charles Oglesby aka Todd Millionaire (Twitter: @RealToddBillion) and Raphael (Twitter: @WorkMoneyLife) are joined by Tramaine Robinson aka 9to5Landlord414 (Instagram: @9to5Landlord414). Tramaine is an accountant by trade, a real estate investor, and the co-creator of the 9 To 5 CEO Podcast. His course: https://9to5landlord414.gumroad.com/l/fvtBQK They discuss what made Tramaine decide to get into real estate, his first deal, why being the first to do something is hard, getting your first 100k, what a Schedule E is, why he returned to his job, what a "write-off" really means, and much more! Get your ticket for the Todd Capital virtual conference and learn from business experts how to take your $1000 side hustle to new levels as a real business while early bird tickets are still available: Todd Capital Business conference! https://www.eventbrite.com/e/todd-capital-presents-run-your-business-like-a-business-virtual-conference-tickets-403561251567 Become a part of the Todd Capital community and join our Millionaire Fam on Patreon to get exclusive access to the hosts of Tweet Talk the Black Wealth Podcast and The Millionaire Talk Show: http://moneyteamtc.com Learn how to Trade Options, run a vending machine business, start an investment club, invest in real estate long distance, etc from Todd Capital: https://gumroad.com/a/386774131 Follow us on Twitter:  Charles @RealToddBillion https://twitter.com/realtoddbillion Raphael @WorkMoneyLife https://twitter.com/WorkMoneyLife Tweet Talk @TweetTalkPod https://twitter.com/TweetTalkPod Follow us on TikTok: @TweetTalkPod https://www.tiktok.com/@tweettalkpod @Todd.Capital https://www.tiktok.com/@todd.capital Follow us on Instagram: Tweet Talk @TweetTalkPodcast https://www.instagram.com/tweettalkpodcast/ Charles @ToddBillion https://www.instagram.com/toddbillion/ Todd Capital @Todd.Capital #BlackWealthPodcast #BlackPodcasters

Rental properties could Single Family Residence, Multi Family Residence, Vacation/Short Term Rental, Commercial, Land (for events like a concert) etc.Detailed expenses (on Schedule E) should be kept for each address.  Schedule E of the IRS will show the items to be included.  In addition to the expenses outlined on the form we will explain other items to be included.We will also discuss items to be included in the lease and what legal rights we have as a landlord and legal rights of the tenants.Support the show

Jerry Allison is a CPA who has been practicing accounting for over 30 years.  He also holds a doctorate in business administration and a master's degree in mathematics. In addition to accounting in all types of businesses, he has taught at several universities and colleges, helping students set up and operate businesses efficiently. Dr Allison has also performed research in business strategy, publishing several journal and conference papers, and he specializes in tax preparation and consulting for those trading public securities.  In this episode of How To Trade It, Jerry talks about the importance of understanding how to properly file taxes as a trader. You don't want to miss it!Subscribe to How To Trade ItYou'll want to hear this episode, if you are interested in…[00:24] Taxation for traders[00:50] Trading Forex…[06:40] Reasons for a Schedule C[07:14] Two types of LLCs[08:55] Tax impact of losing money while trading[09:46] Trading Stocks & Options…[19:58] Cap Gains & Losses[23:17] Trading Futures…[26:32] Trading Cryptocurrencies…[29:02] Creating a trading business[32:45] Services provided by Traders AccountForex taxationIncome from trading Forex is reported as regular, ordinary income.  It's super simple to report.  It looks like income from a W-2 or 1099.  If you want to be able to deduct expenses, you can claim “Trader Status”, if you meet the following special circumstances from the IRS:  Take 700+ trades in a year; trade on 75% or more of the available trading days in a year; and spend 4-6 hours per day in research and/or education.  The IRS is trying to make certain that you are treating “trading” as an actual business.  The downside?  Claiming expenses on a Schedule C, as an individual, increases your audit risk.     Limited Liability CompaniesThe first type is a single member LLC, where there is only one owner.  Income is reported on the Schedule C of the individual's tax return.  This is useless to set up, if you are a trader.  The second type, and the one recommended for traders, is a partnership, or a multi-member LLC.  In this case, the entire trading piece is moved from the individual tax return, and income is reported on a partnership tax return.  The IRS views this as a legitimate business, or a pass-thru entity, where income is reported on a Schedule E.  Capital Gains TaxesThere are two kinds of cap gains to consider.  First, you can Short-Term, which refers to anything that you hold for a year or less.  These gains are taxed the same as ordinary income rates…22%, 35%, 37%, etc. tax brackets.  The second type is Long-Term Cap Gains.  They are the income generated by anything that is held for more than a year, but the maximum tax is capped at 20%.  Traders Accounting ServicesConsultingHelp setting up entitiesTax return preparationBookkeeping servicesConnect with Dr. Jerry AllisonWebsite::       http://www.tradersaccounting.com LinkedIn:        http://www.linkedin.com/in/dr-jerry-allison:Support the show

States with local income taxes in addition to state-level income tax. The following states have local income taxes. These are generally imposed at a flat rate and tend to apply to a limited set of income items. Alabama: Some counties, including Macon County, and municipalities, including Birmingham (employees on payroll only). California: San Francisco (payroll only). Colorado: Some municipalities, including Denver and Aurora (flat-fee Occupational Privilege tax for privilege of working or conducting business; filed with municipality imposing fee). Delaware: Wilmington (earned, certain Schedule E income, as well as capital gains from sale of property used in business; income must be reported to the City of Wilmington if Wilmington tax is not withheld by employer.) Indiana (all local taxes reported on state income tax form): All counties. Iowa (all local taxes reported on state income tax form): Many school districts and Appanoose County. Kansas: Some counties and municipalities (interest and dividend income; reported on separate state form 200 filed with the county clerk). Kentucky: Most counties, including Kenton County, Kentucky, and municipalities, including Louisville and Lexington (earned income and certain rental income that qualifies as a business; reported as Occupational License fee/tax by employer or as Net Profits tax by business, filed with county or municipality imposing tax). Maryland: (all local taxes reported on state income tax form): All counties, and the independent city of Baltimore. Michigan: Many cities, including Detroit, Lansing, and Flint (most income above a certain annual threshold; reported on form issued by imposing city or on separate state form 5118/5119/5120 in the case of Detroit). Missouri: (all other cities are prohibited from imposing local income tax): Kansas City, (earned income; income must be reported to Kansas City if Kansas City tax is not withheld by employer; residents must file the Earnings tax form to report wages on which Kansas City income tax is not withheld and the Business Earnings tax form to report self-employment income). St. Louis, (earned income; income must be reported to the City of St. Louis if St. Louis tax is not withheld by employer; residents must file the Earnings tax form to report wages on which St. Louis income tax is not withheld and the Business Earnings tax form to report self-employment income). New Jersey: Newark (payroll only). New York (all local taxes reported on state income tax form): New York City, (employees with NYC section 1127 withholding should also file New York City Form 1127). Yonkers, Metropolitan Commuter Transportation District (self-employed with income sourced from New York City, as well as the counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester). --- Send in a voice message: https://anchor.fm/law-school/message Support this podcast: https://anchor.fm/law-school/support

Hello, Brilhosas!! Você sabe quais são as formas de criar um Schedule? Ontem fizemos uma live, para tratar deste assunto, e trouxemos aqui pro Brilhacast agora pra vocês ficarem por dentro de tudo. Aproveitem muito! Beijos!!

The below items are for the silver tax return process to show you how to take ownership of your bills, home, car and assets. For 3 barcodes call king Stevian at 850-322-9657 or 850-825-0933 To Set up a free appointment to get help filling out and filing your paperwork call king Stevian at 850-322-9657 or 850-825-0933 Forms needed to file: 1. Silver - https://www.jmbullion.com/1-oz-pyromet-silver-card/ & Get Silver Registration Affidavit - Needs Barcode!!!!!!! 2. 1099 A ( Register at http://1099online.com ) 3. 1099 B 4. 1099 S 5. 1096 (Automatically Done) 6. 4797 IRS Form - https://www.irs.gov/pub/irs-pdf/f4797.pdf 7. 8949 IRS Form - https://www.irs.gov/pub/irs-pdf/f8949.pdf 8. Your Bill(s), Invoice, Contract/Agreements,Mortgage Promissory Notes, Pay Check Copies (This is Your Instruments) - Needs Barcode!!! 9. Schedule E 1040 - https://www.irs.gov/pub/irs-pdf/f1040se.pdf 10. Schedule D 1041 - https://www.irs.gov/pub/irs-pdf/f1041sd.pdf 11. 1041 - https://www.irs.gov/pub/irs-pdf/f1041.pdf 12. 1041 T - https://www.irs.gov/pub/irs-access/f1041t_accessible.pdf & 1041 V - https://www.irs.gov/pub/irs-access/f1041v_accessible.pdf 13. 8302 Form (For Returns Over 1 Million USD) - https://www.irs.gov/pub/irs-access/f8302_accessible.pdf 14. Entitlement Certificate/Claim Deed (Needs Barcode!!!!!!! & USPS Tracking #) --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app --- Send in a voice message: https://anchor.fm/the-100-kings/message Support this podcast: https://anchor.fm/the-100-kings/support

Take Ownership of Your Bills Home Car Assets Make Them .. For 3 barcodes call king Stevian at 850-322-9657 or 850-825-0933 To Set up a free appointment to get help filling out and filing your paperwork call king Stevian at 850-322-9657 or 850-825-0933 Forms needed to file: 1. Silver - https://www.jmbullion.com/1-oz-pyromet-silver-card/ & Get Silver Registration Affidavit - Needs Barcode!!!!!!! 2. 1099 A ( Register at http://1099online.com ) 3. 1099 B 4. 1099 S 5. 1096 (Automatically Done) 6. 4797 IRS Form - https://www.irs.gov/pub/irs-pdf/f4797.pdf 7. 8949 IRS Form - https://www.irs.gov/pub/irs-pdf/f8949.pdf 8. Your Bill(s), Invoice, Contract/Agreements,Mortgage Promissory Notes, Pay Check Copies (This is Your Instruments) - Needs Barcode!!! 9. Schedule E 1040 - https://www.irs.gov/pub/irs-pdf/f1040se.pdf 10. Schedule D 1041 - https://www.irs.gov/pub/irs-pdf/f1041sd.pdf 11. 1041 - https://www.irs.gov/pub/irs-pdf/f1041.pdf 12. 1041 T - https://www.irs.gov/pub/irs-access/f1041t_accessible.pdf & 1041 V - https://www.irs.gov/pub/irs-access/f1041v_accessible.pdf 13. 8302 Form (For Returns Over 1 Million USD) - https://www.irs.gov/pub/irs-access/f8302_accessible.pdf 14. Entitlement Certificate/Claim Deed (Needs Barcode!!!!!!! & USPS Tracking #) --- Send in a voice message: https://anchor.fm/the-100-kings/message Support this podcast: https://anchor.fm/the-100-kings/support

Is income from your rental properties active or passive? What is the best way to report your income and expenses for rentals? How long do you have before having to pay taxes on the sale of your property rental? Toby Mathis and Jeff Webb of Anderson Advisors answer your tax questions about income from rental properties. Submit your tax question to taxtuesday@andersonadvisors. Highlights/Topics: Is retirement income considered passive or active income? If it is a passive income, then can passive real estate depreciation be used against retirement income? Retirement income is not passive, active, earned, or portfolio income. It's ordinary income. Retirement income is not going to offset your passive losses, but it can cause social security to become taxable. I've been told that filing Schedule E for rental properties, which I've been doing for the past several years, is not a good way to report your income and expenses for rentals. I want to file 1065, but I don't have a partner and don't intend to get one. I don't think Form 1120 or 1120S is a good way to file either. What do you recommend for next year? Stay away from corporations because of liability and other issues with appreciated property. If you take an appreciated asset out of a corporation, it's a taxable event. I closed on a co-owned rental property in April 2021. I did not have an LLC with my co-owner, and we are still in the process of forming an LLC to protect the asset. Can we still take all the real estate deductions on our 2021 tax return, absent having an LLC in place last year? You don't have to necessarily have a partnership agreement to form a partnership. Whether you had an LLC or not, you have effectively created a partnership, unless you've done this as tenants-in-common. I just sold my condo that I owned for three years. One year I lived in it and two years I rented it out. How long do I have before I have to pay taxes on my sale? Technically, your taxes are due as they're accrued. You might have some quarterly taxes on it and your actual tax bill is going to be April 15 of the following year. If you sell it in 2022, you have to pay the tax on April 15, 2023. For all questions/answers discussed, sign up to be a Platinum member to view the replay! Go to iTunes to leave a review of the Tax Tuesday podcast. Resources: Schedule E https://www.irs.gov/forms-pubs/about-schedule-e-form-1040 1031 Exchange https://www.investopedia.com/financial-edge/0110/10-things-to-know-about-1031-exchanges.aspx Entity Formation https://andersonadvisors.com/entity-formation/ Form 1065 https://www.irs.gov/forms-pubs/about-form-1065 National Alliance for Recovery Residences (NARR) https://narronline.org/ Toby Mathis https://tobymathis.com/ Anderson Advisors https://andersonadvisors.com/ Anderson Advisors on YouTube https://www.youtube.com/channel/UCX5nh607M8hSBLiMB9MgbIQ Anderson Advisors on Facebook https://www.facebook.com/AndersonBusinessAdvisors/ Anderson Advisors Podcast https://andersonadvisors.com/podcast/  

We all hate tax season, but it's a necessary activity that we all must do to pay public workers to ensure safety and stability of the civilians of the country. If you have any tax questions, please ask them now before you start filing your taxes! Angelina King is the owner of 718 Tax Services. It is a tax preparation company based in Jacksonville, Florida. Watch on Youtube: - https://youtu.be/jGPgATt36yY Check out 718 Tax Services: https://www.718taxservices.com/ IG: https://www.instagram.com/718taxservices/ Also Watch Her on Prior Episodes: https://youtu.be/5bfmOFZ82Ac (Season 2 episode 1 - How to pay less in Taxes) Subscribe on youtube.com/aboutthatwallet **CORRECTIONS** 01/05/2022 - Angelina misspoke on the tax treatment of digital product sales. Digital products can be included as misc. income on Schedule C not Schedule E. Certain states may or may not tax at the state level. **Additional Information** There are steps people, including those who received stimulus payments or advance child tax credit payments, can take now to make sure their tax filing experience goes smoothly in 2022. They can start by visiting the Get Ready page on IRS.gov. Here are some other things they should do to prepare to file their tax return. Gather and organize tax records Organized tax records make preparing a complete and accurate tax return easier. They help avoid errors that lead to processing delays that slow refunds. Having all needed documents on hand before taxpayers prepare their return helps them file it completely and accurately. This includes: ✨Forms W-2 from employers ✨Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan ✨Form 1099-K, 1099-MISC, W-2 or other income statement for workers in the gig economy ✨Form 1099-INT for interest received ✨Other income documents and records of virtual currency transactions Taxpayers should also gather any documents from these types of earnings. People should keep copies of tax returns and all supporting documents for at least three years. Learn and read about the complete IRS tax tip below. It is worth being prepared for 2022. -- DISCLAIMER: I am not a CPA, attorney, insurance, contractor, lender, or financial advisor. The content in this audio are for educational purposes only. You must do your own research and make the best choice for you. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments. If you need advice, please contact a qualified CPA, CFP, an attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. #Taxes #718taxservices #W4 #tax #taxcredit #Deathtax --- Send in a voice message: https://anchor.fm/aboutthatwallet/message

Learn how to review a Schedule E tax form the way a Mortgage Underwriter does to help with your Mortgage Applications.Caeli Ridge goes into the details of the forms. You can find the actual forms on the Ridge Lending Group community article here - Join us each week on Tuesdays for more Live with Caeli Ridge. Each Tuesday beginning at 4:30 PM Eastern.

Dave Homyak is a former engineer that quit his job to go into short-term rental properties full time. Dave runs Smokey Mountain Cabin Realty, helping investors maximize their returns by investing in rental properties in Tennessee. In this episode, Dave shares his investment journey, how he quit his job, how he 1031s his way into bigger properties, what his returns look like, the most powerful price points to get into, and some tips for investors thinking about getting into this game.         https://www.facebook.com/dave.homyak https://smokymountaincabinrealty.com/ --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum and Today we have with us Dave Homyak, who's going to be talking to us about short term rentals out in the Smoky Mountains of Tennessee, and what he did to leave his job is under two years with these types of investments. Without any further ado, let's get into it.   Hey, Dave, thanks so much for taking the time to hang out with me today. Really appreciate it.   Dave: Yeah. Thanks for having me.   Michael: Now, my pleasure. For our listeners who don't know you give us a brief background, who you are, Where'd you come from? And how'd you get started in real estate?   Dave: Okay, so basically, I was an engineer, I did engine calibration for a living, I worked for Chrysler, Detroit, diesel, General Motors, bunch of companies like that, and always wanted to do something in real estate, but quite honestly was afraid to do it. So my first investment property I purchased at 53. And the reason I purchased it is because I wanted to be able to get away from my W2 income. And I had had some money saved up I thought I'd pretty good saver. But I was like, what would it take to make me feel like I can walk away and not have any anxiety whatsoever?   And the answer was pretty easy. It's like if I replace my income, then I can walk away and do anything I want. And it's gonna, I will not have to ever worry. And so basically, I set the goal for myself to replace my engineering income in two years with real estate. And I was able to do it in a little bit under a year. And that was due to getting into short term rentals. And I ended up doing it in what I had kind of researched somewhat to the best of my ability at the time. But then what ended up is that an independent third party which is airDNA they ranked it as the best market in 18 best market in 19. It's three of the top six large cities in 20 and I'm waiting for the latest report to come out and I'm sure it's going to be in the top again.   So bottom line is I happen to buy in the one of the best markets and my research indicated that was a good plan. I had no idea that it was going to work out the way it did as quickly as it did though.   Michael: That's incredible. And so we've got to ask Where is that market?   Dave: Said market is in the Smoky Mountains, which is Eastern Tennessee, the three major cities are Gatlinburg and Pigeon Forge, and Sevierville. So Sevierville is the one that people haven't heard of as much but it's equally profitable and made the air DNA dotco list basically ended up you know, I made the decision looked into apartment syndication knew I could replace my income with that didn't know if I could add it to your timeline, ended up deciding on the Smokies. I looked at the Smokies panhandle of Florida, which is also a good choice. I think Smokies are a little better. Less hurricanes there. I really wanted to go into Panama City. And that got hit about a year later. And I'm like, Oh, I'm so glad I don't have to mess with that stuff.   Michael: Dodged the bullet.   Dave: Yeah, exactly. And then Scottsdale and I ended up going to the Smokies. So started this search and started trying to figure out what I was going to do in March of 18. April is kind of apartment syndication month. first weekend in May, I actually went to the Smokies to look for the first time and ended up seeing six cabins tried to make a decision on three, picked one bought it. So end of May I had that up and running it worked great over the summer, bought another one in August and then bought a third one in November.   And in December I got when the General Motors was offering buyouts and I said, I think it's time to go. And my, my goal was actually to probably stay with General Motors through July. And basically they said if you leave now we'll pay you through July. So I said okay. I can start on, on my leaving and yeah, and all the healthcare and stuff like that that goes with it. So yeah, it worked out really well.   Michael: Fantastic. So what about the Smokies attracted you? They're just out of curiosity.   Dave: So the thing that attracted me was there were people that were making a lot of really good cash on cash return. So one of the things that makes the Smokies a lot different than most other markets and in the panhandle Florida it's fairly similar. But all these things are second homes they're sold turnkey. So if you have to furnish, if you have to buy silverware, if you have to put in beds, TVs, all that stuff, that's just more money that you're gonna have to pay. When the Smokies there's basically two contracts that get written when you buy a house.   One is the purchase agreement for the cabin or the chalet, whatever your choice may be. There's a reason that chalets sometimes work a lot better than cabins and mainly due to supply and demand issues of buyers. But you also write a purchase agreement for the entire contents of the house. So you know, you have here's the cabin price, the chalet price, and for $1, you get the contents. So I literally am closing midweek, and that weekend, I have it rented out. So that's one of the benefits of you don't have a whole lot of downtime. And the second benefit that I didn't even know about at the time or didn't, didn't have nearly as much of a priority on as I do now when I help other investors is the whole regulation.   So in the Smokies, there's not that many hotels, they cannot take nearly as many visitors into the hotels is a built up entertainment, venues, things like that. So there's no way that they can go in like they do in other cities and say we want to ban short term rentals or we want to regulate heavily short term rentals. And, you know, play that regulatory card in make what used to be a really good investment not nearly as good of an investment. And I think you see that in the panhandle of Florida, as well as the Smokies, but I like the Smokies a little better just weather wise stuff like that.   So yeah, I mean, then the other thing is, there's a couple loans that are available down there that I'm not sure if they're available nationwide, I know they're available down there, but there's a 10% down second home loan. So if you're, if your intention is to spend 14 days or more in that property that you're buying the first one down there, you can get a second home loan on it. And that's a fantastic way to get into that market. Because you know, most investment properties you're not going to get for 10% down, right, and certainly not investment properties, you know, that is a primary residence you can put down last but for secondary to put down 10% is pretty crazy.   And then the loan that just, it still makes me smile, it's making me smile right now, and I've talked about it hundreds of times with different investors is there's a 15% down investment loan. And to qualify for the loan, you have to project what the income of the cabin is. And if the cabin throws off enough income, that qualifies you on a debt to income ratio. So for example, if the cabin is gonna throw off $5,000 a month and the payments gonna be 2000. And you're maxed out on debt to income right now. You know, if you're at 40%, guess what, you still qualify because of a cash flow project. It's a cabin with projected cash-flow of 5000 a month, and that cash flows enough to cover the the mortgage payment.   So it's just, it's like one of those things that you're like, I'm pretty I get I've actually checked with my like, once a year, I check with my loan officer, the person that I've used just is this still a thing? Yep, still a thing. And I'm waiting for somebody to say I'm not sure that should be a thing. You know, but it still is now. So even if you're even if your debt to income is fairly high, you can still qualify on the for the investment loan at 15%.   Michael: That is just incredible.   Dave: Yeah, I, it makes me smile, every time I tell somebody, I still can't believe it.   Michael: Yeah, I'm still trying to wrap my head around it, it doesn't seem to make sense. But if it's a thing, it's a thing.   Dave: At least for me, when I've used an investment loan down there, like the property actually made the money it wasn't like you had to stretch your make something up, like I think it's gonna make 10,000 and it makes five or something like that. It's more like if it's going you know, I said an honest five, the payment I think was 16 or 1700 a month and and it did make the five a month that I said it would.   And then where it gets really interesting is once you show them once you show the mortgage company a Schedule E and prove that it made what you said it was going to make, you now qualify for another one the next year. So basically, you can get one of these a year, as long as you wait until after you file your Schedule E and give that to the loan officer. And then if you are married, you know and if you're playing in two person mode two player mode, then you and your wife can both do one a year on that plan. And then the next year you can both do one on that plan.   Michael: Oh my gosh.   Dave: So it's a way to build, build a portfolio very fast and that market is still one of the best markets when it comes to cash on cash returns. So even though there's been a lot of appreciation, the nightly rates have gone up a lot, they had about 2000 cabins burned down in 2016. And before COVID came in, they had I think five developers come in and start to build. And it just the nightly rates have just gone up and up and up. And it's just one of those places that when the when the economy does well, that place does well, the Smokies do well. When the economy does poorly, the Smokies do well, why 60% of the United States is within driving distance of the Smokies.   And smokey, Great Smoky Mountain National Park is the most visited National Park. And in 2009 2010, visitorship actually went up when the economy was doing poorly. And when people are like, what how do you Why do you think that happens? You know, I explained, you know, if, if you're afraid about the economy, you're not flying to Florida and taking a one week Disney Cruise, but you're still gonna want to go on vacation. So you're saying you know what, I'm going to drive to the Smokies, I'm going to rent a cabin for three days, we're going to do this thing on the downlow. It's going to be nice, but it's not going to be as extravagant. So I think even when things slow down.   There's, I obviously know a lot of people that invest down there and kind of one of the one of the questions that that we asked each other is what am I missing? It seems like there's really big upside, and not a whole lot of downside. And we haven't come up with anything. Yet that makes it scary. What am I, I very well may be missing something. But I've asked a couple guys and we can't figure it out.   Michael: So I mean, I just I love hearing all of this because as I was sharing with you when we connected before the podcast here, I just 1031ed into a property down there and severe bill. And so I'm very excited now to to get that up and running right here. And this only makes me even more giddy.   Dave: Yeah, yeah, it's pretty, it's pretty cool. I guess the other thing that I've done that I think is interesting, I think your listeners will find interesting is, the other thing I do is as an engineer, I don't sit still very well. So I'm constantly analyzing my properties. And I've owned five, but I keep trading up and 1031ing up. So for example, 2018, I bought a three bedroom, a four bedroom, a five bedroom, middle of 19, I look and I say hey, the five bedrooms doing better than the four, the four bedrooms doing better than the three. And they've all been appreciating, I know, I think I'll sell this three bedroom. So it's underperforming the other two.   So I sold the three bedroom and it had gone up enough that I actually use that 10 1031 money as a down payment on an eight bedroom. So very directionally correct eight bedroom does really well it costs me basically you know the downpayment that I put on the three bedroom and then just this you know the sale on the transfer the money to control an eight bedroom a year later. And there are different people that are doing that. So some are on a never sell anything. And I get I get some people upset on some of the real estate investment forums because they say, What's some of the worst real estate investing advice you've ever heard. And I say buy and hold and they say oh, they just don't like that.   And I'm like, I think I'm doing okay with it. And maybe I should have kept them all and just bought other ones. And then the other thing I ended up just recently doing is I sold the first cabin I bought which was a four bedroom, and I 1031ed did into this ultimate killer, like five bedroom the most incredible views. Just amazing. So that's kind of the other half of the coin is when you're looking at a lot of the when you're when you're looking to do Airbnb anywhere, when you take a look at the market. And if you if you buy the airDNA data, what you're going to see is, especially when you start to well, bigger places are there are less bigger places. So you're going to get outsized demand for the supply of bigger places, so you're able to charge more more bedrooms is better. In the Smokies a view is better a pool in the basement is better.   And what you're also going to see is that if you're running at 95th percentile property, your gross is double what your what a 50th percentile property's gross is going to be. So that isn't if you're running a 95th percentile property, your profits going to be double because you're already making a profit at the 50th percentile, it means your profits going to be you know, times three times four times five, because you've already got your expenses paid at 50th percentile. So anything about 50th percentile You really need, yeah, that's just money in your pocket.   So you really need to, I was, you know, I've made, I've made some mistakes along the way that have cost me someplace between, like a pretty lot of money and just like a lot of money. There are no small mistakes that I did. So, you know, one of the mistakes that I made was, well, if I can put 10% down, this will be I'm going to try not to put much more money and like, if something breaks, I'm going to do it. And looking back on it, there's a couple things that I could have upgraded, that wouldn't have been a big deal. That would have netted me more money in the long run better reviews. You know, when you look at that delta between the 50th percentile in the 95th percentile, it's amazing. So it's, it's worth, it's worth doing that and not kind of being gone on to put in 10%, I'm gonna try never to put another penny in unless something breaks, you know.   Michael: That's worth the upfront investment. So yeah,   Dave: It totally is worth the upfront investment. And even if it's in, let's just say it's, it's not, let's just say you only have the 10% of the closing costs, you know, the other thing is you're making, you should be making a couple 1000 a month anyway. So I mean, in two or three months, you're gonna have 567 $10,000 to spend. So maybe you wait a couple months, and then you put in, you know, the new the new furniture in the living room and refilled the pool table or whatever, get the better hot tub, whatever it is, when you feed that back in, I ended up just selling a place. And it's just doing some, I have some friends that also have properties that are identical, like literally identical to mine like same layout, same view, 50 feet away, and we were talking some numbers. And you know, they did, one guy did a really over the top renovation, his numbers were crazy, and one guy did a milder renovation. And I would I was doing some math of what it would have taken me to put in that and it'd been like under 10 grand. And basically, he was kind of he was out grossing me by about 10 grand, like, Oh, you put in the 10 grand and for the last three years, I could have made 10 grand instead of I save 10 Grand 30 grand Got it.   Michael: Right.   Dave: So it's it, you know, my mind is a is a work in progress for maximizing all these things. Well,   Michael: That's the engineer in you I totally get that as a reformed engineer myself. We get that.   Dave: Okay. Yeah, totally. Dave, I'm curious to get your thoughts because I'm sure that there are people that would argue that there are Smoky Mountain equivalents all over the place, I can invest anywhere in the country and make a good return. What are your thoughts on that? And how do you kind of narrow in on some hot markets?   Dave: I agree that you could probably make the same money. If you dig into 95th percentile stuff, if you dig into all this stuff that makes money. I think it's harder to make money in other places. And what's really interesting is what the how I made more money inn the Smokies, I've made more money, I've made significantly more money in the Smokies with appreciation than I actually did from Airbnb. So if you're making crazy cash on cash, which you still can kind of do, if you know where to look. And your appreciation is outpacing your cash on cash. That's the thing that I think some of the other markets lack. And I've known people that have had places that you know, guy that was in, in place just outside of Denver, and he was killing it in his neighborhood. And I forget if it was him, or his, basically the two of them where they were doing Airbnb in there and it got banned, and all of a sudden, everything's gone. Or you do it in some small place that maybe you're making money. But you know, how do you get that out? And how do you find the investors to come in behind that? Do they know that's a hot market?   So I think a lot of people concentrate and obviously the rental arbitrage people are just doing a just a strictly cash on cash thing. But I think if you look on, if you look at the markets that are being rated by air DNA, I think you're going to have a better overall return. Because other people are just being pointed to that direction, and they have the proof that they need if there's any, if there's any fear of the numbers, the books being cooked, whatever, and you know, some far off market, the middle of Wyoming, whatever I don't know. I mean, I've heard some really interesting numbers of people buying places in the Midwest with pools during COVID, they just they just annihilated because kids want to swim and people have money and if you couldn't go to the public pool and your kid really wanted to swim, guess what you're dropping top dollar, you're gonna beat out the other guy to get that lock in that place with a swim pool, even though it's a less expensive city. So I mean, those guys didn't really well, they're going to do now that the public pools are kind of open, I don't know.   But I think overall, I trust the air DNA data. And I think the cash on cash is available in other places, I'm not sure the appreciation is as much.   Michael: Okay. And so you actually help people find properties out in the Smokies, is that right?   Dave: I do. I do. I that wasn't my goal, my. So my goal straight up was, I was an engineer, I took my bite out, I said, I get to do whatever I want. And I don't like I don't sit still well. So I'm like, I am going to learn to fly airplanes. And my goal is to fly jets. So my goal was to fly for Delta. And so I'm like, I got my private pilot license, I got my instrument pilot license, made it halfway through commercial license, and then kind of like, the whole real estate thing kind of blew up for me.   And in even before I started working, about halfway through the commercial, or excuse me, halfway through the instrument license, I started to get people asking me, Hey, can you kind of help me do that? And can you help me find some of the best performing properties. And I think, because of the engineering background, and because I'm not afraid to do the numbers, and because I'm not afraid to run some spreadsheets and stuff like that, I'm able to better explain to some of the more technical science, math investors, why this makes the most sense. And I'm able to make them feel comfortable enough to invest there.   So I'm getting a lot of clients that have never invested anywhere, I'm getting a lot of 1031 clients, but they see the numbers and it's just like you can't not do it. And that's, it's, it's one of those things that you know, right now, depending on depending on the cash on cash that you're looking for, a lot of a lot of the places don't work. But if you know where to look and and how to make it work. It's a lot easier and, and it's one of those things that it's like, even with, even with MLS access down there. A lot of the agents don't put in the numbers that you need to see. So there's a lot of calling and texting and stuff to dig a lot of this stuff out to make sure that your clients are getting the best stuff. And I think that's what myself and my teammate do better than a lot of other agents is dig out those numbers and make our clients comfortable that they're getting some of the best returns that they can in one of the best markets.   Michael: That's awesome. So Dave talked to us a little bit about what some of these properties that we're talking about cost. And what are some of those cash on cash return numbers and metrics that you that you're seeing.   Dave: Rght. So yeah, when I got started, things were a lot cheaper, it was a lot easier. But the crazy thing is the numbers were slightly better when I got started. But they're still pretty righteous right now. So right now, it's very difficult to find, but I am finding some clients 60% cash on cash returns, I'm finding people between 40% and 50% cash on cash on a fairly regular basis. But yeah, there's, there's just some places that are under priced a little bit. And that's why you're looking just to see what it can do. And there's so many, one of the things I don't like about the Facebook forums, any Facebook forum for Airbnb, is the amount of people that say that nobody should ever take a course.   And I never took a course. And all these people said, are telling these brand new people don't take the course. And I added up what I didn't know and how much it costs me. And it's, it's like 40 or 50,000. Like if I'd taken the course I would have saved myself easily 40 or $50,000. And I'm like, You have no idea how much you can spend on a course and save money. So one of the things that we're seeing down there when we're finding these properties, right is there was somebody that was just bragging that they just filled their last two nights for 2021. And I just thought, boy, you're so underpriced. If you have your entire thing booked up every last day that that just tells me you're leaving a lot of money on the table.   So it's a combination of what you know, kind of what numbers they're generating, currently what their calendar looks like. You know, if they're completely full and they have pretty high gross while you know there's a lot of room, a lot of upside. There's just a bunch of different things like that, that we're using to find properties. And just the straight math is if you find some property compelling enough to pay $100,000 more for it. That's great. Down to roughly $500 a month in principal and interest payment that breaks down. So let's break it down to short term rental terms, you're going to rent it out list, it's going to be under 500. But we'll just call it 500. For the easy math, let's just say you're going to rent it out 20 days a month, now, in the summer, there's no you're renting it out 20 days a month, you're renting it out a lot more than that. But let's just say 20 just to make the math very conservative.   If you rent it out 20 days a month. That means whatever you paid $100,000 more for. If you can charge $25 a day, $25 a day more. For that additional amenity you're breaking even. And if you can charge $26 a day more, you're making money. And guess what have you cost in the Smoky Mountains? About $100,000? Can you rent a cabin for more than $25? A day more? If you get a view? Heck yes. Can you rent to you know, can you rent a five bedroom instead of a three bedroom for $25? More day? Heck, yes.   Yeah, there's so many of these things. So bottom line is if you look, if you want to do just straight math, and let the math guide you to what you need to buy to have the best cash on cash, you're starting to get into more expensive properties. And you know, that basically, kind of up to any price works several million is is fine. If you have the financial ability to do that, things start to make sense, things make a ton of sense. And like 750 $800,000 range, you're still making money in just about any range, you know, 300, 400,000, but you're not making as much and you don't have as much cushion.   So there's a lot of people that are like I want to start small, and I want to and I'm like you, I will be happy to help you find and buy anything you want. But let me explain to you why starting small, in my opinion is more dangerous than starting with something that's making 5-6- 7, 000 a month, right? Because guess what, you can lose 567 1000 a month and you're still breaking even versus you know, if you're making 1000 1500 a month when something goes wrong, you're now making nothing and you may be coming out of pocket. I never want to come out of pocket.   Michael:: This is mind blowing day. This is such good stuff.   Dave: Yeah, cool. So glad you like it.   Michael: As as we wrap up here and let you get out of here. What's a final takeaway that first time short term investors to be thinking about that they want to get into short term rental game? What are some of the hardest lessons that you've learned that you can help people to hear from?   Dave: One of the things I see people do is I want to stay so if there was a post I saw that said I visit Detroit on a regular basis, I want to stay in Detroit. I think I'm going to get a short term rental in Detroit. I say I will pay cash for wherever I want to stay. And if I want to stay in Detroit, I'll pay cash that I've earned in the Smokies are one of the top markets. I'm I'm very big into what's the least I like to earn money. But what I really like to do is earn money with less effort. So if I can have five or 10 places in Detroit, that earned me the same money as one place in the Smokies. I'm going with the Smokies all the time, or the panhandle of Florida or, you know, right now some of the other really hot ones Joshua Tree, Broken Bow. Some other places like that northeast corner of Pennsylvania.   There's a bunch of other markets, but I want I don't want to have I see a lot of guys do like a 40 or 50 person, kind of, or 40 or 50 property, you know, rental arbitrage grinding these things out. And that's just not me. I would say try to get the one that has the best cash flow and go from there.   Michael: Path of least resistance.   Dave: People trust me and people tell me things that they probably wouldn't tell other people. But if you knew, and you would never get any of these people on your podcast if you knew how much money that I know that friends have burned through attempting to do short term rentals poorly like 50,000 a year 75,000 a year just I thought I'd try this house. I thought people would really like it. And they didn't it's like go with the proven method, click the stuff that's working. Don't try to reinvent the wheel. You know, go to where there's 1000s of other people that have already done it.   That's the big mistake that I see people do that cost them lots of money and lots of time in the end and I don't know and just here's my other just general real estate investing advice. There's a friend there, I have a friend of mine who's very sharp. And he's basically he's put together a portfolio. He's mid 20s. And he's put together a portfolio that now basically makes him financially independent, he makes more money from his real estate portfolio than he does from his day job.   And it's like, just ask guys like that, or ask me or ask y'all like, I have this idea. What do you think? And you know, he's very happy to help people. I'm very happy to help people. I'm like, yeah, I'll jump on a call for five minutes. Tell me that you want to invest in, you know, I don't know, some, you know, I'll either tell you how to figure out whether it's a good idea, or I'll tell you why it's a horrible idea just to begin with, you know, avoid places with regulation, avoid places that you might lose money, avoid anything that you can make a couple $100 on, like, why are you doing that? Make 1000s? Like, think big. Like, it's not that much harder to do. It's actually easier. So I guess that would be the other. The other thing I would steer new investors too.   Michael: That's so so good day. Well, it kind of in that vein, how can people reach out to you to get a hold of you if they want to either invest with you in the Smokies or just want to bounce some ideas off of you.   Dave: I'm on Facebook. So Dave, homie, AK on Facebook is a way to reach me, you can message me click on me, whatever. I have a website, SmokyMountaincabinrealty.com and smokey is SMOKY. And if somebody wants to sign up, I have some introductory investment, zoom classes like a 60 minute thing. And I kind of explained what I think is important when finding an investment. I obviously say that the Smokies are a pretty good place to invest because I believe that so those would be the two the two main places to get in touch with me there's SmokyMountainCabinRealty.com, or DaveHomyak.com.   Michael: Alright, Dave, this has been great. One final question that I want to ask you. Because it seems like you are so hyper focused on one particular market. Do you think it's make sense to diversify and invest across multiple different states? What are your thoughts there?   Dave: Excellent question. I am hyper focused on the Smokies because I know those returns are incredible. I'm not necessarily saying somebody should invest in the Smokies only or the panhandle of Florida. I'm saying follow the numbers. I really have an issue with people that have multiple properties in multiple cities. And they're not doing a comparison of how much you know how much money they're earning, and how much time they're putting in. And there are properties that they have that are doing better and there are properties they have that are underperforming and It baffles me why somebody would want to waste their time on an underperforming property instead of cut that one loose and upgrade so I just wish more people would run the numbers.   Michael: This has been so great thank you again for taking the time to hang out with me and I know we'll be chatting soon because we're fellow smokey guys now   Dave: Yeah awesome really appreciate you having me on.   Michael: Take care talk soon.   Alrighty everybody that was our episode a big thank you to Dave super super cool story and I'm just total fanboy because as I mentioned the episode I also recently invested in a smoky so I'm very excited to hear that the outlook is positive. As always, if you liked the episode, leave us a rating or review wherever it is this your podcast and we look forward to seeing the next one. Happy investing

Brandon Hall is THE real estate CPA of The Real Estate CPAs. He has a wealth of knowledge around financials and taxes in real estate investment. Chatting to Avery Carl in today’s episode, Brendon shares some fantastic nuggets of advice applicable to both new and seasoned investors. Avery asks questions based on what she knows, from experience, people have concerns about. From clarifying passive income to explaining when to make use of cost segregation in your property - he explains all of it concisely and in layman’s terms. So no more excuses! So strap in and prepare to be “in the know” about property taxes at the end of this episode. Discussion Points About Brandon Hall Move into short term rentals Is Short term rental - Schedule E vs C and Passive vs non-passive income Qualifying as a real estate professional for tax benefits Cost segregation Types of properties cost segregation makes sense to do on Accelerating Depreciation LLC vs Personal Ownership in terms of Tax Advice for new investors Brandon’s favorite book Resources The Short Term Shop University The Short Term Shop Facebook Group How to win Friends and Influence People book Tax-Smart real estate investors Facebook Group Real Estate CPA YouTube Channel The Real Estate CPA Website

In this episode, Devin Redmond from Stessa gives us a peek under the hood of the Stessa asset management software. Deven explains Stessa's functionality, reporting tools, and how to use it with a live demo. --- Transcript   Before we jump into the episode, here's a quick disclaimer about our content. The remote real estate investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Tom: Greetings, and welcome to the remote real estate investor. On this episode, I'm joined by   Michael: Michael album.   Tom: And today we're gonna dig into some of the Stessa features and functionality. Devin leads the customer success team at Stessa. So a lots of great things we're going to walk through note this episode, while it's valuable to listen to, and it's gonna be extra valuable if you check out our YouTube channel as well. So worth checking out both. Alright, let's get into it.   Devin, let's get a little bit about your background. So you lead the customer success team at stessa. Let's talk about let's roll back, roll back a little bit further. How did you get to stessa? Are you an investor as well? Let's hear about it.   Devin: Yeah, yeah, sounds good. Let's Well, we'll set the stage a little bit. So yeah, I started with Stessa, about three years ago. So I've been there almost since the beginning. And Stessa, from the beginning has been a financial management platform for rental property owners specifically. So at the time, you know, a few years ago, there's Mint, Personal capital, a lot of these platforms coming out that were more sort of stock market oriented or other investments, and there wasn't much for real estate investors to efficiently track their portfolio.   And so that was the original idea for Stessa. It's the word assets spelled backwards. And since then, we've, you know, introduced through a steady stream of new features over time, that have come together to be a sort of all in one platform for tracking your your tenants, your income and expenses, you can store real estate documents, and you can run all your financial reports there as well. So that's kind of the quick overview on Stessa. It's great for whether you have one property five properties growing portfolio of 10, plus single family rentals, smaller multifamily. That seems to be kind of the sweet spot where people get the most out of out of the platform.   So I run the customer success side, I spend a lot of my time talking with investors, understanding what their challenges are, and figuring out ways that stessa can can help address those. And then I'm also an investor myself, so invested in property, both in California and Hawaii. And I self manage a lot of that so that, you know i'm i'm in investor shoes, seeing what the issues are working with vendors, and building relationships with tenants every day. So that's that's part of what I'm doing what I'm bringing to my job at Stessa.   Michael: Oh, man got to go show a vacant property in Hawaii, poor you.   Devin: Yeah, it's it can be pretty tough. Sometimes I've actually been doing that remotely. So like, I'll get on FaceTime with someone. And they'll go hit the lockbox and get in, we'll sort of tour together. And it's actually worked out really well so far. I don't know if it's just that market, or it's not a cheap property, right. So I've been able to kind of like screen tenants in advance and make sure they're qualified. And then they come for a tour. And I've had really good luck with it so far.   Tom: I remember talking to you about this before, it was interesting learning the rules in Hawaii. Where is it? Right, you have to own it for a certain number of years before doing short term like you have to do long term first, or I thought that was just kind of an interesting factor on the rules. And why do you mind elaborating on that?   Devin: Yeah, yeah, no problem. I mean, it's pretty complicated. Each island has its own rules. Each island has its own County, and the rules are kind of determined by county for the most part. But yeah, getting into short term rentals, there are certain areas on each island where short term rentals are sort of de facto allowed. And you can buy one of those and start doing short term rentals, you know, day one.   On the rest of the island. And a lot of the neighborhoods, they've really cracked down there were a ton of illegal short term rentals going on like that. And those have those have been shut down. There's huge fines for doing that. So on Maui specifically, you can if you buy something in a you know more of a long term rental neighborhood, you've got a five year waiting period before you can even apply to do short term rentals. So everything I'm doing over there as long term rental, it's pretty tricky to manage short term rental from that far away without a property manager and that's kind of how I've preferred to do things so far at least.   Tom: I wonder if it's like the resort lobby. like trying to like snuff out? I don't know, being conspiracy theorists, Tom over here. Like,   Michael: They send someone in to lobby for Marriott. Hey they're killing returns?   Devin: Yeah, definitely part of that I mean, and then there's you know, understandably there's local opposition to and when long term rents are going up you know a lot of that frustration gets directed at people who are doing illegal short term rentals which you know, they shouldn't be doing. Tom:: Sure is and just kind of curious on longer term strategy. Do you see that as like retirement spot as well or I love interesting places where people invest in Maui's awesome,   Devin: Yeah, yeah, I mean, that was definitely part of the objective that it has that option, as a place may want to retire or semi retire in a while. You know, it's a little tricky to spend a lot of time over there. Now, pandemic, there were some opportunities to do that when everyone was working remote. And that was a nice sort of bonus, because one of the properties has a little in-law unit that my family was able to tuck into for a few months, and we got a feel for what it's like to, you know, to live in Hawaii, not right on the beach in a rental condo.   So yeah, and that's one of the ways I think about investing is Okay, is there some reason that apart from just getting getting a good yield, or return that I would need or want to be in this place? Right? So is there some other reason to get on a plane and go there and deal with the property meet people start building a network in Hawaii kind of fit the bill for me on that front?   You know, I have family in Cincinnati, and my family's from part of my family's from Nashville originally. So like, there's other places that also have that, that sort of angle that I think is one way investors can kind of think about things so that it's not just about yield, or just about the math and the model. I think it's nice to have some other ways for things to work out in a positive way for your life overall.   Tom: Optionality for sure. Well, I, we could probably talk about investing in the islands for a long time. But getting I guess we'll save that for another episode going deeper on that. But let's let's circle back into Stessa. So what I wanted to do within Today's episode is to walk through some of the key functionality and use cases, just to give listeners a better idea about what what is the product? What does it do? You know, how is it different than property management, all of that good stuff?   Devin: Yeah, absolutely. So I think the first thing to note is that when you think of property management, you think of really being in the weeds, vendors, maintenance requests, you know, long list of items that have to be taken care of rent collection, etc. Stessa, we've thought about this as more asset management. So this is a layer that kind of sits on top of property managers, or on top of the DIY owner who's doing a lot of property management on their own. So, you know, think of it 10,000 foot level, rolling up a lot of the data and information to help you understand how you're doing on a more macro level.   So, to that end, I'll go ahead and share my screen here. And you can see our dashboards. Can you guys see my screen? Okay,   Tom: I can and note for listeners on the podcast, we have this all the the video is on YouTube, but we're going to talk through it. So you get a good idea on what is within the the dashboards and functionality.   Devin: Yes, so when you set up a test account, it's pretty easy. It's, you just enter a property address. And we go ping a bunch of different public records and put together as much information as we can, then you key in your rent roll some other basic information. And pretty quickly, you'll see a dashboard like this. So this is for our demo account. This is overall portfolio view. And you'll see you know, kind of key metrics like value, set return, if you've set up all your acquisition information, will track your occupancy, we'll do the math on the projected income, you can put in all your mortgages. And then you get a portfolio you know, for if you've got a big complicated portfolio, you might have 10 properties, a bunch of units here, this math gets pretty hard to do on your own. So this is a nice kind of quick reference.   In terms of tracking actuals you get a net cash flow by month chart here, where this blue line is your actual results. And this dotted black line is your pro forma your budget. So you know, one of the things that we learned very early on from talking to investors is a lot of them don't necessarily have a great idea as to how they're doing month to month. You know, you may check in with your CPA, your accountant once a year when it's time to do your taxes. But that's not really enough to know how to operate better during the year, he really kind of need to track your results month to month to know what adjustments you can make along the way so that when it does come time to file taxes, you're making as much money as possible.   So this is a great a great way to automatically track things. As long as you have all your bank accounts set up and your your data is coming in smoothly.   Michael: This is so powerful. And debit, I just want to pause here for one second, if you scroll up just a hair, so we get back to the bar graph. So for anybody not watching this on YouTube, what we're showing is this bar graph, which shows the breakdown of the income and then the expenses that get paid. And then the cash flow is being being tracked. And it looks like for any other math nerds out there, like the sine wave, which basically goes up and down and up and down, and up and down. And that's what we project, that's what we anticipate our actual cash flow to look like. Versus when we're modeling, we assume that it's uniform, every single month, we'll make the same amount of money. And every single month, we'll have the same amount of expenses going out, which if anybody owns properties, you'll know that's not the case, because you might have property taxes due once a year, and you might have your insurance payment once a year. And you might have a big expense once a year, or whatever the case may be if your individual property. So I think it's so important to recognize and understand that it's not smooth, it's not uniform. And this is a really great visual for this.   Devin: Yeah, absolutely. That's a good point. Yeah, property taxes, insurance, these are lumpy things that happen throughout the year. And you want to make sure you're managing your cash flow to accommodate that, right. So this is this gives you a nice visual of what's actually going on and how things really work.   Michael: That's great.   Devin: We've also found that this is really helpful for for some investors who don't necessarily have an appreciated how much capital can be required on certain investments, right. And so when you were accurately tracking all your capital expenses, you can see that that introduces some some lumpiness as well.   And then we also do a cash on cash return down here, which, in the early, early days of an investment is a great way to understand, you know how you're doing in terms of the actual cash dollars you've, you've put into the deal. less important over time, we try to focus more on ROI and ROE over over the long run. But in the beginning cash on cash is is pretty useful.   Tom: We love some cash on cash metrics that Michael and I it's, we have big fan of that one, I think one last thing that I that I love about this is, you know, you may have some dashboards with your property manager that you're using. But if you have multiple properties across multiple property managers, I mean, this is one where you can aggregate it all together, you can, you know, look at you know, perhaps, you know, perhaps part of your portfolios in Texas, you just want to see the Texas properties great. You can run all these reporting for just that specific or all of them, or one of them. It's just really granular, cool reporting.   Devin: That's right, yeah, you can easily switch back and forth between portfolio and a specific property up top here.   Michael: Well, it's something to keep in mind too, is your property manager has a limited insight into what the property is doing. And only from their perspective. So they might be paying the management fee. And I've been the expenses of any kind of repairs that come up. But you as the owner are likely the one paying the property taxes, the insurance, you might be paying some vendors specifically if there's a big a big capital improvement that's being generated or going into the property. So it property managers so often don't have the full picture Oh, and the mortgage, like duh, that's the biggest, oftentimes the biggest expense, they might have no idea what that looks like. So this is Tom, you mentioned, it just aggravates it altogether, one place becomes so nice. You don't have to do that for yourself.   Tom: Great point, Michael.   Devin: Yeah, absolutely. So while we're talking about property managers, and data, let's maybe go under the hood a little bit here and see where all this information is coming from. So the transactions ledger, it's kind of the real engine of Stessa. And this is where all your data gets consolidated in one place. So just like mint or personal capital, you can link directly to bank accounts, you can link to your lenders, you can link to your credit cards, and you can link to various property managers depending on which software they use. So if they use Apfolio or Property Ware we can tap into those reports directly. So when everything rolls up into one place, you can pretty easily go through and categorize all of your income and expenses. Most of these categories align really well to Schedule E on your tax reporting. So, you know, we try to get you to kind of the five yard line before taxes and want to coordinate with your CPA to get over over the finish line. But you can get pretty far just with these quick tools in the in the transaction ledger.   Michael: And just just to clarify that analogy, Devin, you're talking about the five yard line, very close to scoring as opposed to your own five yard line, almost getting saftied.   Devin: Yes, yes, that would be very far. Absolutely. I would imagine a lot of people feel like, you know, especially during I don't know, I felt this, I don't know if you guys experienced this, but like CPAs were just totally overwhelmed this past year. And so I always felt like we always we had a long ways to go just to like, get the conversation started and get someone engaged and working and asking me questions. I don't know what your guys's experience was, but it's been, it's been hard lately.   Michael: I'm still holding my CPA to get my state tax returns. He just got my federal over to me. So I feel that sentiment 1,000%.   Devin: Yeah, yeah. So you know, when you can roll it up and give someone a nice report that's got all your information where you've done a lot of the categorization, which is sometimes hard for CPAs to do, because they don't know your business as well. They don't know your properties, they don't know how you like to do things. I feel like it does kind of put you in the pole position to get you know, better attention from from your CPA and get things done.   So, the transaction page here, this feeds all the reporting all the dashboards, it's very easily searchable. So if you're looking for something like let's say you wanted to say, okay, where did I? Where did that Home Depot, receipt go. Or what did I spend money on last month, you can really easily search and pull that information up. Everything's pretty responsive.   For any particular transaction, you can also attach a receipt so you can drag and drop a file here. And then we also have iOS and Android apps that do receipt scanning. So when you scan a receipt, it'll automatically create a transaction for you attach that receipt here. And then you have a great reference. And you don't have to store store papers at home.   Michael: Awesome. And Devin, if I have regularly occurring expenses, every month, I pay the property management fee every month I pay utilities, or whatever the case may be, will Stessa start to learn that type of stuff, or do I still need to go in every month and manually update what this expense was and categorize it?   Devin: Yeah, in terms of the categories, we do have algorithms that pay attention to your patterns over time. So to the extent those expenses are coming in with the same description from the same source every month, once you categorize it three or four times in the same way, our engine will pick up on that and start to do it for you going forward. So it's not perfect, but it does over time, the more you put in in the beginning, the more time you save down the road.   We also support file imports. So this button here allows you to import Standard Bank files, like OFX and QFX, you can also bring in CSV files. So if your local bank happens to not be supported for a direct connection, you can still get your data in efficiently. Of course, you can also add transactions manually, if something, you know for whatever reason slipped through the cracks, and you just need to track it.   Michael: Awesome.   Devin: So that's the transactions page. I'll show you reports. Next, maybe since this is another place where the data feeds into, we've spent a lot of time building out the report center to be very focused on what investors actually need. So you know, some general accounting programs will give you like a sort of vague p&l for a business. But that doesn't necessarily break down the way you want it to to understand how your investment properties are performing.   So we've got a net cash flow report. This is somewhat influenced by how, you know commercial real estate investors look at things, very detailed operating expenses. So you can see line by line, each category gets a breakdown by month. This is all clickable. So if some numbers seems out of whack, you can just click on it. And so we'll look at what was this $390 and February looks like it was travel, we click here and boom, there it is. Okay, it was a looks like a plane flight to somewhere. So it's a great way to cross check your data. By going through through your reports.   Michael: This is such a powerful report. Devin, I just want to kind of highlight this for a minute. This is one of the first things that I asked for when I'm looking at a deal to purchase is I want to see the T 12, which stands for trailing 12 months of numbers on that property. And also ask for Schedule E from the seller to make sure that those numbers are aligning that they're telling what they're telling me is the same thing they've told the government and as far as operating expenses and costs associated with the property.   And so if you're someone that's thinking, Oh, I'm you know, going to be selling a property, I might not have any use for Stessa because I'm going to get rid of that property. This could be an actual perfect case study to use Stessa because you'll be able to generate these numbers and provide these report to a potential buyer. I mean, this is really, really, really powerful because this aggregates everything that we were talking about previously, all of the property manager expenses, and combined with all the expenses that you're paying as an individual, as an owner, we get to see it all in one place. And so you can show somebody, hey, look, here's living proof of what this property, how it's performed over the last 12 months, or whatever timeline you're looking to, to acquire.   Devin: Yeah, absolutely. I mean, I would have way more confidence in a seller in a property that I'm looking into buying if they provided me with something like this, that looks professional, or all the numbers add up, and it's clear that they've been paying attention, right?   Michael: Hmm. I hate getting the handwritten stuff.   Devin: Right. You wonder well, what else has been kind of like, you know, Jerry rig here? nicest on the property. Right?   Tom: Canary in the coal mine.   Devin: I always one of the things I always look for is is what kind of conditions the mailbox in is it? Is the pole straight? Is the mailbox, like painted a new or is the thing like, all, you know, sideways and falling apart, and no one's bothered to notice?   Michael: That's a good one.   Devin: It's amazing. It's amazing how many slanted like you know, rundown mailboxes that are out there.   Tom: Kind of unrelated kind of related. I. So Have you guys heard that story about rockstars saying like in their writer, you know, in their dressing room, they only want like red m&ms or something like that,   Michael: Like being very particular about their wants, specifically for red m&ms.   Devin: This is this is a great story. This is that I think it's Van Halen.   Tom: Yes, exactly. And I think Devin, you may know, you may know where this is going. But they included this like really detailed thing and the writer kind of buried in there. And what was happening during that time, the electronics and a lot of these stages were sketchy and people were getting electrocuted. So as a way to kind of check that the venue in the team there locally, like was on their game. They had these really kind of obscure requests. And if it wasn't there, that was a huge red flag that, hey, this place might not be safe. Oh, well, we put in our contract that has to be you know, in there, or we're getting paid. So kind of similar to you talking about the mailboxes looking at these like kind of external things to making sure if there's issues there, there may be one of those things. If you find one bug, there's probably 10 bugs hidden in the wall. It was the same sort of reason. It wasn't about being a diva. It was like testing kind of testing the water for some other risks.   Devin: Yeah, yes. I remember a Van Halen specific rider was we need a big bowl of m&ms in the in the waiting room. And it's all the brown ones have to be removed. It was like something crazy like that, that they could immediately walk in and tell whether they had read the vendor had read the contract or not.   Tom: Yeah, in the mailbox. I love that Devin, like super similar. One of the things that you would, you know, easy to overlook if someone's not kind of paying attention and potential risks and other places. Love it.   Devin: Yeah, like they probably haven't maintained the HVC system either. Right? And yeah,   Michael: Yeah, that's really smart. That's really smart. But also kind of silly, because everybody knows that brown m&ms are the best. So Van Halen threw that away.   Devin: There was a cost to it. Kind of the full look at all the reports that we support at the moment. So beyond that cash flow, there's also a balance sheet, which pulls in your bank account balances and then also ties into your valuations for each property and gives you kind of a net portfolio value. You can track your your rent, roll and report out on that. So this one's helpful. If you're buying a new property and your lender needs to see all your underlying data, you can run a quick rent roll, tenant ledger, this tracks, you know, payment status by tenant who owes you how much when their last payment was scheduled real estate owned. This is kind of a full full summary of the portfolio from a high level lenders often like to see this to get an understanding of what your obligations are and what all your holdings are.   General Ledger allows you a full export of all your data line by line. And then you can do whatever you want with it and excel CapEx just what it sounds like. You can also track useful life and date placed in service there. So this is a good one to give your CPA it's pretty helpful. And then tax package is something that a lot of folks use in March and April. This runs a an email with links to all of your key reports that you can then share with a forward to a CPA or spouse or investing partner.   And then we also have a stress test, which is a modeling exercise we did during the pandemic where you can understand what would happen to your portfolio if suddenly your recollections fell to 70% of normal or 50% of normal, just as a kind of pressure test on on your situation. Tom: That's it. stress test is so cool. I mean that just kind of like speaks to the agility of the reporting in the in the company at Stessa where it's like hey, this isn't really you neat feature that could be really helpful right now. Really neat, neat, neat functionality in reporting.   Devin: Yeah, and this is only built as a as a built in model where you can actually change the inputs right here and see how it how it affects performance.   Michael: This is just goes to show you that this stessa was created by investors for investors. If this kind of stuff that you find so helpful and useful, as you continue your investing career.   Devin: You won't find this in any standard accounting program.   Michael: No.   Devin: But that's the fun thing about doing something that's purpose built for niche for an audience that you know, rather well as you can, you can get into all this more sort of esoteric stuff that that you just can't find anywhere else.   So in terms of setup, I'll jump over to the Properties page here, just a high level portfolio overview is a great sort of SREO schedule real estate owned, it shows you what's going on in terms of acquisition price, your market value, so your valuations are easily set through, you can click there and do a short cut on this to this property details page, where you can toggle between different valuations. So it's a little bit of a modeling tool here, you can enter a custom valuation. We connect to Zillow, and you can get updated real time values.   You can also do it based on gross rent multiplier or capitalization rate. Especially if you have a larger portfolio, this high level view calculated equity on these property is a really quick way to see you know, what your current status is, overall. These loan balances are tracked. So if you have your lenders connected through the automated, external account page, this will update automatically as you pay down principal.   Michael: Yeah, I've got a quick question for and this is more so for me as as kind of a teachable moment. In terms of gross rent multiplier grm. I see it all the time I see it used regularly. It's not a it's not a metric that I ever used. So I'm just curious what, you know, what people are using it for it and how it can be helpful to folks who who find it valuable?     Devin: Yeah, I don't actually see it used much on single family rentals. But I do see it on smaller multifamily properties, more sort of industry standard. So, you know, in a typical market, the gross rent multiplier might be 12, or 15. It certainly changes over time as investor return requirements change. But it's a real quick and easy way to say, Okay, let's take my current current rents, and let's apply a, you know, 12 grm. What's that imply for the valuation?   Let's say maybe this market is pretty hot, and the grm is more like 18. What does that mean for the valuation? Well, it's 982. It's a lot higher than what Zillow is saying. So it's an alternate way to kind of like check in a given market that may have a bunch of comps that support a particular range of grm. What does that mean for my property?   Michael: Got it. Okay. All right. Thanks for that.   Devin: So let's spend all the time on leases and tenants. This is where you key in all of your rental information and manage your tenants, which is a big part of owning property, right? That's where all the revenue comes from. So we found talking to investors, a lot of them, if you've got property manager, maybe you got two or three property managers, sometimes it's hard to appreciate what's actually happening on the ground, who's paid rent, who's behind. Sometimes property managers aren't always on top of it, especially during the pandemic.   So I've got overloaded try, just trying to keep track of everyone. And the leases and tenants page is easily sortable by portfolio or property. And we've got these flags here that give you a quick heads up as to who's current who's due, and in who's late. For any particular tenant, you can then dig in. And you can track a lot of detail here. So if you have complicated lease structures, where rents are changing over time, you can key those all in here going forward. You can also track phone numbers, basic contact information for reference, each lease you can renew or set as month to month. So we handle a lot of different scenarios there.   And then down here at the bottom, I think this is the most powerful part, at least in the tenants page, you get a ledger that automatically creates charges in this column based on the information you've set up up here for your reference And then all this payment data is coming automatically from the transactions page. So you can quickly see when someone got behind how behind are they, and what the total balance due here is, which is calculated right up here.   If you have tenants that reimburse you for utilities or any other sort of random expenses or damages, you can add charges. You can also add credits here, if you're say, crediting them for for something off of their rent. So that makes it easy to kind of rebalance the ledger and keep everything tied out.   Michael: This is great.   Devin: And then you also get a reference of all past tendencies. So this is great for you know, if you're, if you've owned a building for a while, you can really keep track of how rents have changed over time who was there, etc, which is something you know, new buyers, if you ever go to sell, probably want to see.   Let's see, let's also talk about document storage. So police's, mortgages, vendor contracts, all this paperwork that seems to accumulate when you own real estate. It's hard to keep track of and it's often difficult to find the right document when you need it. If a lender asked for it. You know, when does my insurance expire, these are all sorts of questions that come up pretty often. And by keeping everything in one place, it's very easily searchable, retrievable, you can look things up and keep going.   So we find a lot of investors have hundreds of documents uploaded to their Stessa account, because they just want to know that when they need something, that's where they can find it. In the past, I've had a bunch of different folders on two or three different laptops. And sometimes it takes half an hour to find the right thing. And organizing and consolidating it all on on stessa in one place. makes that really efficient.   Tom: Yeah, I love this feature, having recently refinanced a few properties and you're collecting tons of documents also going through tax time. This I love the document management part is super helpful.   Devin: Cool. So those are kind of the highlights. You know, we talked a little bit about bank and external account linking. That all happens on on this page here. And you can see we just have one demo bank account connected now. But you know, we have many investors with accounts that Chase and Wells Fargo and BofA. And then they've got a credit card somewhere else and to property managers. And you can have a lot of data connections set up here. And it's incredible how much time it saves to have that information coming in automatically, versus having to create transactions, or go through, you know, checking account statements, credit card statements, separate out which ones are you know, rental investment versus personal. A lot of that can happen for you automatically.   Michael: And Devin, a concern that I had when mint came about and any of these other companies and services were basically it aggregates data and pulls data from from various financial institutions. So you have to go put your your account information and username and password in. And so from a cybersecurity standpoint, maybe you can speak to that a little bit about folks who are entering their username and password. How are they protected against cyber hacks?   Devin: Absolutely. So we use a third party called Yodlee Investnet, who handles all the secure connections. So when you add a new bank on Stessa, you don't actually share your credentials with Stessa. You share them with with Yodlee, who does this for 1000s of companies and organizations around the world. And they go directly to your bank to access the data. So no one at Stessa can see or, or pull up credentials, it all happens through Yodlee. And then, in addition, there's a few of the major banks have moved to this new open banking standard, which which we actually really like, it's a little smoother in terms of getting the data in real time. And they also have you log in directly. So you'll for chase Wells Fargo BofA now, when you add one of those banks on stessa, you'll you'll get redirected to their site where you log in directly and then it actually establishes a connection without having to share your your credentials.   Michael: Awesome.   Devin: So I'm hopeful that things kind of keep moving in that direction. And it's more secure. It's more seamless. It's just a better experience for everyone.   Michael: Yeah, that makes total sense.   Tom: Awesome. Yeah. I mean, Mike was alluding to it earlier, like, going through it, you could pretty much tell that it's you They're not made by a bunch of marketers. It's definitely made for real estate investors. Love it. Love it. Love the demo.   Devin: Yeah. One other quick thing I'll mention is, we also have this alerts and insights page, which is relatively new. And this is where we bubble up interesting things that are happening across your portfolio. So, you know, might be something like we noticed an LTV guy is it this loan to value is pretty low on this particular property, right. So maybe that's an opportunity to refinance or, or cash out in some way, right to redeploy the equity elsewhere.   Things like expiring leases, that's another one where we've got a word set up 30 and 60 days out, so you can get a heads up on something before it's, you know, too late to reach out to that tenant or deal with the situation. And then we'll also surface interesting things about what's going on with expenses recently. And you know, we're spending a lot of time on this particular feature to, to develop even more specific insights around, okay, if certain expenses way out of whack if there's a water bill that's too high, sort of that sort of intelligence that, you know, can help you save money and things you might not notice on your own. So we plan to introduce more of these in the future.   Michael: And this is so great, Devin, and I think it speaks to what you mentioned at the beginning of the episode is that this is more of an asset management layer. And then that, you know, your property manager is not going to tell you, hey, things, you know, your value has probably increased. We're seeing a lot of comps sell higher in the area, you should think about refinancing that's kind of outside their purview. So adding a tool like this into the fold can be so helpful to have that macro level.   Devin: Yeah, absolutely. I mean, these are the things that you know, investors often reach out to other investors to understand, right, like, how do I think about hold sell? How do I think about growing my portfolio? What happens when my LTV gets so low because the value has gone up a lot? Right, like good situation. But how do I handle that? What do I do? And so yeah, Stessa does really try to focus on helping you answer those questions.   Tom: Awesome, Devin? Well, this is awesome. Thank you so much for going through this, you know, another pointer kind of feature within Stessa. That I think is really great. Is the the forum committee that you guys have set up where people can, you know, ask questions about products, they can upload feature requests, you want to talk just real quickly about that?   Devin: Yeah, sure. I can actually do a quick screenshot of that as well. I think it'd be helpful. Let me share a screen here.   Devin: You guys see the forum?   Tom: Yes.   Devin: Great. Yeah. So this, this forum is organized by different threads. We've got set up in support, we've got tips and tricks, these are kind of ways to optimize your Stessa count. bug reports. They do happen sometimes, and we really try to jump on them. And then you've got the wish list, which is very popular. This is for new feature requests. So, you know, we found that as this has community has grown, people have started helping each other solve their own problems with Stessa or get more out of the product. And it's developed into a place where investors can talk to each other directly, which is great, that was kind of what we hoped would happen.   You know, particularly things like the wish list. This is where we often go to understand, okay, what new features should we be looking at building next. So when you sort by popularity of views, all the wishlist items, you can see that, you know, back in 2020, people really wanted an Android app. So we built an Android app. Before that, people wanted cash on cash metrics. So we built that. Tenant ledger by unit status of rent payments. That's something that I shared a little while ago. So you know, we, we really like having our users, our investors involved in what we're doing. And they've been really great at it, about sharing ideas, and, and we'll often develop a beta version, and then post on the forum here. Hey, like, who wants to be part of the beta? We'd love for you to check out this feature. And I've been really pleasantly surprised at how involved people get and how much great feedback they give us that that makes us a better and more useful for everyone.   Michael: That's great.   Tom: Awesome. Well, thank you. Yeah. Thank you so much for coming on, Devin.   Devin: Yeah, thanks for having me. Appreciate it, guys.   Michael: Take care. Talk to you soon.

One of the two biggest expenses that everyone incurs are taxes. Which means, legally lowering our taxes should be of the utmost importance! For easy numbers and simplicity's sake, if you have $1000 in income taxes and you neglect to write off an immediately deductible $500 expense you incurred operating your short-term rentals then you just unnecessarily GAVE your government $500! For many people taxes are intimidating. You may be asking, “Can I write this off? “I don't want to get audited.” But I'm here to tell you, as long as you follow the rules you should NOT be concerned. My tax advisor specializes in real estate and they recently put together a great webinar dedicated to tax advice and your STR's… and since I know we are all busy and taxes aren't necessarily the most fun topic, so I took the liberty of breaking down the webinar FOR YOU with my biggest takeaways that you need to know!This week we'll talk taxes and break down:    How the IRS defines a short term rental Different types of income reporting (Schedule E vs C) How your tax losses are treated?  What it means to be a “real estate professional” and how that can benefit you  How you can become a Real estate professional EASIER with STR's than you can with traditional long term rentals Depreciation  How much you can use your property for “personal use”   HUGE DISCLAIMER: I am not a tax professional and these are just recommendations of topics to look into so please check with your tax advisor and accountant to confirm they will work for you. You can also find the whole, hour long video webinar by vising https://restmethods.com/recommended-resources/ and finding “Keystone CPA. Want a crash course in just two days with everything you need to know to find, acquire and operate a short-term rental with passive operations? Good news! We have our  latest live webinar recording available!   Are you enjoying the podcast? Please subscribe, leave a rating and a review, and share it! This helps us reach others that may find the info helpful as well.   You can find all of our links here including our website, recommended resources, upcoming live event, short-term rental playbook, Instagram and more!

Welcome to DST 1031 Essentials with Kay Properties — An in-depth look at the many recurring themes and nuances to the Delaware Statutory Trust (DST) investment process.   Topics will cover 1031 exchanges, ins and outs of the Delaware Statutory Trust structure, timing, cash investing, REITS, funds, real estate and more.   The kpi1031.com platform provides access to 25+ different sponsor companies, as well as      custom DSTs only available to Kay clients, full due diligence and vetting on each DST property on the platform (typically 20-40 DSTs), and an active DST secondary market. Kay Properties team members collectively have over 115 years of real estate experience, are licensed in all 50 states, and have participated in over $21 Billion of DST 1031 investments.   Matt McFarland and Senior Vice President Betty Friant sit down to discuss how to read and properly evaluate a property menu. There are a couple of things to consider before you pick a property that is eligible for a 1031 exchange, and it's important to read the property terms and definitions carefully beforehand. Betty shares insights into what you should be considering and what these terms mean in this week's call!    Key Takeaways: [0:45] Risks and disclosures. [4:15] About Kay Properties & Investments. [5:00] Matt introduces Betty and today's topic. [7:25] What types of labels would investors find in property menus?  [12:45] How should investors be thinking about debt and equity?  [13:50] If you have a loan on your property, you will have to replace that loan in your new property in the 1031 exchange.  [19:00] Need a better visual representation of what a property menu looks like? Reach out to your Kay property representative.  [19:25] What does PPM mean?  [23:25] When you're looking at the financials of a property, they're going to look similar to a Schedule E form.    Resources Website: https://www.kpi1031.com/ Call Kay Properties at 855-899-4597 Meet the Kay Properties Team: kpi1031.com/meet-our-team   About Kay Properties and www.kpi1031.com    Securities offered through Growth Capital Services, member FINRA, SIPC, Office of Supervisory Jurisdiction located at 582 Market Street, Suite 300, San Francisco, CA 94104. Potential returns and appreciation are never guaranteed and loss of principal is possible.  Please speak with your CPA and attorney for tax and legal advice.

Today we're going to talk about depreciation and how that affects your taxes. First I want to clear up, depreciation only applies to rental property you rent out to others and collect rental income. Not the home you live in. Also, today's discussion applies only to those of you who are not real estate professionals, they fall under some different rules. Rental property owners use depreciation to deduct the purchase price and improvement costs of the property from your tax returns over time, and depreciation is required by the IRS. There are a lot of rules involved and good record keeping is important. Depreciation is claimed as a deduction yearly, the information is carried over on your tax returns year after year, and will also impact your taxes when you eventually sell the property or the it out of service as a rental. See IRS publication 527 Residential Rental Property. https://www.irs.gov/publications/p527 Consider having an accountant do your taxes for your first year with the rental property to get your started out right, even if you do your own taxes again after that.In short, depreciation can decrease the taxes you pay while you own the property and are earning rental income, but will increase the taxes you would otherwise pay when you sell it, something called recapture. Depreciation only applies to your rental property structure and improvements that typically wear out over time, not the land itseDepreciation is calculated based on IRS rules and distributes the deduction across what the IRS considers the useful life of the property. You can find these depreciation tables in IRS Pub 527 and most tax preparation software have these tables built in. So in the first year you put your rental property in service, you'll have one depreciation schedule for what you paid for the house structure  plus any immediate improvements, and expenses to get it ready to rent. That schedule will be updated each year with that year's depreciation and a running total. Each additional improvement you make, will begin its own depreciation schedule.At tax time, you deduct the depreciation allowed for that year from your rental income like you would other rental expenses on your tax form Schedule E. But you can't deduct a rental property loss from your taxable income that year. It will be carried forward  until your property reports a profit or is sold.  Depreciation starts as soon as you place the property in service as a rental property or when it's ready and available to use as a rental.  So your first year's taxes you may only be able to claim only a partial depreciation deduction.When you sell your rental you will pay capital gains tax on the amount you receive from the sale minus its basis just like many other investments. But there is one tricky part. You will be subject to  depreciation recapture. All the cumulative depreciation you claimed, will be taxed at your regular income tax rate in the year of the sale. Calculations on the IRS Form for this are pretty convoluted, it's an entire page. But the important thing to understand is the concept that the “profit” from the sale, that is the sale proceeds you receive minus what you originally paid and improvements you made, is taxed at a lower capital gains tax rate. The total depreciation that you reported over the years will be taxed all at once when you sell the property, or take it out of service, at your higher income tax rate. That's the depreciation recapture that takes some first time rental property owners by surprise.For information on how to figure and report any gain or loss from the sale, exchange, or other disposition of your rental property, see IRS Publication 544, Sales and Other Dispositions of Assetshttps://www.irs.gov/publications/p54

This is how you can tap into the equity of your investment property. If you have an investment property whose equity you want to tap into, there are several ways to do so. The first is by using traditional financing, where you show your taxes, look at your Schedule E form, and see how much money the property is generating versus how much you’re making. Based on that, you either qualify or don’t. In short, your other options don’t automatically mean using a hard money loan. There are equity-based programs where we look at the income being produced by the property so it becomes a stand-alone entity. We look at your credit and the income being produced by the property to see whether you qualify for refinancing or cashing out. Right now, we’re going all the way up to 70% loan-to-value on these programs. If you want to talk more about your options as an investor, don’t hesitate to give me a call. I’d love to speak with you.

In this episode, we continue our series of how to select and vet strong team members. This week we discuss the CPA. --- Transcript   Emil: Hey everyone. Welcome back for another episode of The Remote Real Estate Investor. My name is Emil Shour and I am joined by my co hosts,   Tom: Tom Schneider   Michael: and Michael Albaum.   Emil: And today we're going to be continuing this series we've been doing lately on building out your team. So how do you find and vet the different players on your quote unquote real estate investment team. In today's episode, we're going to be tackling the CPA, which stands for certified public accountant for anyone who's not familiar. So let's hop in.   Theme Song   Emil: All right, before we get into the meat of the episode, the meat and the potatoes, meat, potatoes, the salmon and, the salmon and couscous. Let's go with that. We have some people leaving us some awesome reviews I want to give a quick shout out to so recently real estate financial freedom wrote,   “The show has the feel like we are sitting around a table talking shop about real estate, they do a good job catering to beginner but also go into depth into more complicated real estate subjects. If you are thinking of investing out of state, this is the podcast for you. This podcast makes real estate feel very approachable.”   Emil: Thank you so much love the review, we'll try to give everyone a shout out if you leave us review was mentioned at the end of the episode. But please leave us reviews. We love them. And we'll give you a shout out in a future episode.   Michael: Thank you so much.   Emil: Alright guys. So we usually tackle three questions on each one of these episodes, which is when in the process? Should you look for this individual? How do you source them? And vetting questions to ask them to make sure you're choosing the right person? So let's start with the first one. When in the process of acquiring, let's call your first rental property, do you need to go out and find a CPA? What have you guys done   Michael: Now. Now .ow now now   Emil: All right, Mr. delay?   Michael: I think that first question, it really depends. I chat with someone in the academy a few weeks ago who does their own taxes, they prepare their own returns anyhow, using, you know, TurboTax, whatever. And so they said, Yeah, I already understand how taxes work, I understand tax works. And so adding one rental property to the mix is not a big deal whatsoever. So they've been doing their own. So if that's you great, but if you don't prepare your own taxes, or you want to go hire a professional to do it, I think it can be really great to have that conversation as soon earlier in the year as possible. Because as we all know, taxes are due in April for the year prior.   And you can't really do a whole lot of changes after the fact. And so chatting with a tax professional as you're getting started in owning real estate is going to set you up to have some really good habits and makes tax time so much easier for everybody involved. So I would say as soon as you're considering real estate, talk to a tax professional about how your personal situation might be affected by owning real estate, what some deductions look like and what your overall taxable basis might look like as a result of owning real estate and how that might change as if you previously didn't. So I don't think it's ever too early to start that conversation. Tom, what are your thoughts?     Tom: Yeah, my thought is just kind of on the first piece of this is something that you could file your own taxes and talking to people in Academy, asking about the stuff. My advice is always, you know, it's worth paying that money for a professional, there are a lot of tax benefits with real estate, you get the three DS depreciation deferral and deduction. And you really want to squeeze as much juice as you can out of those three. And it's difficult if you don't have that specific real estate experience. My wife's a tax attorney, but we still hire someone different does, you know international tax, which is very abstract and interesting.   But my point is, real estate tax specifically, is there's a lot of fruit on the tree that you want to harvest. And you want to take advantage. So it's worth paying that money to find somebody. So timing wise, you know, it doesn't have to line up with any of your acquisitions. There is some neat stuff that Michaels talked about in the past will try to sound cool doing cost segues and stuff like that, but   Michael: Nailed it.   Tom: I mean, as long as you give yourself some leeway before going into tax season, I would say that's the real kind of timing and doing it hire a professional who has real estate specific experiences is important before tax season. So that's my timing two cents.   Emil: I like it. I'm going to take the counter point. And I'm going to say that this is a person on your team who, Yes, you can look for them early. But I think there's so many moving parts earlier on to focus on your property manager which market you're going to invest in finding an agent if you take that route that I think the CPA can come a little bit later. I think a lot of fuel can get caught in all the nitty gritty of I should check off all these boxes. And it's like focus on educating yourself and then get that first property. I think the accountant can come a little later. So I'm gonna take the counter point,   Michael: I think it's a really good point to make a meal and that who you ultimately work with can totally come after the fact I think it's really important that somebody at least have the conversation with a tax professional about a like how does real estate affect me personally, because I hear about it all the time. But I don't understand. So for me taken, you know, an average deal, whatever that looks like in your market, or wherever you think that might look like for you as a buyer, how would this affect me because I think it gives a really good insight and helps a lot of people purchase strategically based on some of the tax advantages that they may or may not qualify for. But I 100% agree that the actual person doing the tax returns can totally come after the fact.   Emil: That's a good point. So also, I think when I bought rental properties I chose to that was the first year I hired a CPA to do my taxes. It was like I started doing some, like some side project consulting stuff as well. And so that makes me W2 mix with rental properties. I was like, You know what, I'm just going to give this to a professional, make sure I'm doing it a correctly and be getting maximum deduction so that I save as much as I can. I think we said all the time, a good CPA, they will save you way more than you actually pay them yearly.   Michael: And I'm just curious, do you guys use a CPA on any kind of retainer or annual program or you just pay them for the time that you use when you speak to them? And then for the tax return? How does your program look?   Tom: With my CPA, it's sort of a one time event every year I you know, it's not any sort of like recurring contractor engagement, I could like, use them one year and go somewhere else, but they already have a lot of my information. So it's, it's a lot easier to have some continuity with them. I've been meaning to do a little bit more like a consultation of kind of lifting up the books on all that I have within because right right now I basically just send them all my information all by my 1098 for my mortgage, my 1099 for property managers, I send them all that information, and they just come back with a nice, clean, albeit like pretty long tax return, just because there's so many moving parts that they understand. I've been meaning to do kind of more of like a like an engaged consultation and and have answered your question. But what I do with right now, it's just every year, just a one time do the going through the exercise, but no more strategic stuff. But I'm just something that I think I probably do this year on the list of things to do.   Michael: Do it, do it? Yeah, it's really worthwhile to do that. That planning portion of things. And then what about YouTube? You pay them like an annual fee? Or do you just do the tax return fee? And then the hourly stuff?   Emil: Yeah, it's just the paid to do my tax returns. But I'm probably in a unique situation that my CPA is my brother in law's very good friend. So I can always ask him stuff. And he's really cool about it. But he used to charge me a lot less like he was very inexpensive to start, I think like, friend discount. And I told him this past year, I was like, I asked you a lot of questions throughout the year, our taxes are getting more complicated, like just raise that fee that we normally pay you and he was like, I've never had anyone asked me to charge them more. But thank you. So you know, it was like he's become more consultative throughout the year. And I just want to make sure like, I'm compensating him so he's not like goddamnit Emil's texting me again, right.   Michael: You don't want him to feel like you're taking advantage.   Emil: Exactly. So I was like charging us more. And it's still like totally reasonable. So that's kind of how we have it set up with him.   Michael: Great.   Emil: How about you?   Michael: Oh, yeah, I'm just hourly, and then whatever the tax return is at the end of the year, and so I'm chatting with my CPA several times throughout the year, kind of about next moves and strategy type stuff. We don't really have this formal sit down session where Okay, we're gonna talk strategy about what it is, but I'll call him up and ask him Hey, you know, cost seg, do you think that would have a big impact on my, on my taxes this year, and talked about the numbers and yada, yada, yada. So there's definitely expense ongoing expense throughout the year, but it's just whatever the hourly fee is, however long the call is, that's what that's what I pay him almost like an attorney. And it works great. And I I think it's well worth the money. I'd say it sucks when I get the bill. But I think it's it's money well spent. And it's a deduction to keep track of the…   Tom: Yeah, it's a deduction it is for listeners who are newer, Michael has a lot more moving pieces on within his projects. He's doing multi families doing, you know, all kinds of stuff. But at least for myself, it's a much more simpler engagement of kind of the the annual thing, but I think as you go into more complicated deals and structures, there is more meat on the bone for going through with your CPA. So he would be on the further end of the spectrum of kind of more, I guess, opportunity for tax savings and more more need for higher engagement.   Michael: Right, right. Right. Yeah. more need for planning, I think. Yeah, absolutely. My first couple years, my first one, I had a handful of deals was not nearly as frequent or this often. So I think it's a really good point to make, Tom that this is going to be a pretty person that you probably won't speak to very regularly when you're first starting out.   Emil: Yeah, good point. All right. Let's move on to the second part of these episodes where we talk about,   Michael: We've got about a minute 50 left to cover these next topics. Good luck.   Emil: All right. So moving on, we're going to talk about how do you source CPA? How do you go about finding someone who could be your potential CPA? So how did you guys go about it?   Michael: I called around a bunch of different people. I was using this guy that my dad was using, with a big firm down in LA. And he was, he was really thorough, and he was really good and he was really expensive. And it just got to a point where I was like, Yeah, I just can't, like afford you. Slash need that level of service. So they provide all kinds of stuff. And a lot of that's baked into the cost of the returns. So I went and found my own person. And then that didn't work out. Well, I had a bunch of problems with the IRS because this guy was a pain in the butt. So then my brother found someone he liked down where he lived. And so I was using him and I have been for the last several years, and he's been great. He's a smaller shop, but really knows his stuff has a lot of real estate clients.   So it's been a really good fit since but trial and error and we're going to share here in a minute, some of the interview questions that you can ask a CPA that I wish I had thought of a couple years ago when I was going through this process, because it would have been a lot less painful. Tom, what about you?   Tom: Yeah, so using the same framework that I used in the last episode in sourcing a CPA, I think at the top of the pyramid is personal references is a great place to start and then pass there would be professional references. Oftentimes, a partner with a CPA is an attorney. So you know, if you have an attorney like oh, what CPA recommend, or do you have a CPA like, oh, what attorney you're like, they're oftentimes working together. The third level would be forums Roofstock Academy, that's a place where within our private Slack channel, we talk about vendors and CPAs pretty regularly, or at bigger pockets or friends there have a great forum. And then lastly, just general online research. I sourced my CPA from a reference a gentleman named Paul Kidwell, who was one of the early employees at Roofstock. Think he was our like VP of data, something just super smart guy. He's an advisor. I'll stop now, but I got my CPA reference from me.   Michael: Emil, I know you shared already that your brother in law's best friend, was that the first one that you use? Or did you have some trials tribulations leading up to that point?   Emil: No, I wish it was more of a science that I could divulge sort of listeners, but I've known him for years, too, before we ever actually, like needed his services. And he's a good guy. And I was like, he was the first person I thought of when we needed a CPA and just let him run with it. And he's been great. So yeah, it was more of just going with my gut. Somebody I know. You know, I mentioned like, this is what we're doing. We're investing in property out of state and he was like, totally comfortable with it. And he's been he's been awesome at handling it. So   Michael: Right on.   Emil: Yeah, our situation is a little easier.   Tom: I'm gonna give a shout out to my CPA, though. So I use Iryna CPA accountancy Corp. And she's awesome. So just a little free advertisement, something like Yeah, why not? Why not sure these people she's located out of Oakland and in Northern California, but her website is irynacpa.com. And I've used her for the last, I don't know, five, five years or so. And she's fantastic.   Emil: Yeah, my CPA is Dan Ratynets. And he's at Eichenbaum, Comer & Ratynets.   Michael: Awesome. And I've been using Josey Schenkoske with Bianchi, Kasavan & Pope and they're out of Monterey, California. They go by BKP and Associates.   Tom: Some love, some love shout outs.   Michael: Yeah. So I just want to give a kind of real quick personal anecdote from when I was going through my trials and tribulations trying to find a CPA. So I went from that really expensive one that my dad used. And then I was sourcing my own. And I found this guy, he was a one man operation. I went met him and we talked and he goes, Yeah, I can totally take care of all of this. And this is my accounting firm. That that totally sounds like he knew what he was talking about. No problem. My personal return, including all my real estate stuff was gonna be like 400 bucks.   I was like, Wow, that's amazing. That's cheaper than h&r block. And so I got, you get what you pay for, two years later to get to another account. And he was like, Yeah, but I don't know. Like, what this guy did. This is not at all right. And so I had to pay for it to be corrected after the fact. So don't go with the cheapest option. That doesn't necessarily mean it's the best by any means. So look to that people above and beyond what it costs.   Tom: I love the phrase penny wise pound foolish and you know, you might be like, Oh, this is awesome. I'm gonna save a couple hundred bucks doing this. And I bet you the pain the butt of going back and trying to fix that stuff, you know, know what the market rate is. And typically, we're just going to give super broad ranges But usually, I'd say like 1000 bucks is a pretty if you have a less complicated going up to I don't know what do you think the range Michael?   Michael: Couple thousand, depending on how complicated that is?   Tom: Anyways, I think oftentimes, you're going to get what you pay for.   Michael: Totally, totally. And keep in mind too, for everybody listening. These are West Coast, California Bay Area prices that can totally range as you go in different parts of the country. I feel like attorneys and CPAs often have relatively similar pricing. So at least has what I found here in California for the most part.   Emil: All right, so let's wrap it up with questions to ask that in questions to make sure you're going with the right person. You guys want to go through a couple of questions that you really like asking?   Tom: Yes. All right. I got my question. First one is they need to have real estate experience and what kind of profile of customers they have is so important. I don't want to be somebody kind of break In this type of market as a CPA, and there's a little bit of specialization, so knowing that the other thing that's really important is what states they like have coverage in. So, Oh, am I stealing Michaels? That's cool, it's good, good, good,   Michael: I'll get better ones at the bottom,   Tom: I'm gonna leave you scraps. So if I have properties that are in, you know, Florida, Georgia, Pennsylvania, Ohio, I want to make sure that that my CPA has some experience there and has done in file in those different states. So yep, I took those two. Let's take it from there.   Michael: I like asking the questions of what are your various rates? We touched on this earlier, but do they build by the hour? Do they build by the form, that's typically seen, like an h&r block style will build by the form. So if you have big we'll see that's this dollar market, Schedule E that this much and then ask if there's a flat rate option, that's a really, really important one to find out. But like I mentioned, that's not the only deciding factor.   The other thing I like to ask CPAs is what can I do in advance that will make this process so much smoother and easier for you? Do you want a shoebox full of my receipts? Do you want an Excel doc with all of my expenses, because that's how I work best? And so just having that open communication on the front end of Hey, this is what my system looks like, is that gonna work for you? A lot of new investors have kind of the benefit of they might not have any systems yet set up. So they can tailor their system to work well with whatever their CPA is looking for.   Emil: I get the real scraps, guys got nothing. Good luck. The only thing to add there would be, I think ask them if they work with other investors. That's a good one. I think Tom grab that already. Right. He said about other states or like being able to fund this now. His first one was about investors. All right. Okay. So I got a real bottom of the barrel you scrape. The only other thing I would ask just going off of what we talked about earlier, is expectations around like you asking questions or consultations throughout the year, right. So some people will say, this is my hourly rate. Or Yeah, you know, if you have any questions, no problem, just call me whatever asking that and getting the expectation right up front plane. Another good question to ask.   Tom: I'm gonna sneak one more in references, don't sleep on the references. So perhaps ask if they have a client sort of a similar profile, if they wouldn't mind sharing email to basically check on that. That is just such a high ROI with regards to value. If you can talk to someone who has a similar situation, they like working, I recommend not sleeping on references.   Emil: It's such a good one that I don't do enough. It's like such a good best practice. That is, you say, Don't sleep on it. I think you're stressing it because it's really easy to sleep on. But it's such an important one.   Michael: Yeah, references. I think across the board is one of those things that it's so easy to physically do it, myself included. Don't do it enough. I don't know why that is. I have no problem talking to people. I've no problem picking up the phone and calling. It's just one of those things.   Emil: Yeah, I don't know either.     Michael: Yeah. If anybody has an idea about why Neil and I can't call references, please leave us a rating review. Let us know in the comment section what we can do better.   Emil: Oh, wow. We're to wrap up that episode. All done.   Emil: We'll see you on the next one. Happy investing.   Michael: Happy investing.   Tom: Happy investing.

Finding Any Dirt: 1:36: It's worse to have an apartment full of tenants who aren't paying anything and are causing all sorts of problems and have an apartment full of...no one. 2:50: You want to make sure of what they reported to the IRS. If anything seems off there, it probably is. 5:10: You should never rely on a proforma, which is just an estimate and they will always be in the seller's favor. 6:33: Schedule E's are part of the 1040 IRS form which is where income or loss from rentals, royalties, S-Corps, partnerships, estates, trusts, etc. is reported. Basically not “earned income” but investment income only. 8:32: You want to see their list of capital expenses for at least the last year for two reasons. (1) you need to see how much they're spending and (2) you need to see whether they're correctly capitalizing things. 10:43: Pay attention to utility costs. What tenants would pay and what the landlord would pay. Contracts & Analyzing Property Actuals: 13:11: Write up 30-30-30 contracts that are in your favor. 30 until the contract is hard, 30 to line up financing and 30 days extra for something that might come up. 16:23: You want to look at the rent roll and get copies of all the leases. Look for rent price, deposit amount, late fees, when the late fee is charged, pets, etc. 19:28: Talking with the property manager is always a good point of contact. 20:50: Ryan has seen a lot of landlords spend their security deposits, so make sure to pull those out from proceeds . Inspections & Holding Your Emotions: 24:30: You don't need an inspector to walk through every unit, but maybe 1 for each building. 26:50: Get a 3rd-Party inspection to go over key systems and the units the sellers don't want you to see. 30:21: If there are red flags, regardless of how much work you've put into it, let the property go. The “Well I just spent X money” is going to keep going. 32:12: Include a letter of intent (LOI) before the contract so you clearly dictate what you're anticipating. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

The final part of rental property. What happens if the tenant fails to pay rent? Some of the legal procedures you should follow. If you have to take the tenant to court you probably do not need an attorney to evict the tenant. The procedure is doable, by any one of us, if we have the time. Support the show (https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=JHSCA4VS8F2NE&source=url)

What is cost segregation, and how does it work? If you're knowledgeable of the tax code and understand what you’re able to do, you will put money in your pocket.  Today, I am talking to Kim Lochridge, Executive Vice-President at Engineered Tax Services. The company started with about six employees and has grown to 130 to do 150-200 cost segregation studies a month. Kim loves talking about taxes. She’s here to help make sense of it all!  You’ll Learn... [03:10] Investment Depreciation Concept: What you get when you have an investment property. It's a tax deduction. [05:15] Depreciation is everything and anything, including buildings, carpet, walls, paint, countertops, and cabinets that depreciate over 27.5 years (unrealistic). [07:17] Cost Segregation Metamorphosis: IRS allows building professional/engineer that understands property and tax laws to segment each component of a building.  [10:30] Does Kim use cost segregation? No matter how big or small, she doesn’t do a deal without cost seg. [11:53] Cost Segregation Studies: How long are you going to own the property? What are you going to be doing with the property?  [12:03] Justify Numbers: Don’t do a cost seg study unless it makes sense financially to pay less in taxes for more money to reinvest. [15:10] Audit Defense: Engineered Tax Services covers questions from IRS about cost seg performed by internal engineers. [16:00] Tax Strategy: Know how to use it and when to use it. Too many people don't understand taxes and let their professionals handle it.  [16:21] Motto: We do believe that everyone should pay tax, but there's nothing in the code that says you have to leave a tip. [16:55] When and when not to do cost seg? Ask questions. If something doesn't make sense, make it make sense.  [21:35] Bonus Depreciation: Too good to be true? Or, leaving money on the table by not doing cost seg? Probaby 80-90% of real estate agents are missing out.  [29:30] Depreciating Bonus Depreciation: Do it now before it decreases from 100% to 20% in 2026. Tweetables Engineered Tax Services’s Motto: Everyone should pay tax, but there's nothing in the code that says you have to leave a tip. Depreciation: What you get when you have an investment property. It's a tax deduction. Don't do a deal without cost seg. It doesn't matter how big or how small. Bonus Depreciation: It’s a big deal, not a scam, to spark the economy.  Resources Kim Lochridge’s Email Engineered Tax Services Schedule E W-2 Form 1099 Tax Cuts and Jobs Act (TCJA) Opportunity Zones DoorGrowClub Facebook Group DoorGrow on YouTube DoorGrowLive DoorGrow Website Score Quiz DoorGrow Cold Leads Calculator Transcript Jason: Welcome, DoorGrow Hackers, to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker. DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it, you think they’re crazy for not, because you realize that property management is the ultimate high-trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change the perception, expand the market, and help the best property management entrepreneurs win. I’m your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now, let’s get into the show. My guest today is Kim Lochridge. Kim, welcome to the show. Kim: Thank you, Jason. Thanks for having me. Jason: Kim is here with Engineered Tax Services. We're going to be chatting a little bit today about cost segregation and how it works. Those of you that don't really geek out on accounting, that's okay because I pay people to help me with that stuff. I don't either, so I'm going to ask all the questions. We're going to figure this out and make sure it'll all make sense. Kim, give us a little bit of background on you, and how you got started with Engineered Tax Services. Kim: Thank you for the internal question. I've been with Engineered Tax Services. I'm the Executive Vice-President, and I've been with them for about 10 years. I started out as an associate. I was on the board of a manufacturing company, and they were looking into some energy-efficient tax credits. It was just a brand new program that came out and tax rules. I found this company because they were doing that early on. That was really my beginning and how I met them. I just thought I came on board.  We've been growing the company since we started about five or six employees. Now we have about 130 across the country. We're doing about 150-200 studies a month across the country. It's pretty impressive. Jason: All right. We will get into what those studies are in just a minute. Let's get into the subject at hand. Maybe we start in the preshow, in the Green Room, we were chatting for just a little bit. It was like, "When is this stuff?" "Maybe I should explain it a little bit to you, Jason." You did which is very gracious of you. Why don't we start with the concept of depreciation on an investment? Just to make sure those that are not yet investors, or they're just new in the space, and they're starting to deal with real estate investors, understand this concept. Kim: Okay. Depreciation is something that you get when you have an investment property. It's a tax deduction, essentially. On top of the mortgage interest or any of that expenditures that you spend on that property, you also get depreciation.  Depreciation is calculated depending on the type of property that you have. If it's a single family home or some type of residence like a multifamily and then in capacity, you're required to depreciate that property over 27½ years. If it's any other type of property like an office, retail, or anything commercial, that is 39 years. For today, I think almost everybody in the audience is more of a single family-owned, we’ll target more at 27½. Just know that that's interchangeable with 39 if it's commercial. Essentially, if you have (say) a $300,000 single family home, you're going to be able to depreciate according to the IRS. You're going to divide that by 27½ and you end up getting $10,909 every year, that you can help use that to offset the income that you made on that property and then not pay tax on it. Sometimes, if it's a smaller home, that might cover it, that and any expenses, and you won't have to pay any tax on the income (which is nice). But sometimes, if your cash flow's pretty good, once you're high right now, mortgage rates are low, you might've owned it for a while, then this could be something that could help you. If you have that, your income is more than the depreciation, then you're going to want to make sure to do something else. This is where cost segregation comes in. Also, if you end up having multiple properties, and one is cash flowing much more than another, then you can basically take that cash flow, and you can do from one to another if it's in the excess. We'll go over some of those details a little bit more. Essentially, the depreciation is just that. You have depreciation. You're required to depreciate a building if it's on a Schedule E or if it's a rental income. If it’s a second home, you're not going to depreciate it. It has to be a Schedule E or some sort of an income revenue-generating project. Jason: The idea with depreciation is that everything in the property is going to depreciate at the same way? Kim: Yeah, everything. It contains the whole building, whatever you bought. That means carpet, walls, paint, countertops, cabinets, anything that you bought in that purchase is going to be depreciated over 27½ years. Jason: [...] lasts about 27½ years, right? Kim: That's what the IRS says.  Jason: Okay, that's not reality. How do we solve this problem there? Kim: Yeah, it's not reality. For decades since the 40s, cost segregation as a whole, what we're going to talk about today, has been around since the 40s when it began in court cases. That's because property owners went and argued the fact that, "This is what I'm doing. This isn't really fair because assets that I'm depreciating over 27½ years or 39 years are not going to last that long. I'm replacing them, in some cases, multiple times over the course of ownership. I want different rules. I want to be able to depreciate those separately." It made it very difficult for a CPA to say how much is the carpet or how much is the building when you just bought up a building. You didn't put it in. You don't have receipts. You don't know how much the roof, the HVAC, the water heater and all that were. They can't break it down. The CPA doesn't have the ability to do that. The IRS came back and over years of morphing cost segregation, they said, "We're going to give you the ability to do cost segregation, which means you have to have a building professional or an engineer, somebody who understands property and tax laws to come into the building, and segment (hence, the segregation) out each of the component of your building." As a result of segmenting those out, you can depreciate them in different time zones, or different buckets. For instance—these are just some examples, depending on the purpose on some of those components—carpeting is always going to land in a five-year bucket. You're going to be able to depreciate all of your carpet in five years, not 27½.  Things like all of your landscaping, your driveways, curbing, gutter, landscape bushes, trees, all of Rockwell expenses, all of that stuff, gets to be depreciated over 15 years. That's more realistic. Things are going to be overgrown. You're going to have to rip things out. You're going to have to replace fences, all those types of things. They'll give you that bucket as well.  The law also says that you can break down certain components like mechanical, electrical, and plumbing, as long as it's for specific purpose for the building, and not necessarily for the building itself. It has to be for the business.  It gets pretty complicated and these rules have morphed since the 40s. There have been massive amounts of court cases that give us these rules today. As an example, something traditional out of today, if you have that same $300,000 single family home, percentage-wise, we're going to be able to take (conservatively) about 40% of the cost of that building or $120,000, and we're going to be able to shift that into faster class lives for you. You won't have to depreciate all of it over 27½ years, but we can break it out.  Essentially with that, that would be $180,000 gets depreciated over 27½ years, and about $120,000 gets split up between five and 15 years. Those are the good rules of thumb numbers to use. Following so far? Jason: I'm with you. Kim: I have to tell you, I love tax. I know it's really geeky, but it's okay. I can help you through it. Jason: That's why people hire you. You're weird. Kim: I get excited about it. Just to kind of give you an idea, I'm also a real estate investor myself. I have my day job, but I'm also an investor. I have invested in about 800 doors in multifamily in Texas. We have cannabis warehouses, we have a mobile home park, just my husband and I. We manage them all ourselves (which is pretty incredible) plus a full-time job. Jason: Do you use this? Do you use cost segregation? Kim: Of course. I don't do a deal without cost seg. It doesn't matter how big or how small. Jason: That's the cool phrase for it, it's cost seg. Kim: Yes, short for cost segregation. Jason: Guys, get yourselves some cost seg. Pretty dope. Explain how your company helps with this. Obviously, accountants can do these. The property manager isn't doing this. The investor doesn't know when they will buy this property. How do we solve this problem? Kim: Engineered Tax Services, this is our specialty. This is one of the main service lines that we offer as cost segregation. This is where I was saying that we do about 150-200 studies per month across the country, whether it's a single family residence all the way up to something like the AI Building in Chicago—big, high-rise, office buildings. We do cost segregations. We're very good at it. It's cost effective. Most CPAs, if it's not over $2,000,000 then it's going to be too expensive. We have single family home rates. We have different levels of studies that we can do according to how long you are going to own the property, what you are going to be doing with the property and those types of things. Maybe we should go in and talk about some numbers, Jason, just to tell everybody (the listeners and the viewers) what it would mean for them. Jason: Yeah. I don't know if this is where you're headed but if you're saying that a lot of people say, "Oh, that's for the big properties. That's too expensive to do for my clients on this single family home or my investment property." Help them justify the cost of doing this study. Nobody would ever do it with you ever unless it made sense financially. Kim: I haven't since a project that isn't at minimum like a 50-to-1 return. It's going to be better than any improvement you can do in the house, any tenant change over, addition, or whatever you're going to do, your returns on this are going to be [...]. Jason: By doing this, by getting the cost seg study, working with you guys, and with their accountant to make this all happen, what has this allowed the investor then to do that they wouldn't have been able to do otherwise? Kim: They're going to be able to depreciate more in the first years rather than just the $10,900 on the $300,000 property that we talked about.  Jason: Which means they're just reducing their tax liability? Paying less taxes? Which maybe means they have more money to reinvest? Kim: Exactly. I want to preface this with the fact that there's a lot of investors that this is passive income for them. If you don't know whether your income from your investment property is passive or active, you want to talk to your CPA because sometimes this gets locked up. We're only talking about if you're a non-real estate professional, how to offset the income from the property so you're not going to have to pay tax on that. This isn't a loophole. This is nothing that is illegal. This has been around for decades. This isn't something that I’m going to get in trouble if I do this. This is simply just a different method of accounting and it requires a professional to come in. Just like an inspector or an appraiser would come in to tell you more specific about a building that you're building. This is basically more of a professional coming in to explain more of the accounting side of it. Jason: Okay. What do you call these experts that come out to the property to do a cost seg? Kim: They're engineers. Jason: Engineers? Kim: Yeah. Engineers come out. They're either structural professionals or mechanical engineers that understand building mechanics. They understand how to break down different components in the building. They're our own employees across the country. They come out to do those studies to document everything.  Just keep in mind that the IRS says that if you have the building professional onsite, then that is required by the IRS. A CPA can do some sort of cost seg if they're knowledgeable about it, but many of them aren't going to be able to tell you how much the [...] costs. If they do, they're just going to do it from a square foot allocation. It's not going to be able to stand up in the event of an audit.  We offer audit defense, so if the IRS does come back and question this, we're going to cover all of that for you. We're going to defend that for you. Our reports are going to be solid. We're going to be here and that's what this covers. We're going to stay behind the product. Jason: Okay. What else should people know about cost segregation or about your company that they may ask? Kim: I think we need to talk about tax strategy because I think this is really important for people to understand. So many people (and I think in my opinion, too many people) don't understand taxes, and they let their professional handle it. That’s exactly what you said in the very beginning, Jason. Jason: Yeah, that's what I do. Kim: Yeah. We have a motto at Engineered Tax Services. The motto is we do believe that everyone should pay tax, but there's nothing in the code that says you have to leave a tip. Jason: I love it. Kim: If you're knowledgeable of that tax code and you understand what you are able to do, you will literally put money in your pocket. That's what this strategy does. That's what these studies do for you. You have to know how to use it and when to use it. That's what I can help with. We help with realizing when is the good time to do cost seg and when it may not be a good time. When it would not be a good time to do a cost seg study is if you just flip. You're going to buy and you're going to renovate it. You're going to get rid of it. You will probably not want to accelerate depreciation. It's just not smart because you're essentially taking more depreciation upfront because you're going to hold on to those assets like the carpet, and you’re depreciating it over five years. You're not going to get all that money and keep it if you sell the building. Jason: Right. You don't want to pay for the future owner of the place’s carpet. Kim: Right. Unless you're doing substantial rehab—that's a different story—and if you're actually going to depreciate the property on a flip, you usually don't depreciate it because you're never placing it in service, if that makes sense. You're never really putting in service because it's all going to be under renovation. You're not going to depreciate it. This does not include flippers, but it does include people who are renting their property. If you have this passive income, let's just take our $300,000 example from the beginning, you're giving the $10,900 in the depreciation every year. If your cash flow is bigger than that, more than that, and you're still paying some tax on that income, you might have to figure that out because you might have a job in your W-2, and you're not really sure what part of this is what you owed in tax because of the house and the income, and what's on your W2.  It's really important for you to see where this is coming from. "How much of my paying tax is from my rental property?" Ask those questions to your CPA, or we can work with you on that. We're looking at tax returns and can help you there. That's the first thing. Just ask some questions. If it doesn't make sense, let's make it make sense. Let's make sure that the common sense is there. At least, you trigger certain things in the brain. When you get into that and you start realizing that you are paying tax on the income, that $10,000 isn't enough, then you're going to want to do some sort of cost segregation, so you can accelerate the depreciation faster especially if you're going to do renovations. Many times we buy property, and then we're doing renovations, either immediately or very soon after or even just repairs and maintenance, and we have to capitalize that in many cases. Now, you're actually depreciating two assets. Let's say you bought a building that had a roof, then the roof gets replaced in five years, now you can't write off the roof. You have to capitalize it which means you have to depreciate it. You don't just get an expense for the cost of the roof. You have to capitalize it and depreciate it. Now you have two roofs. You're depreciating one in the purchase and you're depreciating one you just bought. That's where we really want to come back from that and say, "I don't want to depreciate two roofs. When I sell this property, I'm going to get killed in the accumulated depreciation on both of those assets. I only have one in the building. Why am I depreciating two?" If you do a cost seg study on the original purchase, then you replace the roof, not only do you have to capitalize the new roof, but you can write off the remaining depreciation of the old roof. Traditionally, CPAs can't do that because they don't know how to value the roof if you don't have a cost segregation study.  Not only are we going to help you with your depreciation, but you're now going to have a very detailed fixed asset report that's going to outline every single aspect, every component of that building, and it's going to have a number attached to it. Every light switch plate cover on the wall, every baseboard, every layer of the roof, HVACs, and hot water heater. Now, you have this really great report that every time you do any improvement, it has to be capitalized. You're going to write off the remaining depreciation of the old.  Let's think about this for a minute. Let's say you buy a property. You have it for three years and the hot water heater goes out. It's a significant dollar amount, you have to replace it. You can now take that hot water heater if it's not expensable. You capitalize it and write off the old hot water heater. If you have it in a straight-line depreciation, that water is being depreciated over 27½ years. That means you're going to have 24½ years left of depreciation on the old one. Now, you're depreciating two of them. Why not get that money right now and help cover the cost of the new water heater? That's the beauty of cost segregation. Jason: Nice. You mentioned real estate agents. Are they not allowed to do cost segregation on their properties if they're an agent? Kim: No. It actually gets better for them. If you're a real estate professional, this is a whole different conversation. Jason: A lot of our listeners, they're property management business owners, but they're also brokers, real estate agents, and are licensed, most of them. Kim: Yeah. That's where we really want to get into. This is part of the tax strategy that I was talking about. If you are a real estate professional in any capacity, whether you're self-proclaimed real estate professional and you're managing your own property, or if you're actually a real estate professional, an agent, or a manager. If you are paying tax, if you are a W-2 employee or if it's a 1099, if you're paying tax, and you're a real estate professional, you have had some misinformation. This industry right now, we have a real estate president, like him or hate him, it doesn't matter. He's a real estate president. He walked in and just literally handed the real estate industry a gift with a big red bow. It's called bonus depreciation. Remember what when we said the $300,000, you'd have over 27½ years. You'd have $10,900. Then if we did a cost segregation, we would be able to accelerate the depreciation. That would be a lot better, actually. Now, with the Tax Cuts and Jobs Act of 2018, President Trump passed the bill for bonus depreciation. Let me go back a little bit in history. Bonus depreciation has been around since 2006. It was 50% bonus depreciation (and I'll cover what that 50% of what in a minute) on new construction or renovations. You're essentially able to really expense a lot of stuff to a certain point—at least half of it—for a long time from 2006 until through 2017.  In 2018, President Trump passed this Tax Cuts and Jobs Act. Not only increasing the bonus depreciation to 100% from 50%, they also expanded it to allow purchases not just new construction. What this means is that, say you're a real estate professional. Let's say you're making $200,000 a year. Maybe it's tons more, but let's just call it that. Let's say you're making $200,000 a year, and at that level you're probably paying 33% tax rate or something like that. Maybe a little bit less. Let's call it 35% just to be generous. Each year you're paying about $70,000 in income taxes. If you are a real estate professional and you go buy a property, let's just say you go buy this $300,000 house, and you're going to start renting it out. We have the cash flow, we have the income from that which is also a factor, but let's just talk about the tax for a minute. When and if you do buy a $300,000 property and you're a real estate professional, then you do a cost seg study on that building. Essentially, we're going to be able to write off about 40% of it. That's $120,000. Normally, if you're not a real estate professional, that's locked up in your passive income and it cannot offset your W-2 wages. It has to just stick with the income from the property or other properties that you owned.  If it goes in your Schedule E, if you own 10 properties, then that $120,000 will house all the other properties. But it is still stuck on the passive side because it's passive income. When you're a real estate professional, it's an active income. This is active depreciation, which also covers all of your regular W-2 or 1099 income when you're in the real estate industry. Remember when I said that the $120,000 will be shifted over five or 15 years. We have to prorate that all out over these buckets. What's really cool about bonus depreciation, that means 100%, not 50% anymore on purchases, but 100% of your purchase price that is allocated to a class life less than 20 years. You heard me talk about the 5-year buckets and the 15-year buckets. Anything in a cost seg study that you reclassify that's less than 20 years which would be about 40% of this building, you're going to take as a writeoff in year one. Now you get this $120,000 in the year that you purchase it. You can go buy a property on December 31st and it closes before the end of the year. You can offset your taxes by the amount of your results of cost seg study. In this case, $120,000 that you get to offset, all of your $200,000. You've made $200,000, you're going to depreciate $120,000. Now you're only paying tax on $80,000. But if you buy two houses, you basically just wrote it off, and you can pocket that $70,000 that you would've paid in taxes. Let's just run the numbers real quick. If you have $300,000 and you're saying you're going to put 30% down, that's $90,000. Let's just say the $120,000 times the tax rate of 33%, so $40,000. Basically, what the $120,000 would equate to is about $40,000 in cash. Instead of coming up with your down payment of 30%, if you have to come up with 30%, you've got to come up with the $90,000 down payment to buy that $300,000 house. But you're going to get $40,000 back in your pocket. Immediately. As soon you file your tax return. You get to write that off. Buy two properties and you just write off your entire tax liability for the year. Jason: Okay. This sounds almost too good to be true. Help me understand. How many agents do you think are doing this type of stuff, that they're not doing cost seg, and they're just leaving tens or hundreds of thousands of dollars on the table. Kim: Probaby 80%-90%. Jason: This is a pretty big problem. Kim: That’s why I’m on the show because I want to raise awareness. I will tell you personally, I'm an executive, my husband's an executive, we have high incomes, and when they came out with this bill, the first thing that I told my husband was, "We have to go and buy some properties." I am a real estate professional by trade because of what I do anyway, so I'm a professional. We are under contract to buy a mobile home park. We're closing on December 31st. We have good income and I bought it, but I actually am going to have about $400,000-$500,000 write-off this year for my taxes. Jason: Nice. Is there anything else that people need to know about this? That was a really good point. Any other major things that we should be aware of? Kim: Yeah. Bonus depreciation goes through 2026.  Jason: Okay, then what happens? Kim: Then it starts to phase out starting in 2023. It goes from 100% to 80%. Then 2024, it goes down to 60%. Then 2025, it goes to 40%. Then in 2026, there's only a 20% bonus depreciation. It doesn't mean cost seg is not beneficial. It's still beneficial to do that just like it would've been without bonus depreciation, but there's a greater incentive to do it now. This is all brand new tax rules that just came out in 2018. If you're saying to yourself, "Hey, why haven't I heard of this? This has got to be a scam." It's not. This is a big deal. It's huge for President Trump [...]. Jason: It's a big deal. Was this done to basically spark the economy? Is that why they're throwing this out there? Such a big [...], so to speak, then they're depreciating their bonus depreciation over time? They're going to be taking it down, but is that the mindset of why was it put out there? Kim: Yeah. I'm in the tax community for the real estate roundtable in Washington, DC. When the Tax Cuts and Jobs Act was being formulated, we had long discussions about how to deal with depreciation and what to do. Everyone was worried about the real estate being in the 7th or 8th inning as far as the cycle goes. “Hey, we’re a little bit worried about this. How can I continue to be sustainable at this rate?” The big talk of this Tax Cuts and Jobs Act on President Trump's docket was solely to raise the GDP and just really get the economy going a little bit better. What they did to incentivize that is to offer this bonus depreciation. This was part of that incentive to buy property, exchange property. They also, in this package, were part of the opportunity zone, which I know a lot about. If you don't know about that, we can do a whole another show on that, about purchasing property in an opportunity zone, and having essentially no tax liability on that after you held it for 10 years (as long as you do some improvements). That's a whole another show that we can do. All of these are part of the Tax Cuts and Jobs Act. It's very powerful, and in my opinion, I think we probably, at that time, went from a 7th or 8th inning in real estate back down to a 5th or 6th inning. That's where it really continued to boost and postpone any kind of real estate downturn.  Jason: Who is aware of this and is capitalizing on this? Obviously, your company and your clients. Who's been taking advantage of this? Kim: We do a really good job educating CPAs across the country. We try. There are a lot of CPAs out there. We cannot touch them all. We've got 120 people and there's literally hundreds and thousands of CPAs. We do the best we can. We love CPAs. We want to educate them. We want to connect with them. If you are not doing this and you want to do this, it would be great for us to work together. I really want to talk to your CPA because he has more of use out there that I want to make sure he’s or she's aware and give him or her resources to be able to let other people know that we do this. We do this very economically. I work with a lot of property management companies, investors, and funds. I work with a lot of family offices. I work with a lot of individuals. The word is now starting to get out there. There's a lot more individuals that are starting. We do a lot of shows like this to bring what really the wealthy has done for a long time down into mainstream. That's really what we've been doing. Jason: Random seg question, if property managers came to you, and they've got lots of investors, is there some sort of service that they could work with on you that they can add as a new revenue stream to push their investors towards you? Kim: Yeah. Absolutely have them call us. We can do some sort of [...] share or something like that, or just the finder's fee or something like that. Property managers, historically, have been difficult. Property managers do the property management. They usually don't get involved in the taxes. It's hard for them to have those discussions because a lot of times with the owners they'll say, "Hey, you should really do cost seg," they're going to go, "Oh, it's taxes. My CPA handles that." Now you're dealing with two different layers. Just like you said in the beginning, "If it has anything to do with taxes, I'll let my CPA do it." Those people have that mentality like, "Oh. I'm sure my CPA's already doing this if it's that big." I'm telling you, please listen to me, most CPAs are not doing this. I'm telling you that right now. Most of them aren't. Be proactive. Take your own taxes and your knowledge into your own hands and ask the appropriate question.  I will leave you with a kind of case study of a project I've been working on right now. This is incredible. I literally have a client that I was referred to from a CPA. The CPA brought me the client—a very good CPA client of mine. He owns tons of property all over the country. His family owns property and I've done all their cost seg for about five or six years. We finished the project. I was in my closing call with them, explaining those studies in the last report and everything. He says to me, "I'm part owner in this mobile home park. I think we should probably do this. Do you think it will be worth it?" I said, "Absolutely. Mobile home parks are killer. They're amazing." They do way better than single family homes or multifamily with that matter.  They said, "Yes. It's absolutely worth it. Get me the depreciation schedule, and we'll go over it." He put his partner on the phone with me, and we talked about it. Then, they finally sent me the depreciation schedule. The mobile home park was put on their depreciation schedule as land, $3.5 million as land. I looked at that and I almost gasped, that I called, and I was like, "That's not good. You're not depreciating this at all. Land is not depreciable. It looks like you just bought a raw piece of land." He goes, "Well, that's just all there is. We don't own any of the parks." I go, "Yeah. But you own the pads, the electrical post, you own a laundry facility and there's a house there, there's fencing and there are all kinds of stuff. They are land improvements. That's all 15 year depreciation. You have to pull out the land first then depreciate what's left." He goes, "Oh, man." Long story short, we get on the phone with the CPA. They're like, "Why didn’t you depreciate this? Why is it all on land?" He's like, "Oh, well. I didn't know." The CPAs don't know this stuff. Make sure that you're asking questions. If you have even just the inkling, reach out to me. I try to be very responsive to my emails, text messages, and whatnot. Email me. It's klochridge@engineeredtaxservices.com. Shoot me an email. Give me some synopsis on what's going on. Send me your depreciation schedule and I'll be able to tell you real quick if we can do something or not.  Most CPAs are not doing this because we don't have the resources. They don't even know. How was a CPA to know how much the electrical post we're going to depreciate? How was he supposed to know how much the pads are? They don't. You have to have a professional to go out there. Appraisers can't do it because they're going to tell you what's in there and what's the total value is. They're not going to break it down. Inspectors are going to tell you what's wrong. Nobody's going to tell you what the cost of every component is in that building. That's where the power comes. Jason: Awesome. This is really interesting to me. I appreciate you coming on the show, Kim. You gave out your email address, which we will have in the show notes as well, and on the website. How else can they get in touch with your company? Kim: Our website is engineeredtaxservices.com. I'm also on the back page with our team. Just pick my profile and shoot me an email from there as well. I'm happy to help you. I have an assistant that can handle all the influx of emails that might come. We'll be able to work through them all. I'd love to hear it from you and please just reach out, so we can at least talk about tax. Jason: Perfect. Kim, thanks for coming out and hanging out with me here on the DoorGrow Show. Kim: Anytime. Jason: All right. We'll let you go. Bye. Kim: Okay. I’ll talk to you soon. Bye, Jason. Jason: All right. There you have it. Really interesting topic. I didn't know about that. It's really fascinating. I'm sure it might be new to a lot of you. If that was helpful, make sure to reach out to them. If you are watching this on YouTube, make sure to subscribe, and catch these videos as they come out. If you are paying attention to us on iTunes and listening, make sure to subscribe on iTunes. If you can give us a little review, like this video, whatever you can do to help us about, it means a lot.  We're putting out a lot of free content. We would love it if you would reciprocate just a little bit and help us out. It helps us get the message out. It helps us get greater awareness and help more property managers change this industry. I'm Jason Hull of DoorGrow. This is right towards the end of the year. This may come out in 2020 on iTunes and other places. To everybody, happy holidays. I hope you have a fantastic 2020. If you're looking to grow your business, you're wanting a vision for 2020, you want 20/20 vision, you have a plan, and you want to do something different, reach out to DoorGrow. I'll say this real quick, if you didn’t get the results you wanted in 2019 or the result you wanted in 2018 or in 2017, you know exactly where you're going to be at the end of 2020. You're going to be at the same level of results you had every year so far. That's your default future. If you want to have a creative future that's dramatically different, then I would love and be honored to help you create that. We've helped hundreds of companies do that. Those that listened to me, followed, do what I tell them to do, and show up to our coaching calls, they get those results. They get it. I would love that to be you. That's it. Bye, everyone. Until next time, to our mutual growth. You just listened to the DoorGrow Show. We are building a community of the savviest property management entrepreneurs on the planet, in the DoorGrow Club. Join your fellow DoorGrow hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead, content, social, direct mail, and they still struggle to grow. At DoorGrow, we solve your biggest challenge getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today’s episode on our blog at doorgrow.com. To get notified of future events and news, subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow hacking your business and your life.

Have you already finished your taxes? Chances are you haven’t. Whether it is satisfying the Cohan Rule, automating your accounting processes, or taking hours (or even days) to file a Schedule E, we can all use some insight into best accounting practices for the year-end tax season. As tax season is well upon us, we share three tips for getting through it. In this podcast, we'll cover three important tips that will help make this tax season, your most relaxed tax season yet. Read more at https://www.tenantcloud.com/blog/three-landlord-tips-for-tax-season --- Send in a voice message: https://anchor.fm/tenantcloud/message

As with any earnings, the rental income a property owner brings in must be reported to the IRS. So, what do property managers and homeowners need to know about reporting rental income and expenses on their federal and state tax returns?On this edition of Five Minute Friday, Bob offers an overview of the tax implications of owning a rental property. He describes the landlord or property manager’s role in keeping accurate records, discussing the most common methods for tracking income and expenses and explaining what information is included on the 1099 North County Property Group submits to both the property owner and the IRS.Bob weighs in on why the gross rental income listed on the 1099 differs from the total of owner distributions and walks us through the most common landlord deductions. Listen in to understand California’s requirements for out-of-state property owners and learn how an accountant uses the information provided by a property manager to prepare the owner’s federal and state returns.Topics Covered[1:02] The landlord or property manager’s role in keeping accurate records and supporting documentation for a rental property[1:17] The most common methods for tracking income and expenses[1:55] Submitting a 1099 that reflects gross rental income to both the property owner and the IRS[2:14] Why the gross rental income listed on a 1099 doesn’t match the total of owner distributions[2:41] Providing a year-end owner statement in parallel with the 1099[2:50] How an accountant translates this information to the property owner’s federal tax return[3:03] Why most landlords file a Schedule E as part of their Federal 1040 Tax Return [3:27] The most common landlord deductions[4:06] The importance of saving receipts associated with landlord deductions[4:11] Leveraging a tax-deferred 1031 Exchange to purchase additional properties[4:37] California’s requirement for out-of-state owners to submit 7% of rent collected to the California Franchise Tax Board[4:59] Why out-of-state property owners receive both a 1099 and 592-B[5:16] The tax preparers responsibilities around the California State Return[5:24] Bob’s advice on consulting with a professional tax advisorConnect with Bob North County Property GroupResources MentionedMicrosoft ExcelQuickenQuickbooksFederal Tax FormsCalifornia State Tax FormsThis episode is always available for listening, sharing, or download at Property Management Brainstorm. Subscribe to Property Management Brainstorm on Apple Podcasts, Google Play Podcasts, Stitcher, Spotify, and YouTube.

Rental Real Estate irs.gov/ Schedule E. How to handle if we have rental property business. Classifications, Type of Property: Single Family Residence, Multi-Family Residence, Vacation/Short Term Rental, Commercial, Land or others We will discuss, what to put on your lease, the Landlord/tenant relationship. Avoid Discrimination,Rights of Disabled Tenants, Reasonable Accommodations, Accessibility, needed Modifications Rental Applications and moreSupport the show (https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=JHSCA4VS8F2NE&source=url)

Rental properties could be Single Family Residence, Multi-Family Residence, Vacation/Short Term Rental, Commercial, Land, Royalties etc.Detailed expenses should be kept on each property based on their property addresses. Schedule E of the IRS will show the items to be included. In addition to the expenses outline on the form we will explain other items to be included. Moreover we will discuss other expenses that could be included and items that have to appear in the lease agreement.Support the show (https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=JHSCA4VS8F2NE&source=url)

Pastor Jamie Tyler/Eunice

A brief summary of this episode

Chegando mais um episódio quentinho do podcast Chiefs Kingdom Brasil, hoje trazendo vários assuntos diferentes para vocês como nosso roster fica para essa temporada da NFL 100. O post Chiefs Kingdom Brasil 018 – Roster Chiefs 2019, Fantasy, Schedule e Semana 1 da NFL 100 apareceu primeiro em Fumble na Net Podcasts.

Hey everybody! My name is Jesse Grossbohlin. I hope you really enjoy today's episode. I have a video version of this podcast on YouTube. Please like, comment, share, dislike, or troll. I will see you guys tomorrow. Have a great day! Music: Artifact By, Taranoshi https://itunes.apple.com/us/album/artifact/1412707567?i=1412708778 https://open.spotify.com/album/5l9ZOapt8XBNvoPjKg5oHO

Hey everybody! My name is Jesse Grossbohlin. I hope you enjoy the episode. Don't be afraid to give me a thumbs down, thumbs up, comment or a share. This podcast is being posted in unison with Apple Podcast, Google Play Music, and SoundCloud. SoundCloud: https://soundcloud.com/jesse_grossbohlin ApplePodcast: https://itunes.apple.com/us/podcast/jesseaf-show/id1452114439?mt=2 GooglePlayMusic: https://play.google.com/music/m/I64ejhs2mmu2qlrpupewzduve6e?t=JesseAF_Show Music: Artifact By, Taranoshi https://itunes.apple.com/us/album/artifact/1412707567?i=1412708778 https://open.spotify.com/album/5l9ZOapt8XBNvoPjKg5oHO

Gary Pinkerton starts off today's show with a little news from his first short-term rental property. Fortunately it's good news. Then, Jason Hartman talks with Brandon Hall, CPA, about short-term rentals and taxes. If you are using your buy and hold properties as short term rentals, through a company like Airbnb, you may be required to pay an additional 15.3% self employment tax. Although it may seem like a gray area to you, the IRS considers it an active business and will take note of which schedule you are filing. Short term rentals require more of your labor and your time which rarely gets accounted for when calculating costs. Considering all the aspects of short term rentals versus long term buy and hold properties will shield you from future surprises. Key Takeaways: [7:02] Airbnb investors also have a 15.3% tax on active income [8:13] Monetizing the value of your time. Automated business systems allow me manage my real estate in only 30 min per month [11:01] It’s more time and labor intensive than a buy and hold property [13:50] A complicated scenario in setting up short term rentals [16:49] Short term rentals may earn more but the time is not factored in [17:45] Schedule E or Schedule C? [19:47] The IRS may be bringing on the audits [21:33] A 5 year depreciation schedule [23:05] The diminimous safe harbor [25:23] 500 material participation is solely for rental properties [28:06] An example of a three unit qualifier for material participation [29:53] Long distance self management is possible and maybe easier [31:35] Segmented depreciation, cost segregation using a sears catalog [34:41] Feasibility studies are expensive [36:43] Everybody needs a home office Mentions: www.TheRealEstateCPA.com

Today's Quick Start comes from Creating Wealth Episode 882, originally published in September 2017. The month of October brings the 2017 tax season to a close. Jason and his panel showcase the organizational tools and portfolio management options available through the newly upgraded Property Tracker 2.0. The Property Tracker software makes creating Schedule E’s, depreciation schedules and other tax forms easy as well as a robust calendar which keeps track of all of your income properties important dates. Key Takeaways: [02:25] Was the media bummed out that Hurricane Irma didn't cause more damage? [09:04] The Waffle House Index and Cryptocurrencies. [16:44] Fundamentals for organizing and tracking investment properties. [24:00] Property Tracker produces tax schedules including Schedule E and an up-to-date Schedule of Depreciation. [27:58] Property Tracker 2.0 has updated proformas with RV ratio evaluations. [30:24] Clarifying the statement "Every day you have a property you own and don't sell, you are buying it back from yourself." [35:05] Organizational tips for using Property Tracker. [39:28] Scanning with Optical Character Recognition (OCR) makes you more efficient. [46:38] Details about the new Amazon Echo contest, the Meet the Master's event and the upcoming Venture Alliance Mastermind.   [50:20] Free one-hour Property Tracker onboarding session with Zack for Jason Hartman clients. Mentioned in This Episode: Jason Hartman Property Tracker Software Administrator@realestatetools.com Meet the Master’s of Income Property Tickets Venture Alliance Mastermind Donate to Hurricane Relief Here

Toby Mathis and Jeff Webb of Anderson Advisors are here to answer all sorts of tax-related questions that focus on everything from applications to forms and QuickBooks. Do you have a tax question? Submit it to Webinar@andersonadvisors.com. Highlights/Topics: Will income earned by lending money to real estate investors reduce Social Security benefits or increase taxes on them? Income vs. earned income; until full retirement age, benefits are reduced; when full retirement age, it doesn't matter what you make How do I get the 20% deduction from Trump's Tax Plan? The 199A Deduction is a 20% deduction on qualified business income, but you need a pass-through entity; QBI 20% deduction vs. 20% of taxable income are compared, and you get whichever is less When you make a contribution out of your own account to your LLC as a member, are you taxed on contributions? No. It’s a contribution to an entity that becomes your capital and money you can take back out tax-free, if you haven't used it to recognize losses What is the best business structure recommended against asset, structure, and personal protection? With any passive activity, use a passive entity - LLC taxed as a partnership/limited partner; whomever has control of entity decides what's distributed What is the best way to set up QuickBooks when I have a Wyoming Holding LLC and several other LLCs holding real estate in other states? Create one set of books with Wyoming LLC as the primary; do a classified income statement for other states What are the tax forms for 501c3? Use Form 1023 to apply to be an exempt charitable organization; yearly recording forms include 990-N If someone has rentals in their self-directed IRA, how are they impacted as UBIT - does it make a difference on the number/dollar amount? No UBIT, if it's a rental; UBIT is for an active business inside an IRA; passive income is almost always exempt Can I have recourse debt in a 401K or IRA? Can I have non-recourse debt? You can’t have recourse debt, but you can have recourse debt What are my options to re-distribute funds from one LLC in several entities to separate investments? You can always move it from one to another with no tax implication Can I write off costs for rehabbing out of the country? Yes. Worldwide profits; if it's income-producing property, you report it to the United States I lent money to a real estate flipper. She gave me a promissory note, but it wasn’t recorded with the deed of trust. Now, she is in default. Can I foreclose? Document it because you can’t foreclose until you file your secured interest Is there anything I can do to reduce my taxable income? Yes. There are lots of things you can do - make contributions to qualified retirement plans, charities, and C Corp I purchased a new computer that cost less than $2,500. Is that a straight expense in the current tax year or some weird depreciation thing? Section 179 deduction; you can buy up to $1 million and write it all off For all questions/answers discussed, sign up to be a Platinum member to view the replay! Resources U.S. Social Security Administration Trump’s Tax Plan 199A Deduction QuickBooks Tax-Wise Workshop 501c3 Unrelated Business Income Tax (UBIT) 990-T 990-N Section 179 Deduction 1244 Election Kiddie Tax Anderson Advisors Tax and Asset Prevention Event Toby Mathis Anderson Advisors   Full Episode Transcript: Toby: Hey, guys. This is Toby Mathis with Jeff Webb again. Jeff: Good afternoon. Toby: If you don't know, Jeff Webb's a tax manager here, and I am one of the partners. I'm not an accountant but I'm an attorney. Jeff is actually a CPA. This is Tax Tuesdays. If you've never been on Tax Tuesdays before, all we do is answer all sorts of questions. Let me see here whether I've got the right question field up. Look at that. We've got a bunch of people asking questions. Let's see. We'll get to all your questions, making sure you can hear us in the question and answer part. Just say, "Yes, I can hear you loud and clear," to make sure that we're getting through to everybody. If you do that, then we appreciate it. There we go. I'm getting a whole bunch of "loud and clear", "loud and clear", "loud and clear". All right, if you don't know the format if Tax Tuesday, it goes like this. We answer a whole bunch of questions. We answer the questions that people ask via the email that I'll be giving you at the end of the webinar, and we grab a whole bunch of them, and we just start answering them. If we can't answer the question or the question that you ask is too complicated, too specific, too long, then I grab it and kick it off to a staff or we answer it the following week, depending on how cool a question it is. That being kind of the overview, this is where we're at. We're going to go through these and we're going to make sure that we're answering all the questions. Let's see if I can actually make these slides advance. Look at that. That's weird. I didn't even know what that W there is. It's kind of cool. "Will the income I earned by lending my money to my real estate investors reduced my social security benefits or increased my taxes on them?" That's an interesting question. There's, "How do I get a 20% deduction?" I'm picking these literally from people's emails so don't yell at me for the typos. "When you make a contribution funds to your own account to your LLC as a member, are you taxed on contributions that you contribute to an LLC?" "What is the best structure–" and that is the weirdest thing I've ever had. "What is the best structure recommended against asset, structure and personal protection for a Multi-Family Home Investor acquiring and holding rental properties, especially if working–" and I'm going to go through each one of these. "What is the best way to set up QuickBooks when I have a Wyoming Holding LLC and several other LLCs holding real estate in various other states?" Those are our opening questions. We have a few more. We're going to go through a ton of them, and I'm already getting a bunch of questions on the Q&A portion. We will get to those but, first, we're going to knock these ones out. The first question: "Will the income earned by lending money to real estate investors reduce my Social Security benefits or increase my taxes on them?" The first thing is there's the benefit itself. In this particular question, I looked it up and I believe there were 61, so they're receiving Social Security benefits before they reach the full retirement age. Full retirement age varies between 65 and 67. The reason this is important is because, once you reach that age, it doesn't matter what you make. Until you reach that age, you will have your benefits reduced on what you're receiving. When you're pulling out Social Security early, 50 cents on the dollar once you get over $17,080.Of course, it's indexed for inflation, but it's a little bit over $17,000. I think this year it's $17,080 or something like that. What that means is, if you are lending money, then that would be counted as income. However, if you're under the full retirement age, they only count earned income. The question here is, "Until you're at full retirement age, will the income earned by lending money to real estate investors reduce my Social Security benefits or increase my taxes on them?" The answer is a big, resounding, "No." This will not hurt you in any way. Once you hit full retirement age, now we have to be worried about how much of your social security becomes taxable. When they look at your tax ability of the benefit, now we're looking at all sorts of income, everything that you make, and it's going to push it up. That's the one where it's not that you reduce the benefit but it becomes taxable. Jeff: Fairly quickly, additional income starts making your Social Security benefits taxable. They're never going to be more than–85% of your benefits are never going to be taxable. I'm saying this totally backwards. Toby: What it means is that the most they're ever going to tax your benefits is 85% of them. If you're getting $20,000 of benefit, the most you'll ever pay tax on is $17,000. You'll still get $3,000, tax-free. The sad part is you didn't get, really, a deduction when they took it out the first place. That's the old double tax that you hear about with Social Security. Anything else you want jumped into? This is kind of stuff. It makes your brain go numb so you're doing it right. You're actually asking good questions. Jeff: Just the matter of when you should take Social Security is such a huge question. Toby: Because you can start taking it. When is the earliest, is it 64? Jeff: I'm going to say 62, but maybe it's earlier depending on their age. Toby: It does depend on their age. There is a before-a-threshold and after-a-threshold. Now, I forget what the threshold is. What you do is you go to the Social Security Administration and you run your scenarios and they'll give them all to you, or you can contact us. We have folks we could send you out to that have software because it is complicated. Depending on what month you were born in and all that stuff, how many days–all of this gets factored in as to what's the earliest you could start receiving benefits. Once you start receiving the benefit, they let you receive that benefit only so long as your income is low and it's your earned income. If you're trying to get the benefit when you're 62 and you make too much money, you're going to lose a bunch of the benefits. If you start making–if you're 62, start pulling out the benefit and you have passive income, not that big of a deal; it doesn't reduce it so that's really cool. Enough of that. It makes my head hurt, Social Security. Do not rely on Social Security. There, I said it. Yeah, Social Security is one of those things that, when it was set up, the average life expectancy of people on Social Security was two years. It was really there to catch you if you're really old and didn't have any other benefits. Now, we use it almost like it's a retirement plan that's not what it was intended for. That's why it doesn't work to do it. Here's the next one. "How do I get the 20% deduction from Trump's Tax Plan?" First off, it's not Trump's Tax Plan. It's the Tax Cut and Jobs Act and it was passed by our wonderful Congress because, technically–though, they seem to forget this–Presidents don't write laws. Now that we got that out of the way, they did put this thing called a 199A Deduction, which is a 20% deduction on qualified business income from pass-through entities. Follow me here. The first thing we need to have–and I'm going to write these up–is we need to have a pass-through entity, and you can be an LLC taxed as–this is a 1065 that's partnership, a sole proprietor or as an S Corp. Those are your choices. Technically, it could also be a trust. Then, you look at other entities, S Corps and just flat out partnerships, including limited partnerships, all that fun stuff. It's passing through; it doesn't pay its own tax. Then, you need qualified business income. I'm just going to call it QBI, which just means income. Generally speaking, it's active income, but they also include real estate, if you are making money on real estate in which you participate in some fashion. The only type of real estate that's not included as far as we can tell–because they're still giving us regulations on it, but the proposed regulations make clear that real estate, rental real estates included, is if you have a commercial building and triple-net leases that you're giving out where you're not really taking on much of the risk, then they're not going to let you have the qualified business income. Then, they compare that qualified business income 20% deduction versus 20% of your taxable income, whichever is less. Why is this important? Because if I'm a sole proprietor–let's say I have $50,000 that I'm making–that I would get a $10,000-deduction under the QBI. Let's say that I take and contribute into my retirement plan–a husband-and-wife sole proprietor is still the same thing, and they both put in–what's a good number–let's just say $10,000. Then, my taxable income is actually $40,000 because I rode off–I made tax-deductible contributions into my IRA of $10,000 so I would take the lesser of that. Then, they do this wonderful thing, is they then say, "Well, if it's a special service company, we're going to put a cap on how much QBI you can actually make." It's not really QBI; it's actually your taxable income, and they say, "We'll only let you ride off so long as your taxable income is below a threshold." If you're single, that threshold is $157,500, and there's a phase-out for the next $50,000. To make your head spin, it goes from $157,000 to $207,500. That's the easiest way to look at it. If you're married, filing jointly, those numbers are $315,000 to $415,000. Jeff: What's an example of a special service? Toby: Special services are something that it is you and your skill that makes the money, and they use–it's going to be doctors, lawyers, accountants, engineers, real estate agents who are solo, somebody who–it's their skill so like a carpenter who doesn't have a bunch of staff. That's going to be a special service. If you get above those thresholds, you are done. Somebody's asking a question which is pretty interesting. A single-member LLC counts. You have a flow under you so that's when you're sole proprietor or just going under your tax return that's passed through entity so you're fine. The interesting here is that you can control your taxable income. Even on those thresholds–and when we teach this in the class, we actually go through a learning chart where we say, "If this, then this. If this, then this." If you're a special service, we just need to make sure that we can control your income, and the way you control your income is by splitting it with tax-free, tax-exempt or separately-taxable entities. Let me give you an example. If I have a C Corp and it makes a bunch of money, great, that's not income to me. I don't want to pay myself a whole bunch of money and make whatever my other business is that is or where I'm going to meet the threshold taxable because I'm losing that 20% deduction. Let's say I have $200,000 coming in. As an individual, I can get some donations and deductions into a retirement plan and I get myself underneath that $157,000 and I have another $200,000 in C Corp that I pay myself. If I leave the $157,000 as is and I don't take any money out of the C Corp, I'm going to get a 30-something thousand dollar deduction. It's just going to come off the top. It's a 20% deduction so almost like I spent. If I took the money out of the C Corp–and, by the way, that C Corp is a flat 21% tax rate now so it's going to pay 21% so it's not horrific. If I paid myself that money, I push my taxable income over the threshold, now I get 0 deduction on my qualified business income. That's why it's important. If it is not a special service, then those thresholds trigger something else. It takes us to an area where we can write off up to 50% of the W2 income or 25% of the W2 income for the business plus 2.5% of the assets. Jeff: No, you're right. I'm just jumping ahead of you. Toby: Yeah, so what we're looking at, then, is you better have a regular business that actually has salaries. If you, for example, as a sole proprietor, single, are making–what would be a good example–$200,000 and you're over the threshold, you're phasing out, you'd have to go to the second test. You're over the 157 and the second test is now pushing you at 50% of W2 wages, and you have zero so your deduction is going to be zero. You're going to get literally nothing. You might get a few dollars because you're not quite at the 207, which is the top line of the actual phase-out so you'd be phased out about 90% plus of the benefit. Now, let's say you converted that sole proprietorship to an S Corp and, instead, you paid yourself a salary, so same situation, $200,000. Let's say I paid you $75,000 of salary. Then, the QBI or the monies that's flowing through is actually the net income and net profit, so you'd subtract the 75 off. It would be $125,000. You compare 20% of that number, which I should grab the calculator, whatever that number is. Jeff: It'd be 25,000. Toby: Yeah, 25,000, and we would compare it to one-half of the W2 income, which would be 37,500. You'd get the lesser of the two. You'd get a $25,000-deduction just because of the type of entity. That's the one I have to do. Somebody just said, "I have almost 300K in real estate and other income. Is there anything I can do?" A single person? Yeah, there's something you can do because, remember, it depends on whether you're special service and then it depends on the business, and there's one last thing: It always comes down to your taxable income. "What other ways can I use to control my taxable income?" The most obvious is I split it with a C Corp, I give it to charity–and it could be my charity–or I deduct it by putting it into a tax-deferred retirement plan. For example, same situation, I'll use the $200,000 and they do a 401K. They put a husband and wife each–they're under 50. They each contribute 18,500–or, actually, the example I used was a single person so I would have to say I put 18,500 and in, and they get a 25% deduction on the 75,000. They would put in–again, I'm using crazy numbers so what would that be? About $18,750 or whatever that is–around under $19,000. I can put, in essence, about $37,000 right into the 401K, and that reduces my taxable income. The taxable income goes from 200 down to almost the threshold, and now I don't have to worry about it. It makes my life so much easier. I'm just going to get a nice big, fat deduction and I'm happy as a clam. That's how this stuff works, but if you don't do it before the year ends, you're toast. This is going to be my–this is why you need to have some sort of somebody doing tax planning. How do I get the 20% deduction from the new tax act? Very deliberately. You make sure that you have the income flowing under your return and then you make sure that, if there's a disqualifying factor that would cause you to lose it, that you look and say, "What's better? To just walk away from it and not worry about it or would I be better to take a couple of actions to allow myself to take advantage of the deduction?" It's a freebie, guys. If I make $20,000 in real estate, that rental real estate–that's my net after all my depreciation–I get a $4,000-deduction. I'm only recognizing 16,000 under this taxable income so that's a nice little benefit especially if I'm a high-income person so that's what I'd be looking at. Jeff, do you want to do this one because I'm […] barding the answers again? Jeff: No, that's alright. "When you make a contribution out of your own account to your LLC as a member, are you taxed on contributions that you contribute to the LLC?" No, actually, you're not. That is a contribution to an entity that becomes your capital, your owner's equity–we can call it a lot of things–your owner's capital in that company. That's actually money that you can take back out also tax-free assuming that you haven't used it up to recognize losses or maybe other things like that. Toby: We get that a lot. I'll give you a real-life example. Some guys were doing a syndication on apartment buildings and they were telling people, "Hey, we're going to return your capital out of the profits and you're not going to have to pay any tax on the money that you receive up to your investment." I said, "Hey, that's not really the case." Here's how it works: I can always get back my contribution, and it's tax-neutral; it means nothing. If the company makes zero, no profit, it can always give me back my money and I pay no tax, but if the company makes money, I'm taxed on my portion of that gain no matter what even if they're giving me extra. I was like–what they were doing was they were saying, "Here's a little thing. We'll make some profit. We'll just give you your money back. You want to pay tax on it?" I was like, "No, that's not how it works. You actually have to pay tax on the profit in proportion to your ownership, and it's a little bit funky." Jeff: This is a case that, sometimes, we see where a client will tell us, "I had deposits of $100,000 into my business," and what they fail to tell us is that 50,000 of it was their own money. We want to make sure that we're able to differentiate what the owners are putting into the company versus what income they're making in the company. Toby: There's a couple of questions. Somebody says, "My head is spinning." We do record this. If you're platinum, you're going to get a recording of it in your little platinum area. Somebody asks, "Is this pre-recorded?" No, it's not. We're doing it live but I'm answering the questions that people have emailed me first and, yes, we have about 50 questions that are in the queue that we're going to go through here in a second. Jeff: We don't have a three-second delay or anything? Toby: No, I don't think so. I could give you a 10-second delay. All right, "What is the best business structure recommended against asset, structure and personal protection?" I don't know what that means. I'm going to assume they mean to protect the business–for a Multi-Family Home Investor acquiring and holding rental properties, especially if working as a team member with other investors? Here's what I'm going to say: Anytime you have a passive activity–that is, when you buy the property or the cash flow and the appreciation–you're going to want to use a passive entity, meaning an LLC taxed as a partnership or a limited partner. Don't do anything else. That's it. There's maybe some really weird exceptions but I'm going to say, 99% of the time, you're going to end up using an LLC, and it's either going to be disregarded even if you have other people in or it's going to be a partnership. If anybody does anything differently, they're doing some weird stuff. If you have other investors, then it depends on your relationship with those investors. I'm not going to going to get into securities, Reg Ds and all that but, generally speaking, you're going to have it taxed as a partnership, but the most important consideration is always going to be control, who has control of that entity, because that's who decides what's distributed. That partnership agreement or the operating agreement of the LLC is really going to be important. You do not want to do this stuff half-arsed. You want to make sure that you're actually really addressing this stuff. At Anderson, we tend to be very protective of the manager, meaning we want you to have control. If it's your project, we don't want people to force you to do stuff and, on the flip side, if you're investing and you're a client, we're always going to say, "You don't want to be forced to kick in more capital against your will." Those are the things we always look at. Where does that one go? Here we go. "What is the best way to set up QuickBooks when I have a Wyoming–" and this is going to be so you, Jeff, because Jeff loves QuickBooks. "What is the best way to set up QuickBooks when I have a Wyoming Holding LLC with several other LLCs holding real estate in various other states?" I'm going to draw this. There's my Wyoming LLC. It's either going to be a 1065 or disregarded, and it holds all these cute little LLCs in other states. Let's say this is Texas LLC, Washington LLC, Nevada LLC, Georgia LLC, and they're all going to flow up to that Wyoming. I want to keep my books straight because, if you know QuickBooks, they will sell you QuickBooks for this one, this one and this one. You'll end up with four sets of QuickBooks and you'll drive yourself crazy. What do you do, Jeff? Jeff: Here's what we like to do: We like to create one set of books with the Wyoming LLC at the top being the primary set of books. Then, what we do is what we call a classified income statement where each of these four LLCs below the Georgia, Nevada, Washington and Texas where they're all kind of their own set of books within your Wyoming LLC books. All this income is going to flow from those bottom four up to the top one anyway and, while we need to keep the entities separate so we can report them that way, ultimately, what we're reporting is what's coming through the whole kit and caboodle. Toby: Yeah, we only need to worry about setting up QuickBooks for this guy right here, and then we set up these guys as classes. All that means is we have one set of books. Jeff: Yeah. You can still pull an income statement for your Georgia LLC or your Texas LLC to see what's just in that but, all in all, you still have one set of books. It makes it easier and you don't have all these inter-company transfers that you have to track. Toby: Oh my god. I'll tell you, we're horrible on that. He's giving me the look. See, here's the problem, is if you have different companies with different sets of books, you've got to close out the previous sets of books and then open up the new company. It's a process and it takes a few minutes and it's really annoying when you're trying to enter stuff into it. It's going to save you a whole bunch of time to use one set. Jeff: Yeah, then you don't run into things like, "Well, I transferred money from Georgia, the taxes that I did it, I record it in both companies." When you record them on one, you end up re-recording it in both. Toby: Yeah, and there's some fun stuff. Some of them just ask for a basic QuickBooks question, jump in the line. It's hard to set up classes in QuickBooks, not horribly, but if you don’t want to learn–QuickBooks is one of those things where you're going to spend some time with it. You just have a bookkeeper do it. Anderson does that if you want. All right. If you have questions–you guys, I know you do because there's a ton of them already in the little queue here. Here's how it works: If you want to ask a more detailed question, if you have a question that you didn't hear answered on the webinar, you can just email them on in to webinar@andersonadvisors.com, and, that way, we can put it in that queue and we can answer it just like we just did. We're going to break those out. Those will be separate little videos, each one of those, so that you get your answer. Somebody was saying, "My head was spinning about 199A." You can go back and listen to that. Better yet, you can come to some of our other webinars or come, actually, to the Tax-Wise Workshop and we go through this stuff. Spend some time with us. If you invest a little bit of time in taxes, it will pay off in spades. Other questions–some people just answered this stuff. "Can you go over the tax forms for 501c3? Jeff: There's a couple of forms for the 501c3. To apply the BF 5O1c3, there's what's called the Form 1023. It's the application to be an exempt charitable organization. Then, there's several different yearly recording forms. The 990 is the primary one where you report, among other things, what your income was, what your balance sheet looks like, your plan, your purpose, who you've dealt with. What were you going to say? Come on. Toby: Basically, if you're making less than $50,000 in your 501c3, you're doing a 990 post-note card. You're just doing a real basic here. Literally, it looks like a postcard. Jeff: They don't do that anymore. Toby: I thought they're still– Jeff: All these old people still call it postcards, but it's a… Toby: They do that in the 10… Jeff: But it's a 990N and it's filed electronically. Toby: Yeah, I know but it's the same thing. Jeff: It's still close. Okay. Toby: It's a postcard. Oh, my god. Yeah, you do it electronically now but it's really simple. You go above that, then you're going to be filing a little more detail. You get about 250, you're filing very detailed. Never do it yourself. Just hire an accountant to do it, and those guys–we do them. They're not horrifically complicated unless you have a huge void that everybody's taking money. You go American Red Cross, you can go look at the actual tax forms that everybody files because they're all public record. You can go in there and take a look at anybody and see just how complicated it is. What you'll realize is that the more the stuff they're doing, the more complicated it gets, and not doing ton it is pretty simple. We have ones that are $5 million non-profits and it's a few pages. Then, you have ones that are $1 million but they've got everybody and their mother with their hands in the thing, and you're doing a lot of reporting. That one might be more complicated. If you're a church, you don't file anything. If you're religious and you're a religious organization, you don't file anything; you file zero tax forms. Jeff: When you have an accountant do these 990s for you, they're going to ask you a lot of questions because there's a lot of questions on the form that they don't have the answer to, basically about what it is the non-profit does and things like that. Toby: All right. "If someone has rentals in their–" basically, again, if you have those tax forms, this is one other thing, is that's the tax compliance on an annual basis. If you're setting up a 501c3, you are doing–more than likely, 501c3 is an application called a 1023. If you're doing a 501C6 or some of these others, that's a 1024. Jeff: Wow, I'm impressed. Toby: Yeah, sorry. It's stuck in my head. Those are the applications for exempt status. Your business, your non-profit, is in existence and it's considered exempt from Day 1. Even though you haven't gotten your exemption approved, you actually have 28 or 29 months to get approved, and it relates back to the day that you started. You can actually do a 501c3 and be up and running in a matter of weeks if you want to. All right, from Lisa: "If someone has rentals in their self-directed IRA, how is it impacted as far as unrelated business income tax (UBIT) and does it make a difference on the number or dollar amount?" You want to do this one or would you like me to? Jeff: Why don't you do this one? Toby: All right. Self-directed IRA and it has real estate? You have no UBIT if it's just rental. That's not unrelated business income tax. Unrelated business income tax is when you're doing an active business inside an exempt organization, inside an IRA, or church, or something else, and you're running a mini-mart then they tax you on it because it's unrelated business income so not related to your exempt purpose so they tax you on it. Passive income's always going to be–I shouldn't say "always"; it's almost always exempt. I guess there's possible–if you have some royalty stuff, it's possible, if you're advertising, that the exempt organization tax, but for your IRA for rentals, don't worry about it. Here's what you worry about when you're doing an IRA with rentals: It's usually the case–this is what we've seen–is that people will oftentimes want to lever that real estate. In an IRA, you have something called–I'm just going to blank on it–unrelated debt financed income. There we go, UDFI. Unrelated debt financed income means–or just call it debt finance income–the portion of the profits that are coming from the debt. If I have a piece of property, I have a 50% loan on it, then 50% of its income is going to be taxable to the IRA. It's not allowed to have that type of loan and not pay tax on it. A 401K is allowed to have that type of loan, and it doesn't pay tax on it. It's one of those weird things where you're like, "Hey, should I be an IRA or 401K?" More often than not in our world, you're going to want to be the 401K. It has different rules, and one of the big ones is the ability to use debt. Now, here's something for you. I think I had poll questions on this. This is fun. I'm going to send a poll out to see whether you guys are listening. You guys can answer this, and what it is, "Can I have recourse debt in a 401K or IRA?" Let's see about that. Isn't this kind of cool? Jeff: It is cool. Toby: We're going to see whether or not you can have recourse debt in a 401K or IRA. For those of you who don't know what recourse debt, recourse means, "I can go after you. I have recourse, and I can go–" basically, a personal guarantee, personal guarantor. We got a lot of people voting. I will share the results with you once we're there. Jeff: What if Lisa is flipping instead of renting in an IRA? Toby: Then, we don't have any cases on it. Jeff: Great. Toby: What we always say is do five at a max. Here's the thing: If you disqualify an IRA, the whole thing's disqualified. What I want to do is if I'm flipping in a self-directed IRA, I want to make sure only that money is in that IRA so if I have a disqualifying event, it's only for that one little IRA. So, I may have two or three IRAs. Good news: People are listening. That's always good news. We have about–50% of you guys voted. I'm going to go ahead and close this thing in about a few seconds. Let's see. There, I closed it and now I'm going to share it with you. Do you want me to tell you the answer? You cannot have recourse debt. 36% of you guys just disqualified your plans, and you have a 10% penalty plus it's all taxable. Sorry to say that you just destroyed your plan, but you cannot have recourse. This is half the fun. What's the next question I could ask you? I could throw up another poll at you. Let's see. Get out of there. Let me see if I can do this. All right, what's the next one? Here's a better one: Now that you know you can't have recourse debt, I'm going to launch a new poll. "Can I have non-recourse debt in an IRA or 401K?" This is where accountants and tax lawyers have– Jeff: Disagreements? Toby: No, this is where it's so much fun. Are you kidding? Let's see. Somebody's saying, "No." What is non-recourse? Non-recourse means you can't hold the person responsible. There's no personal guarantor. You can only go after the property so the property is truly asset-based lending. There's nobody on the hook for that loan if it goes south. A typical non-recourse loan in a plan–this is kind of cheap because it's going to give you the answer–is they're going to look at the other plan assets and so they're going to secure the other plan assets. They're going to make sure that they're not over-leveraged. In other words, they're not going to give you a 99% loan to value; they're going to give you a 60% loan to value or 50% loan to value. We'll see if you guys still get the answer even though I just basically gave it to you. This is fun. I'm just going to stop this one and I'm going to share it because the numbers are pretty done. It looks like 86% of you said, "Yes." Can I have non-recourse debt? 86% of you are correct. You can have recourse debt. Here's the trick: In an IRA, that non-recourse debt creates debt finance income so you have to pay tax on the portion that you're making but it doesn't disqualify your plan. In a 401K, you do not pay the debt finance income, and some of you guys are not too pleased with me for that, but I'm getting giggles out of it. That's enough with polls. I could have polls all day long and we would have a lot of fun. Last one: "I hold some assets in LLC–"and, by the way, this is the last one from people that have shot it in but it says, "You don't pay tax until withdrawal, correct?" No, if you have debt finance income, you're paying it in the year in which the debt finance income–you actually file a 990 T. You actually have to report it. "I have some assets in an LLC that is a day-trading entity." You're brave. "If this generates sizable profits–" I just love traders. "What options are out there to re-distribute funds from one LLC in several entities to the separate investments?" You can always move–if it's yours, it's like–an LLC is a safe so I can always move it from one safe to another, no tax implication. This is one of the questions we had earlier. I can always put money in, take it out. Somebody was talking about an opportunity zone. The opportunity zone's awesome. It's where you take capital gains and invest them in the opportunity zone. It's actually called the growth opportunity zone, and you defer the tax on that income. The max amount you can defer that tax is until 2025 right now. Then, you get a portion of that as non-taxable. Then, the growth–if you leave it in the opportunity zone for 10 years, all that growth and the gains on the investment itself are tax-free, and that's pretty interesting. Growth opportunities, we'll be talking about that as they give us more information. Somebody says, "Can you take the poll down?" I thought I did. I'll make sure polls, hide. There we go. Sorry about that, guys. Everybody's telling me, "Flip off the poll." I'm flipping it off. I like your opportunity zone discussion, and think about a bank, and loan out funds to other LLCs you use. You could do that. Then, it's interest unless it's all you. In which case, you don't charge yourself interests. "I am told that funds in an LLC are much like funds in a savings account. I pay taxes on the gains my funds make, and funds can be withdrawn at any time." That is true as long as it's disregarded or taxed as a partnership. I want to make sure that we're very clear. LLCs that are partnerships are disregarded. Yes, you can do that. If it's an LLC taxed as a corporation or LLC taxes in S Corp, little bit different. An S Corp probably has a huge difference. Jeff: Yeah. You can even pull securities out–even if it's a partnership–pull securities out and put them somewhere else. Like what Toby's saying, if it's an S Corporation or corporation, if you pull securities out of a corporation, you have to recognize gain immediately. Toby: It sucks. Appreciated assets is considered wages, right? Use an example here. Jeff: We had a client who had a couple of $100,000 of securities in a corporation, wanted to move it somewhere else, and we tried to explain to him that if he pulls securities out that are now worth 250 and he's only got a basis of $100,000, he's going to have capital gains of $125,000 in that corporation. The corporation will pay gains and then, for you to take it out, that's got to come from somewhere else, so either a salary, roan repayments or dividends. It doesn't work out well. Toby: No Bueno. The other one is people that real estate in an S Corp and then they need to take it out to refile it or something. All that appreciation is wages. It's horrific and so we have oftentimes say, "Hey, if you're going to do this S Corp, it's cool." The capital gains still flow down to you; it's just that you can't take it out. You've got to leave it in there. Jeff: Can we  re-running into that more and more where the banks are running to take it out of the LLCs and stuff? Toby: They got horribly hosed during the downturn of people doing weird stuff. What happened is I would do a financing in an entity. Say I'm the owner, and then I would sell Jeff my ownership and the entity and the bank had no idea that I'm no longer the guy that they were dealing with that they gave the loan to in their mind and had sold his interests. They had no idea. One day, Jeff comes back in and says, "By the way, I'm the owner of this LLC, not the guy that you loaned the money to." No Bueno. They don't like that. All right, we got a lot of questions to go through so if you have questions, you can always email them in. I'm going to start going out through these things, and we have questions from almost an hour ago. People were asking questions before we even started. "I did a cash-out refinance from my residence to invest in private lending or to buy rentals. California only allows 150,000 to deduct interest expense for residence." That's actually the new federal rule. "For the portion that is more than 750, can I deduct the interest as investment expense?" All right, so here's the rule–and, Jeff, I'm [...] barding, but I deal with this stuff all the time. Your new limit is–unless you owned your house prior to–during 27 and perhaps during the first quarter of 2018 if your loan was already in process before December 15th of 2017, don't try to remember this stuff; just know that if you're in that weird period, you may qualify, then you're up to a million, but it has to be for acquisition indebtedness. Acquisition indebtedness means, "I bought the house," or, "I improved the house." That's for the mortgage person to be deductible on your Schedule A, which is your itemized deduction. If you're using the money for something else, then it has to be deductible on that something else. For example, if I am buying rental real estate, then the interest–you'd be writing off the interest on your Schedule A, essentially, against the income from that rental real estate. You are no longer writing off your mortgage interest personally as the individual residing in it; you are now writing it off as part of an investment. Anything you wanted to add on that? Jeff: No. If we're talking about buying a piece of investment property like you're just going out and buying more land, hoping that it'll go up in value, then it would be considered investment interests and go back on Schedule A. Typically, we want to keep it–if it's in a business interest or rental property, something like that, we want to keep it there. Toby: Again, the Canadians have been dealing with this for a lot longer than us guys. You cannot write off interest if it's not for your home in Canada unless it was used for an investment. People actually have to go re-file their houses, they get all the cash they could, pay down their house, re-file it so they could show that they used it for an investment so they could actually write off the interest. I think it was called Scotts transactions. It's weird. Hey, I'm not Canadian. This is another question: "Say I deducted a newsletter subscription in 2017 but received a refund for it in 2018. Do I need to add this back as income in 2018 or no?" If you wrote it off and it means your basis is zero, give you the money back, what does that sound like? Jeff: Income. Toby: Income. It is income. At the same time, I see people saying, "Hey, what if I reimburse myself from my cell phone out of two companies?" Now, each reimbursement represents–I said, "Well, you can reimburse yourself up to your expense. Anything above that is income so it becomes taxable." Fun stuff. Yes, you would report it, but only–your cash basis tax first. You report it in the year that you received the money back. "You've saved me so much money. I call y'all my friends." I love that when I get stuff like that. That's not really a question but I'm going to repeat it because it's better than, "Flip off the poll." Not that I had too many of those, but I had a few. "Can I write off costs for rehabbing out of the country?" This sounds like something for Jeff. Can you write off? US taxes. Jeff: Yeah, you do have investment in another country. Toby: Worldwide profits, baby. Yes. Jeff: If it's income-producing property, you're going to be reporting that to the United States. Any expenses you have on that property will go towards that also. Toby: If you're rehabbing a property, it sounds like dealer activity and active business. I may be little interest–I probably want to be looking at structures in the Bahamas if that's where it is. I'd be looking at something that's taxable there so you don't get into treaties and all sorts of fun stuff. "Do I have to pay $800 off the top to the franchise tax board when we start our corporation?" Jeff: No, California has an exemption to corporations that are first year only. Toby: Yeah, and that $800–this is, if you like tax cases, there's Veritas 1, there's Veritas 2, there's Northwest Energetic Services, there's Bakersfield Mall, and they're all versus your friendly–what is it called? Not the franchise tax. No, it's whatever. I forget what they're called. Jeff: We know what it's called. Toby: Yeah. Anyway, I'll remember it as soon as I could. I'm trying to think about it, but they keep suing the Board of Equalization, the BoE. It's $800 and they say that's the minimum tax, but they say, really, it's a fee because if it was a tax, then it'd be an unconstitutional tax because it's not attached to the income. They keep trying to call it a fee. They lose and then they change it a little bit and they lose again. That's just an aside. California is kind of evil. "We live in Washington. We have a Nevada C Corp which fully owns a watch and LLC and employs the kids. What are the recommended strategies to optimize for college tuition?" Wow, so you're doing a great thing. You are going to run them through payroll. When you're applying for things like scholarships, if it's going to be based on income, you're going to show that income. You're going to show those returns, but those kids should–most of that income is going to probably be underneath the standard deduction. Right now, it's $12,000. They're going to pay zero and they're going to pay very little on any amount over that. Plus, if you're smart, you're putting some of that money in a Roth IRA and they're never going to pay tax on that. It's smart to do this with your kids. If I paid tuition out of my tax bracket, it's coming out of my highest tax bracket. If I'm in the highest tax bracket, that's 37%. If my kids pay for their tuition and are working for the company, and they have to do something, then they pay at a third tax bracket, which, quite often, is zero. I do this with my own daughter. Last year, I think we paid $500 in taxes total for the year when it cost me $8,000 if I was doing it, but she has to do something. She has to actually work for the company and do stuff for the company. Other stuff you could do to optimize is dump it into–defer it into a retirement plan. If you want to do a 401K, they can put the first 18,500 of their income and they can defer it. You're still reporting it. I'm not sure it'll have an impact on scholarships or not. I have not seen it have much of an impact, but that's what I'd be doing, is the benefits far outweigh anything with this on the scholarship side. It is huge. Here's one: "I lent money to a real estate flipper. She gave me a promissory note, but it was not recorded with the deed of trust. Now, she is in default. Can I foreclose?" When you loan money to a flipper with no deed of trust, that's called a gift. I'm just kidding. You need to make sure that you're documenting it. You cannot foreclose until you actually file your secured interest. You got to have it filed and then, yes, you can actually start foreclosure proceedings if you want, if they don't pay it. You definitely want to make sure that, when you're giving notes–there's something called "first in time, first in right". You want to make sure you know it's recorded and you have your deed of trust against that house. Otherwise, somebody else could go slap theirs on first. There's also places where they get priority. In Nevada, for example, the HoAs get super liens. They actually step in front of the primary lender. It sounds weird but it's true. You want to make sure that you're documenting your loan and covering yourself as best you can, make sure that you're getting a personal guarantee and, if they have any other assets, you may want to slap a lien on those, too. All right, "With a new company, there's quite a lot of expense reimbursements. Since I don't have a lot of revenue yet, I haven't paid it back. Is it okay to carry it over a year or should I go ahead and pay it back even though I'm still in the red?" Jeff, this sounds like you unless you're zoning out there. She has a new company, she has lots of expenses, she doesn't have any money that she's made yet, so should they pay it back, carry it forward? "Can I pay myself, reimburse myself in the future year?" The answer is yes, you could reimburse yourself whenever. The question really becomes, "Do I want to capture all my startup expenses in the first year?" Jeff: Yeah, I think you do. You want to capture as many expenses as possible even if you're not getting directly reimbursed right away. Toby: Yeah, you have two choices whenever you fund a company. You can fund it with your cash and then it's going to have a loss and it's going to carry that loss forward if it's a C Corp. If it's an S Corp, you can actually take that loss. I've contributed $20,000. That's my basis and it loses 20,000 and, technically, I'd have a $20,000-loss with an S Corp. Usually, we're seeing this in C Corps, and you just carry it is a payable and a receivable. It's payable to you, you would say, "Hey, it owes me some money. It's kind of like this." I always use Krispy Kreme in my examples. I go out for Anderson and I bring in 12 dozen Krispy Kreme for a meeting or something, and the others say, "Hey, I'll pay you back but we don't have the money right now." It doesn't mean that it goes away; it means that I'm sitting there, waiting for them to pay me back. If they pay me back in two years, all it means is they can't write that off as a deduction until they pay me back so they're not going to have a loss if I'm carrying it as an IOU. If I give them the money to buy the doughnuts and they buy the doughnuts, they get the loss right away even though they haven't returned my money to me. They could return that money to me at any time. For me, it's always going to be tax-neutral. "Do I need to be on payroll with my real estate income or can I just take distributions from my LLC?" This is regarding Trump's 20% deduction on the plan. If it's investment real estate, you never have to take a seller as long as it's rental real estate. If it's flipping and it's in an S Corp, then you would have to take some salary if you're taking distributions. I don’t want to twist it. This sounds like it's just an LLC with rental property. You do not have to take it. The 20% is for 2018 onwards. If they think that it has a sunset clause, the end of 2025. Is it the end of 2025 that it ends? Jeff: Yeah. Toby: Yeah, so 2025. Here's a really long one. Boy, this is a really long one. Let me see if I can condense this. "I have a Wyoming LLC that is the sole member of a second LLC that is disregarded entity. I funded the Wyoming with 8,500 and the Wyoming funded the other bookkeeping QuickBooks balance sheet shows an owner equity 100% of 16,500. This is offset a balance sheet with capital contribution. While this does end up with net equity of 85, it gives the impression of the equity, which is incorrect. Is there a different way of handling?" Do you see what they're doing? Jeff: This is what we call–anytime you have combined financials or tax returns, you're going to have a–you may have a payable from one to the other where you've lent money to the other company, but when you do the combined financial or tax return, this is what you call an eliminating entry. If you lent $8,500 to one, those two entries are going to offset each other and it's going to be zero on your tax return. Toby: He's looking at it and saying, "Hey, they took the eight that I put into the second and added it to the 8,500 that I put in the first," and it's only 8,500 and then 8 went to the second LLC. Jeff: Yeah, I think you just need to clarify that it was the same money that– Toby: We're doing it and we'll take a look at it. We'll grab that name and, when we can, I'll print this out. "Can SMLLC, single-member LLC, disregard an entity under an MMLLC, which is a multi-member LLC taxed as a partnership, be converted to a single, multi-member LLC taxed as if–" you guys are killing me, "And would the tax changes be implemented?" What you're really saying, Billy, is, "Can I spin off a single-member LLC, make it into a multi-member LLC and change it to an S Corp?" The answer is yes. We just have to make sure that we follow the S Corp rules, which means there's got to be natural persons owning it, resident aliens–if it's somebody from out of the country, that they reside in the United States in certain trusts and even certain single-member LLCs. All right, to the question about–this refers to qualified business income. Sorry for lack of a better–no, Janet, you've already got it. "Since rental real estate is included for the 20%, are you also required to be a rep for that to be true?" No. You automatically get it. "High-tech network engineer, does it qualify as special services?" If you're not a network engineer and it's just you, then I would say probably yes. If you have a company and it's not so much you but your company has its own–like it's lots of people and it's just known, then the answer is no. Then, you're not. Jeff: Yeah, there were some specific carve-outs. I think the architects got a carve-out of this, but there's a few industries that have been specifically exempted from those specialized industries. Toby: I'm not sure but software engineer–I would say that if it's just you, chances are going to be under the special services. "When I file taxes, the taxes for the rental property show up on my tax showing a schedule form that is Schedule E. I almost $300,000 with my real estate and other income as a single woman." I think we already talked about this one. "Is there anything I can do to reduce my taxable income?" Yes, Janet, you can make contributions to qualified retirement plans. You can make contributions to charities, including your own. You can make contributions to C Corp if it has a business relationship. There are lots of things you can do or, if you have anybody that you need to pay salaries to like kids or somebody that's working with you, that would be something else you could do to lower the taxable income. "If you were writing out another slide, it's not showing up on my computer." Sorry, Sir. I think that's where all they go. "What about an IOL as a tax-deferred compensation for my property management income?" That would not work. An IOL is tax-neutral although you can do tax-deferred compensation where it's taxable to the entity and it's not taxable to you under certain circumstances. If I do tax-deferred income like, "Hey, I'm taking deferred compensation," I need to be at a losing. Usually, non-compete is going to be the thing that makes it work. We use these especially in the non-profit world where somebody says, "I don't want to be paid; I want to work, but I do want to get paid eventually for all the work I'm doing now. Rather than pay me this year, pay me when I'm 65 and maybe I wipe it out or not, but as long as I have a non-compete with that–" it's saying, "Hey, basically, if you go work for somebody else in a competing industry, you lose all that deferred compensation." You should be good. "I purchased a new computer that cost less than $2,500. Is that a straight expense in the current tax year or some weird depreciation thing?" Dean, it's called a Section 179 deduction. You can buy up to $1 million, you're good. You can write it all off. Otherwise, that would be depreciated. They also have 100% bonus depreciation, so we're going to catch it no matter what. Bonus depreciation is, if it's less than a 15-year property, you can write it off this year. You're not required to. Somebody says, "Is 199A or that 20% a 20% tax deduction or a 20% reduction?" No, it's a 20% deduction against your qualified business income. The net effect could be much more than 20% depending on your tax bracket. If you're not in a high tax bracket, then the net effect won't be huge. If I'm in the highest tax bracket in a state that's taxing me where I'm at 50%, that 20% deduction could be worth a ton. It could be worth significant amounts especially if I'm in a company that's not a specialized service and I meet the requirements. I could have hundreds and thousands of dollars of qualified business income being exempted, and that could be worth hundreds and thousands of dollars to me from a tax standpoint. We already did this one. Somebody who had their spinning left. You can go in bite-sized pieces, guys. We're going to break these things down, and I understand that we're going through fast, but that's half the fun. We're not dwindling around here. "My self-directed IRA received a K1 for net rental loss for a passive investment of $50,000. Do I need to file a 990 T to show loss? Does the IRA custodian sign the return or can I sign?" Jeff: Here's what happens: If your IRA is a partner in a partnership, that partnership is required to issue a K1 to all of its partners. That doesn't mean you have to do anything with the K1 in your IRA. You're not going to recognize any taxable income until you actually start taking money out of the IRA, especially since this is a rental property we're talking about. Toby: Cool. Hey, this is a really good one. By the way, if you ever do a 990 T and it says self-directed IRA, your custodian does have to sign, and they like to charge you for that. "401K, 401K." "I have a C Corp with accumulated losses and would rather close it than repurpose it. Is there a way to direct the loss of my personal taxes? Is it possible?" The answer is yes. It's called a 1244 election. It should have been made when you issued your stock. If Anderson did your C Corp, we already did that because I do it with every single corporation. You can then write off as a single person up to $50,000 or up to $100,000 if married, filing jointly, and then it could be used to offset even your W2 income. Jeff: Going back to one of the earlier questions, this is one reason we want to start recognizing reimbursements and stuff as early as possible to establish those debts to you early on. Toby: Yeah, I had this happen and we actually had–the one time this was ever audited was because this accountant refused to give him a $67,000-deduction. It was one of our clients who was a trader who was ready to launch and go into his business and then his employer made him an offer he couldn't refuse and gave him a whole bunch of our money. He took a $67,000-loss. He had never made a dollar in the corporation. We went under audit. We won. Yay. It took two seconds because it was a single letter and we gave him the law, and it's a statute. The IRS is just a policing agency. If there's a statute that's clear, they don't sit there and fight with it. I think it was a $38,000-reimbursement–what do you call it–refund. Awesome first-timer. We love first-timers. Thank you for joining us. "I want to receive an invite, a reminder to a different email." We can give you that. You can always use this when you register for the Tax Tuesday. Just put in your other email. "Interested doing sandwich lease options. What is the best business structure and what document can you provide to protect myself from sellers suing me if a tenant or buyer stops paying rent or if a tenant or buyer trashes the home?" That's a tough one. You're literally leasing it and then re-leasing it with the right to buy. Let me think about this one. How am I going to do this? I'm going to be doing that through an entity. The way you protect yourself is to keep very little amounts of asset in that entity so that if you're sued, it's not you; it's the entity itself, and the entity doesn't have much to lose. That's a tough one. I tend to stay away from stuff like that. I want to buy the property and then you do a lease option in an LLC. Jeff: Make sure you have insurance. Toby: Yup, make sure you have insurance, too. That could happen so the tenant trashes the place and somebody else says, "Hey, wait a second." That's why there's always risk. What you do is you just keep it to a low. "Is it hard to set up classes in QuickBooks? Does Anderson do this?" It's not hard and, yes, we do it. "How long does it take to set up a class in QuickBooks?" Jeff: No, you'd have to ask bookkeepers. Toby: Jeff's such an accountant. Yes, it's actually very easy. Jeff: Actually, the bookkeepers are really good at it. They do it all the time. Toby: It's literally all you're doing, is setting up another class. It's almost like a revenue class so you might have revenue that comes in from plumbing and then selling products in your plumbing business and then, "Hey, I have one that's a consulting," and that might be another class. It literally takes two seconds. "What if the Wyoming LLC owns a C Corp which owns an LLC?" I don't know what that means, but what we mean is–I imagine for the 199A. We're just going to look at it is the C Corp owns an LLC that's not going to be qualified for the 20% deduction. The LLC that owns the C Corp, if it's doing other activities, might qualify for the deduction. Here's the problem: In the qualified business, the part I didn't tell you about is what is qualified business income. Dividends, interest, capital gains are not included in that definition so if you're issuing interest from a C Corp to the LLC that flows under your return, you're not going to be getting the 20%. "If you set up QuickBooks with a single entity and use class as a separate income, can you also print a balance sheet by class?" Jeff: Yes, you can do it if the balance sheet is also classified. Toby: Okay. See, we're good. We're getting there. We only have about 200 more questions to go. I'm just teasing you. We've gone through about three-quarters of them. "What is Jeff's last name?" Webb. "I have a rental company. This will be my first year doing taxes. What can I expect to pay on my capital gains? What are some determining factors?" Isaac, if you're a rental company and you're selling–like if you have capital gains, it's going to be depending on whether you sold it within a year or after a year. If it's less than a year, it's going to be ordinary income to you. If it's over a year, it's going to be taxed with either 0%, 15% or 20%. If you make over 250,000, you're going to get to add no another 3.8% and then whatever your state tax is. What are the determining factors? How much you make. If you're married, filing jointly less than 77,000, your capital gains rate is zero. All those things come into it. You can always write us at webinar@andersonadvisors if you want to ask specific questions. "I'm in the process of setting up QuickBooks account for my C Corp. I have a construction business and a hair salon that are DPA-ed as C Corp. I am flipping single-family residents in Wyoming LLC? I have sub-expense and sub-income accounts for those." This is getting long. This one, we may want to answer next week because this is kind of cool. It's talking about sub-accounts. I'm just going to table that one unless you want to jump on it. Jeff: No, I think there were a couple of issues in there. Toby: Yup, "But you don't pay tax until the withdrawal, correct? That was just with regards to the IRA." Steve, you do need an account and, yes, you don't pay the tax until you withdraw, add up in IRA. If you have unrelated business income tax or debt finance income out of an IRA, you'd pay it in the year that it was generated. "Can I set up an entity to receive W2 income and max out top […]?" Yes, but you can't do it out of a self-directed IRA. The reason being is that you are a disqualified person so you cannot do that unless you do something called a ROBS transaction, and that's going to be a major topic for another day. That's if your IRA invests in a C Corp that you set up and there are ways to do it and then you could actually pay yourself, so there. "I recently rolled over a 401K to equity trust IRA account, lending funds to other investors charging interest. Is interest income taxable to the IRA?" No, you can do that all day long, and equity trust is having to sign all your docs. My recommendation would be to set up your own 401K so you can sign the loan documents. Somebody says, "How many times a year can you roll over from 401K to IRA or reverse rollover?" It depends on whether you're doing a direct rollover. Jeff: You can do a trustee to trustee every day if you want, meaning you're going from TDM trade to Bank of America. You can do those as long as it's directly being transferred. You can pull the money out once to yourself once every 12 months, and it's a rolling 12-month period. If I pulled it out today, then I wouldn't be able to do it again until next October. Toby: Somebody asks, "Can I roll individual stock holding into Roth trading account if the current value is under the 550 limit, and how?" The answer would be, really, no; you're going to have to liquidate the holdings, open up a new account in the Roth IRA and then contribute the 5,500. It's a pain in the butt, I know, but I don't make the rules. It's this whole Bank Secrecy Act and all this stuff since they flew planes into trade centers. "Is the old rule dead on personal residences two out of five years?" No, that's still the rule, and we still use it like crazy. That's exception 121. Jeff: Yeah, they were talking about making it five out of eight years, and that got thrown out so it's still the old two-out-of-five rule. Toby: Yup. "Do my startup costs carry over two years if my net was negative?" It's actually 20-something years. Jeff: 15 years. Toby: 15 years now? Nate, you can carry forward your startup costs. Is it 15? Jeff::Yeah. Toby:  "Hey, wait a second. I have an S Corp. They keep charging me the 800 fee ever

#176: Stock investors are not getting ahead, but they think that they are. 10% return, minus 5% inflation, minus 2% fees, minus taxes, minus volatility, minus more. Most methods of valuing an income property are lousy. I tell you the good and the bad methods: price per square foot, price per unit, RV ratio, Gross Rent Multiplier, Cap Rate, Cash-On-Cash Return. I tell you how to avoid overpaying for property by making your offer contingent on seeing the seller’s “Schedule E”. The bustling Charlotte, North Carolina real estate market is discussed. It is growing at an enormously fast rate. Learn about using IRAs and 401(k)s for buying real estate, and leverage vs. paying all-cash for property. Want more wealth? 1)    Grab my free E-book and Newsletter at: GetRichEducation.com/Book 2)    Actionable turnkey real estate investing opportunity: GREturnkey.com 3)    Read my new, best-selling paperback: getbook.at/7moneymyths Listen to this week’s show and learn: 01:06  Why stock investors aren’t getting ahead. 04:17  Real estate performs. 06:27  Mortgage interest rates are up, Fed Chair change. 07:26  How to avoid overpaying for property. 09:50  Income, expense, and financing gears. 10:03  Price per square foot, price per unit, RV ratio, Gross Rent Multiplier. 11:49  Cap Rate vs. Cash-On-Cash Return. 17:35  Avoid overpaying with Schedule E. 22:45  Charlotte, North Carolina’s rapid growth. 25:12  More appreciation, less cash flow. 29:11  Typical property is an SFHs, $100K-$120K rents $1,000+. 31:02  Using IRAs and 401(k)s to buy real estate. 35:08  Leverage vs. paying all-cash. Resources Mentioned: GetRichEducation.com/Charlotte RidgeLendingGroup.com ValhallaWealth.com GREturnkey.com GetRichEducation.com  

Today's Flash Back Friday comes from Episode 563, from September 2015. If you are using your buy and hold properties as short term rentals, through a company like AirBnB,  you may be required to pay an additional 15.3% self employment tax. Although it may seem like a gray area to you, the IRS considers it an active business and will take note of which schedule you are filing. Short term rentals require more of your labor and your time which rarely gets accounted for when calculating costs. Considering all the aspects of short term rentals versus long term buy and hold properties will shield you from future surprises. Key Takeaways Jason's Editorial: [2:04] The huge flaw in Airbnb [3:10] The passing of Dr. Wayne Dyer [4:14] The female perspective [5:40] Positive Feedback from the 1st Jason Hartman University [7:39] Save the Date for the next Meet the Masters in early January 2016 [9:30] The Venture Alliance Rhode Island trip details Brandon Hall Guest Interview: [15:02] Airbnb investors also have a 15.3% tax on active income [16:13] Monetizing the value of your time [16:44] Automated business systems allow me manage my real estate in only 30 min per month [19:01] It's more time and labor intensive than a buy and hold property [21:50] A complicated scenario in setting up short term rentals [24:49] Short term rentals may earn more but the time is not factored in [25:45] Schedule E or Schedule C? [27:47] The IRS may be bringing on the audits [29:33] A 5 year depreciation schedule [31:05] The diminimous safe harbor [33:23] 500 material participation is solely for rental properties [36:06] An example of a three unit qualifier for material participation [37:53] Long distance self management is possible and maybe easier [39:35] Segmented depreciation, cost segregation using a sears catalog [42:41] Feasibility studies are expensive [44:43] Everybody needs a home office Mentions: YourErroneousZones JasonHartman reviews@jasonhartman.com EO HallCPALLC

The month of October brings the 2017 tax season to a close. Jason brings Fernando and Zack on the show to showcase the organizational tools and portfolio management options available through the newly upgraded Property Tracker 2.0. The Property Tracker software makes creating Schedule E's, depreciation schedules and other tax forms easy as well as a robust calendar which keeps track of all of your income properties important dates. Key Takeaways: [1:14] Fundamentals for organizing and tracking investment properties. [8:30] Property Tracker produces tax schedules including Schedule E and an up-to-date Schedule of Depreciation. [12:28] Property Tracker 2.0 has updated proformas with RV ratio evaluations. [14:54] Clarifying the statement “Every day you have a property you own and don't sell, you are buying it back from yourself.” [19:35] Organizational tips for using Property Tracker. [23:58] Scanning with Optical Character Recognition (OCR) makes you more efficient. [31:08] Details about the new Amazon Echo contest, the Meet the Master's event and the upcoming Venture Alliance Mastermind. [34:50] Free one-hour Property Tracker onboarding session with Zack for Jason Hartman clients. Website: www.PropertyTracker.com

The month of October brings the 2017 tax season to a close. Jason brings Fernando and Zack on the show to showcase the organizational tools and portfolio management options available through the newly upgraded Property Tracker 2.0. The Property Tracker software makes creating Schedule E's, depreciation schedules and other tax forms easy as well as a robust calendar which keeps track of all of your income properties important dates. Key Takeaways: [1:14] Fundamentals for organizing and tracking investment properties. [8:30] Property Tracker produces tax schedules including Schedule E and an up-to-date Schedule of Depreciation. [12:28] Property Tracker 2.0 has updated proformas with RV ratio evaluations. [14:54] Clarifying the statement “Every day you have a property you own and don't sell, you are buying it back from yourself.” [19:35] Organizational tips for using Property Tracker. [23:58] Scanning with Optical Character Recognition (OCR) makes you more efficient. [31:08] Details about the new Amazon Echo contest, the Meet the Master's event and the upcoming Venture Alliance Mastermind. [34:50] Free one-hour Property Tracker onboarding session with Zack for Jason Hartman clients. Website: www.PropertyTracker.com

The month of October brings the 2017 tax season to a close. Jason brings Fernando and Zack on the show to showcase the organizational tools and portfolio management options available through the newly upgraded Property Tracker 2.0. The Property Tracker software makes creating Schedule E's, depreciation schedules and other tax forms easy as well as a robust calendar which keeps track of all of your income properties important dates.   You can now get tickets to the Meet the Master's of Income Property event and the Venture Alliance Mastermind is coming up in October. Key Takeaways: [02:25] Was the media bummed out that Hurricane Irma didn't cause more damage? [09:04] The Waffle House Index and Cryptocurrencies. [16:44] Fundamentals for organizing and tracking investment properties. [24:00] Property Tracker produces tax schedules including Schedule E and an up-to-date Schedule of Depreciation. [27:58] Property Tracker 2.0 has updated proformas with RV ratio evaluations. [30:24] Clarifying the statement "Every day you have a property you own and don't sell, you are buying it back from yourself." [35:05] Organizational tips for using Property Tracker. [39:28] Scanning with Optical Character Recognition (OCR) makes you more efficient. [46:38] Details about the new Amazon Echo contest, the Meet the Master's event and the upcoming Venture Alliance Mastermind.   [50:20] Free one-hour Property Tracker onboarding session with Zack for Jason Hartman clients. Mentioned in This Episode: Jason Hartman Property Tracker Software Administrator@realestatetools.com Enter the Amazon Echo Contest Meet the Master's of Income Property Tickets Venture Alliance Mastermind Donate to Hurricane Relief Here

https://turbotax.intuit.com Tax Tips When Renting Out Your Home on Airbnb, FlipKey and Others - If you’re renting out your home through services like Airbnb or FlipKey, here are some tax tips you should consider. Learn more about when you can skip declaring rental income on your taxes, claim rental expenses - business expenses - as deductions, how and when to report rental income tax information on Schedule C and Schedule E, and what occupancy taxes are with this helpful tax tip video from TurboTax. For more tips and information on your taxes when renting out your home, visit TurboTax.com. For more tips and information that can help you get your taxes done smarter, visit TurboTax.com.

If you are using your buy and hold properties as short term rentals, through a company like Airbnb, you may be required to pay an additional 15.3% self-employment tax. Although it may seem like a gray area to you, the IRS considers it an active business and will take note of which schedule you are filing. Short term rentals require more of your labor and your time, which rarely gets accounted for when calculating costs. Considering all the aspects of short term rentals versus long-term buy and hold properties will shield you from future surprises.   Key Takeaways: [2:34] Airbnb investors are running an active business, so the IRS imposes a 15.3% tax on the income. [6:38] Maintenance on Airbnb properties are more time and labor intensive than a buy and hold property. [13:18] Should Airbnb owners file a Schedule E or Schedule C at tax time? [17:08] Are you able to depreciate the furnishings in an Airbnb rental and what is the De Minimis Safe Harbor? [23:31] How many units do you need to qualify for the 500 material participation hours? [27:11] Using segmented depreciation can help to depreciate your assets at a quicker rate. [30:16] Cost segregation feasibility studies can run anywhere from $5,000 to $20,000. [32:21] A home office is beneficial as it opens the door to many tax deductions.   Mentioned in This Episode: Jason Hartman reviews@jasonhartman.com Hall CPA LLC

Jason Hartman invites prior guest Joel Grasmeyer  back on the show to talk about updates to one of the greatest software tools for property investors, Property Tracker.  Joel started PropertyTracker.com in 2004 after creating and using this software himself to evaluate and keep track of his own investment properties. Property Tracker is a two-part tool, like having a property analysis tool in your pocket. The Property Evaluator tool allows you to analyze and compare properties in which you're interested, providing a one-year projection on cash flow, cap rate, and return on investment, and a multi-year projection on true rate of return. The Property Tracker tool help keep track of the performance of properties you already own, based on actual income and expenses rather than projections. It also provides an “instrument panel” to let you see when it's time to buy, hold, sell, or even do a 1031 Exchange. At the end of the year, this tool allows you to print up a Schedule E. Recent enhancements allow the investor to email PDFs to lenders or investment partners directly from your iPhone. Real estate agents can add their own branding to the cover page, heading and footer of the report and email it to potential investors. With the introduction of the iPad, Property Evaluator became even easier to use, with the ability to input more information with full-screen PDF capabilities to email reports directly from the iPad, as well as print the reports from the iPhone and iPad. Available products are the web-based Property Evaluator and Property Tracker, and the standalone apps for iPad, iPhone, and Mac, which is just a one-time fee. There are three versions for the iPhone and iPad:  Standard, Premium and Pro editions. Jason highly recommends the software for its multiple uses and benefits at such an affordable price. Jason and Joel also discuss other investment related issues, such as the Affordability Index, cap rates, interest rates, and the different approaches to valuation of properties.

If you are using your buy and hold properties as short term rentals, through a company like Airbnb,  you may be required to pay an additional 15.3% self employment tax. Although it may seem like a gray area to you, the IRS considers it an active business and will take note of which schedule you are filing. Short term rentals require more of your labor and your time which rarely gets accounted for when calculating costs. Considering all the aspects of short term rentals versus long term buy and hold properties will shield you from future surprises.   Key Takeaways Jason's Editorial: [2:04] The huge flaw in Airbnb [3:10] The passing of Dr. Wayne Dyer [4:14] The female perspective [5:40] Positive Feedback from the 1st Jason Hartman University [7:39] Save the Date for the next Meet the Masters in early January 2016 [9:30] The Venture Alliance Rhode Island trip details   Brandon Hall Guest Interview: [15:02] Airbnb investors also have a 15.3% tax on active income [16:13] Monetizing the value of your time [16:44] Automated business systems allow me manage my real estate in only 30 min per month [19:01] It's more time and labor intensive than a buy and hold property [21:50] A complicated scenario in setting up short term rentals [24:49] Short term rentals may earn more but the time is not factored in [25:45] Schedule E or Schedule C? [27:47] The IRS may be bringing on the audits [29:33] A 5 year depreciation schedule [31:05] The diminimous safe harbor [33:23] 500 material participation is solely for rental properties [36:06] An example of a three unit qualifier for material participation [37:53] Long distance self management is possible and maybe easier [39:35] Segmented depreciation, cost segregation using a sears catalog [42:41] Feasibility studies are expensive [44:43] Everybody needs a home office   Mentions: YourErroneousZones JasonHartman reviews@jasonhartman.com EO HallCPALLC