Podcast: Inflation, Deflation, Recession, Depression or Dollar Crisis?

Increase Cash Flow Using Powerful Tax Breaks

There’s no such thing as a perfect investment … but real estate sure comes close!

But with any investment … you have to be smart. One important aspect of smart real estate is taking advantage of powerful tax breaks. 

We’re diving deep into one of the best tax benefits that real estate offers to investors like YOU … cost segregation. 

In this episode of The Real Estate Guys™ show, hear from:

• Your appreciated host, Robert Helms
• His depreciating co-host, Russell Gray
• Cost segregation authority, Erik Oliver

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Increase cash flow and reduce taxes

You can make a lot of money in real estate … but you can also pay a lot of taxes. 

Today, we’re going to show you how you can increase cash flow and reduce taxes with investment real estate. 

Beyond monthly cash flow from a real estate property, you can also make money as your property appreciates over time. 

That equity is locked into the property until you do something about it … like refinancing or selling. 

You also have the benefit of amortizing a loan. Every month when you make your mortgage payment, part of it goes to pay interest while the other part pays down the principal. Each time you pay down the principal, you own more of the property.

But the way to make money we are focusing on today is … tax benefits!

CPA Tom Wheelwright has taught us that if you want to know what a nation wants its citizens to do with their invested capital … just look at the tax code.

The tax code is a series of incentives … and these incentives will benefit your bottom line and enhance your cash flow.

The tax code can be especially helpful in those early years of purchasing a property when there is a lot of expense … above and beyond what you get over the life of the property. 

We should remind you that we’re not tax advisors or professionals. We give ideas and information. We’ll be sharing a lot today … but sit down with your tax professional before you make any major decisions. 

Make sure you have a tax professional that truly understands this niche … preferably one who owns investment property themselves or whose practice serves a large percentage of real estate investors.

And … don’t let the tax tail wag the investment dog. 

You don’t want to invest in something just because of a tax benefit. Instead, find a great market, a great property, a great niche. 

Then, you’re going to seek to exploit the tax law legally in your favor to the best degree you can. 

Today, we’re going to talk about a tax benefit that most multifamily and seasoned long-term developers and investors know about … but many smaller investors haven’t discovered yet. 

What is cost segregation?

Erik Oliver is an authority on cost segregation. 

Depreciation accounts for a loss of worth in your asset. Some things depreciate, while others don’t. 

Land doesn’t wear out … so it isn’t depreciable. But gutters do … so they are. 

“Cost segregation is simply accelerated depreciation,” Erik says. Many people get into real estate in order to take advantage of the depreciation loss. 

“We depreciate our real estate over either 27.5 years for residential properties or 39 years for commercial properties,” Erik says. 

Cost segregation means that you accelerate that timeline instead of taking 1/39 of your depreciation each year. 

It starts by identifying the different components of your building and segregating out those components into shorter asset lives. 

For example, the IRS allows you to depreciate carpet over five years. Instead of having to lump that together with your 39-year asset cost, cost segregation comes in and puts a value to that carpet, allowing you to depreciate it over a much shorter time frame. 

Accelerating the depreciation means more tax benefits, sooner. 

Let’s put some numbers to it for a simple example. 

If you own a $270K duplex, you’ll get to write off $10K every year against your income for the next 27.5 years without doing cost segregation. 

If you were to do cost segregation on that duplex, the analysts will identify roughly around 30 percent of that $270K and categorize it into 5, 7, or 15 year property. 

Depending on when you bought the property and what the laws were at that time, you may be able to write off all of that 5, 7, and 15 year property in year one. 

That’s over $70K that can be written off in the first year instead of $10K. 

What does an analysis look like?

Cost segregation is a process generally done in conjunction with an engineering firm and accounting firms. 

In order to complete a cost segregation study, you’ve got to have construction engineers that can go in and reverse engineer these buildings, so to speak. 

You also have to have someone with tax knowledge to take that information and make it work for you. 

Many CPA firms will partner with an engineering firm to offer this service to their clients. 

The IRS has actually put out an audit guide that most cost segregation companies follow. It’s 13 steps and requires a site visit. 

“Typically, we’ll send one of our construction engineers out to the property for them to do an inspection,” Erik says. “They’re looking for things like retaining walls outside, drainage in the parking lot, what type of flooring and window coverings are used, etc.”

The resulting reports are pretty detailed … usually about 40 to 60 pages long. They basically line item every component of the building. 

“We do go over everything from flooring to cabinets to countertops. We’ll even go out and count the trees and bushes,” Erik says. 

Cost segregation studies can cost anywhere from $7K to $15K. Erik says he recommends you get an estimated cost for a study for any property over $200K. 

“Sometimes, depending on a number of variables, it may not make sense to do a cost segregation, but you should always look into it in case it does make sense,” Erik says. 

Most cost segregation companies will do a free benefit analysis to make sure that you are going to get significant tax savings from completing the study. 

For more on cost segregation … listen to the full episode!

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More From The Real Estate Guys™…

• Sign up for The Real Estate Guys™ Free Newsletter
• Check out all the great free info in our Special Reports library.
• Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
• Stay connected with The Real Estate Guys™ on Facebook,  and our Feedback page.

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

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Podcast: Recent Updates Unlock Retirement Account Profit Potential

Podcast: Increase Cash Flow Using Powerful Tax Breaks

Encore – The Godfather’s Tips for Working with Investment Specialists

When you’re in need of valuable advice … you talk to a Dad. 

In this Father’s Day encore episode, we are revisiting the sage wisdom provided by the late, great Godfather of Real Estate, Robert’s father, friend, and partner … Bob Helms. 

Listen in as Bob shares his top tips for working with real estate brokers who understand what it means to work with investment property. 

To contribute to the Godfather Scholarship Fund in honor of Bob’s life and legacy, send an email request to [email protected] We’ll get you the details!

In this episode of The Real Estate Guys™ show, hear from:

• The father and host of The Real Estate Guys Radio Show, Robert Helms
• The father of outtakes and co-host, Russell Gray
• The father of Robert Helms and The Godfather of Real Estate, the late, great Bob Helms

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Advice from The Godfather of Real Estate himself

In honor of Father’s Day, we’d like to share some wisdom from the archives. 

We’re throwing back to late 2018 when The Godfather of Real Estate, Bob Helms, shared his best tips for working with real estate agents that understand investment property. 

That’s the thing about advice from world-class dads … it never gets old! 

Bob Helms spent many, many years actively brokering properties, teaching agents, and managing agents. He knew firsthand why it was so important to find and work with great real estate professionals. 

Our philosophy has always been that you should align yourself with professionals in every category … lawyers, CPAs, real estate brokers, and agents. 

Cooperation, not competition

Real estate is a relationship business … and when it comes to the brokerage community, it seems awfully competitive out there.

But here’s the first secret … The brokerage business and the real estate sales business are really ones of cooperation rather than competition.

More often than not, we need other agents in the community to be out there providing the inventory that we need.

You may have heard of the 80/20 rule. That rule says that 80% of the real estate in a market is sold by 20% of the agents.

“The most active agents in the network know each other,” Bob says. “They’re in deals together. They understand both sides have to win. It’s urgently important that you not practice your business by trying to take advantage of the person on the other side of the transaction.”

Many investors think they have to squeeze every last dime out of the deal. But the best transactions are whenthe deal closes and everyone looks around, high fives, and says, “That’s awesome!”

“When that happens, people also tend to say, ‘Let’s do it again!’” Bob says. “This is a relationship business. It’s a long-term business.”

The typical homeowner moves every four to seven years. When they move, they usually move out of the area completely.

That means, when you help somebody sell their house … they’re not coming back to buy a property from you … and that’s why it is so important to have a great relationship with other agents.

Working with your agent

Let’s talk a little bit about working with your agent.

Bob says that one of his biggest tips is to pay your agents … insist that your agents get paid top dollar.

Why wouldn’t you want to negotiate that fee?

“I’m going to suggest that you do negotiate the fee,” Bob says, “and the minute an agent agrees to take a discount, you know not to work with that agent.”

An agent that takes a discount on their fee will roll over when it comes to trying to save or make you money.

You want to work with someone that is firm in their value, understands what they’re worth, and will fight for it.

The reality is that the vast majority of real estate agents don’t really work with investors … not because they have anything against it but because they’ve simply never done it or been taught how to do it.

The difference between working with a typical agent and someone who specializes in working with investors is gigantic.

And, if you’re a real estate agent wondering how you can make more money … working with investors is the answer.

Investors are clients that buy properties again and again and again. The pricing of those properties can also be higher.

Investors tend to purchase larger properties as their portfolio grows … which means larger commissions for the agent.

Resources for getting ahead

Bob’s book, Be in the Top 1%: A Real Estate Agent’s Guide to Getting Rich in the Investment Property Niche, is a great resource for agents looking to get ahead and for investors hoping to understand more about where their agent is coming from.

Bob’s biggest tips for agents are to recognize there is no limit on how much commissioned income you can make … and that you don’t have to stop doing what is already working for you.

If you’re selling single family homes and doing well … you can keep doing it! Just add investment property as a new segment of your business.

As an investor, the person who benefits most from agents who take on investment property is YOU.

As you develop your relationships with agents across markets, they will bring you great deals.

For more tips from The Godfather of Real Estate … Bob Helms … listen to the full episode!

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More From The Real Estate Guys™…

• Sign up for The Real Estate Guys™ Free Newsletter
• Check out all the great free info in our Special Reports library.
• Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
• Stay connected with The Real Estate Guys™ on Facebook,  and our Feedback page.

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

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Encore Podcast: The Godfather’s Tips for Working with Investment Specialists

Passive Investing through Real Estate Investment Funds

There are plenty of people out there who want the benefits of real estate but don’t want to get their hands dirty. 

For those folks, private funds can be a great option. 

While it can be expensive to send your money on the long round trip to Wall Street … Main Street funds are a lot leaner and a lot more transparent. 

We’re visiting with a Main Street real estate fund manager and exploring the benefits of passive investing through real estate investment funds. 

In this episode of The Real Estate Guys™ show, hear from:

• Your hyperactive host, Robert Helms
• His passive-aggressive co-host, Russell Gray
• Real estate investment fund manager, Paul Moore

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A space for passive investment

You can be an active investor that does all the work … finds the market, puts together the team, rolls up your sleeves, even paints and carpets. 

Or, you might leave that work to somebody else and invest passively in real estate. 

Today we are talking about one of the many ways to passively invest … real estate investment funds. 

A real estate investment fund has a specific purpose. It invests in a particular type of real estate …  maybe in a geographic area, maybe a specific product type. 

The difference is that a fund isn’t typically going to invest in just a single property. And, it’s not a single investor … multiple investors come together to share both the risks and the rewards. 

In today’s environment with the volatility we’ve had in the stock market, many people are looking at other ways to invest. 

Real estate investment funds usually invest in commercial properties, because they’re playing at scale. So, you become a Main Street investor investing in Main Street. 

If you drive around your community and see a new apartment building or self-storage facility going up … it’s likely those aren’t owned by individual investors. But they aren’t usually owned by institutional investors either. 

There is a middle space. 

That space used to be a good old boys club … you could only find them if you knew the right people. 

But things have changed. Depending on the type of investor you are, a fund can make sense for you in so many ways. 

The basics of real estate investment funds 

Our guest today has a multitude of real estate investment funds and is here to show his approach to that business. 

Paul Moore is a fund investor and manager from Wellings Capital. Before COVID-19 hit, Paul and his team raised a record amount of money. By the end of March, they decided to hit pause on the fund. 

“We pressed pause to evaluate opportunities in this new light,” Paul says. “We’ve been evaluating syndicators for years and have a short list of people who meet our criteria to invest with.” 

The fact that the fund is made of passive investors means that Paul had this luxury … it’s not like they were stuck in escrow and wondering if things would work out. 

Let’s talk about what makes the type of funds Paul works with different than your average syndication deal. 

Often, syndication is a single property. You find investors that fit the criteria of your deal and your investment fits them. 

What Paul does in a fund is bigger than that. Funds have multiple properties … which offers great diversity. 

With funds, you’ll see diversification across five or six different metrics. 

You’re diversifying across operators … across geographies … across asset types. You’re also diversifying across strategies and time.

All of that diversity helps create opportunities that are recession proof and still offer promising returns. 

Diversification across time is a particularly intriguing part of a real estate investment fund. 

An investor that joined a fund … say in June 2020 … would get the benefit of assets that have already been purchased by that fund. 

Basically, you’re buying into a portfolio, and about three quarters of the assets have already essentially been de-risked. 

Because a fund is diverse, you’re going to have a home run or two, a grand slam … and maybe a few base hits. 

In Paul’s current funds, you’ll find multifamily properties, mobile home parks, and even self-storage. 

Nothing in investment is guaranteed … but funds are pretty well protected pieces of collateral. 

Understanding operators and managers

When you talk about funds, you have managers and operators. Some people act as both. They have a property management company and they manage portfolios. 

That’s not how Paul’s team operates. They search out properties and operators. 

“We spend a lot of time getting to know the operators,” Paul says. “We get to know everything about them, about their company, about the way they treat their employees. That due diligence really pays off for us in the long run.” 

Paul says that the team is always more important than the property. Once you have a great operator, they can lead you to potential properties. 

The right operator can stay with you and shepherd you through whatever comes in the market. 

Paul’s job as a fund manager is managing and interfacing with these operators on behalf of all the investors who take part in the fund. 

“We have such good operators that we never want to try and take control, but we do stay in close touch with them and get regular updates on what is happening in the market,” Paul says. 

For more information on passive investing through real estate funds and what you could expect from working with Paul and his team … listen to the full episode!

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More From The Real Estate Guys™…

• Sign up for The Real Estate Guys™ Free Newsletter
• Check out all the great free info in our Special Reports library.
• Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
• Stay connected with The Real Estate Guys™ on Facebook,  and our Feedback page.

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

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Podcast: Passive Investing through Real Estate Investment Funds

Pandemic, Civil Unrest, Job Losses and Other Good News for Investors

This year has seen its highs and lows … and the hits just keep on coming. 

Coronavirus, civil unrest, unemployment … an endless parade of bad news. If it’s all starting to wear you thin … listen in!

We’ve seen our fair share of calamity and catastrophe. While what is happening right now is unprecedented, many of the principles for thriving in tough times are timeless. 

We’re talking trials and tribulations … and why you can still have a reason to smile. 

In this episode of The Real Estate Guys™ show, hear from:

• Your optimistic host, Robert Helms
• His worn-out co-host, Russell Gray

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Finding good news to talk about

There is so much going on in the world! 

It’s easy to get caught up in the negativity … but these types of human emotions can often be detrimental to real estate investors. 

The big picture is that the need for real estate isn’t going to go away … we can’t imagine something that eliminates human beings from having to sleep under a roof. 

So, this week we thought we should talk about some good news. 

Tom Hopkins, a personal friend, and mentor said, “I never see failure as failure, but just the feedback I need to improve my performance to adjust my technique.” 

What a great attitude! 

The world is going to go on. People are going to be here 10 … 20 … 30 years from now and real estate is a viable asset class. 

The business model is sound … all the rest of it is just noise. 

You’ve got to calm your spirit a little bit and assess what’s going on. Then, it’s time to move forward with your wits about you.

Bad stuff happens … but in the grand scheme of things, you can find a silver lining and let these events mold you into a better person. 

Managing your psychology

How do you manage your psychology and live to become the best investor possible in light of what’s happening?

The key is to set your filter correctly. 

If you filter out ALL the bad news because you just can’t handle it, then you will be dragged down. You’ll miss the obvious because you filtered it out. 

The flip side of that is there are people that are permanently negative that can never take action because all they can see is the downside. 

If you want an excuse to quit, life is going to give you a million of them every day. 

But, the fact is that there are people out there in the exact same environment that are able to take effective action. 

That’s why the first step is to take your filter off. Look at it objectively. Clean it out. Then, start listening to people that you wouldn’t normally listen to, and read things that you wouldn’t normally read. 

You don’t need to accept things blindly … but you do need to hear them. 

Understanding different points of view is like being a general in an army. You have to get down in the weeds … but you also have to be able to step back and look at the big picture from a mile high. 

Real estate investors by their very nature tend to be in the weeds. We’re very transactionally detail-oriented, which means we can miss a lot of the big picture stuff. 

Remember to take a step back and try to see larger trends. 

Adapting to how things really are

There are people who believe that the housing market is tanked … but a recent article shows that home prices in April 2020 saw their biggest gain in two years. 

There are fewer homes on the market, and there’s still demand … coronavirus or not.

Even though the number of sales may be down, the price being paid for real estate is up. 

That’s why it is so important for real estate investors to learn to remain cool, calm, and collected. The saying goes, when emotions run high, intelligence runs low. 

Humans have found a way over the millennia to find a way to adjust to whatever the world gives them … disease, natural disaster, war, and oppression. 

The only thing you can be certain of is that people are going to find a way. 

One reality to face is that inflation is probably headed our way. When inflation happens, the rich get richer. 

If you don’t want to have your feet taken out from under you, you need to find a way to add value to the people who have resources. 

That’s what syndication is all about. 

When markets fall apart, they create a lot of opportunity for private equity and private capital. That opportunity keeps getting bigger … especially for syndicators. 

You may not have capital … but you probably have time that those with capital don’t have. It can be the perfect partnership. 

Let’s take a look at another example … with riots and unemployment, many businesses are rethinking their very existence. 

These things are causing businesses to evolve and find better ways to do business and new ways to create jobs. 

The opposite of any crisis is opportunity … and we could be seeing some of the best opportunities … especially in real estate … that we’ve ever seen in the coming months and years. 

You can’t control what happens in the world … but you CAN control how you adapt and respond. 

What are some practical things you can actually do to be ready for the opportunities that will come?

The biggest is to be financially ready to go. Shore up your financial house, and make sure you’re in a position to make the right investments. 

See if there are some places you can grab some equity … or find those ways you can be of value to people that have money. 

For more on the good news hidden in all the bad news out there … listen to our full episode!

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More From The Real Estate Guys™…

• Sign up for The Real Estate Guys™ Free Newsletter
• Check out all the great free info in our Special Reports library.
• Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
• Stay connected with The Real Estate Guys™ on Facebook,  and our Feedback page.

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

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What Unprecedented Stimulus Means for Real Estate

During the Great Financial Crisis of 2008, the Fed created over $85 billion PER MONTH of “new” dollars … and Uncle Sam spent over $800 billion to “save” the economy. 

And now they’re doing it again. 

To take on the COVID-19 crisis, the Fed has been creating over $80 billion PER DAY … and Uncle Sam is planning on spending nearly $4 TRILLION. 

Is this spending spree going to work? What will happen next … especially in real estate?

In this episode of The Real Estate Guys™ show, hear from:

• Your stimulating host, Robert Helms
• His stagnant co-host, Russell Gray
• Best-selling author and Wall Street insider, Nomi Prins
• Best-selling author, podcaster, money manager, and outspoken financial pundit, Peter Schiff

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Unprecedented times

The Fed is busy printing cash and sending it out into the economy. When you hear about trillions of dollars in stimulus, the question is … what does that mean for real estate?

Some of you may have started investing in real estate after 2008 … so there is a whole bunch of experience that you don’t have. 

So, if you haven’t gone back and studied what really happened in 2008 … it’s time to do so. 

Understanding what happened then will help you understand what is happening now. 

When the Fed sends more money out into the world … prices go up. And with the COVID-19 crisis, businesses are closed, and many paychecks have stopped … which means payments on a lot of debts are going unpaid. 

What’s most important for investors right now is to reach out and listen to people who have been in a similar situation before. 

That’s what we are doing today. 

What’s happening in the economy now

Our first guest today is Nomi Prins. She is an author, journalist, and public speaker who writes about Wall Street and the American economy. 

She understands that everything happening with the Fed and monetary policy works its way through the markets and affects real estate. 

“We’ve seen tremendous and far greater than during the financial crisis of 2008 electronic money printing, not just from the Federal Reserve but from all of the central banks in the world,” Nomi says. 

The central banks around the world are trying to keep their liquidity, their credit markets, and their economies … and the Fed is trying to create money, provide liquidity, and keep rates at zero. 

Nomi says that, in her opinion, this relates to real estate in two ways. 

One is the cost of money to the banks, to the lenders, and therefore to anyone investing or refinancing real estate. 

Second is the Fed purchasing real estate securities that the banks have created. The Fed has done this in the past and has continued to do the same during this period … both regular individual properties and commercial real estate. 

Unlike in 2008, a lot of the stimulus money has gone directly to people in terms of unemployment or through the PPP program to businesses. Will that make a difference?

Nomi says this method will make a difference for individuals and small businesses, but we’re still dealing with 30 million people who have filed jobless claims in the first six weeks of this crisis. 

So, there is money coming into people … but a lot of people aren’t getting enough or aren’t getting funds effectively. 

And, many people are choosing to save money rather than spend it and put it out into the economy. 

In fact, the savings rate right now is over 13% … it hasn’t been that high since 1981. 

Along with that, people are indicating that they’re less likely to make purchases … like buying homes. 

Investors look at the other side of that … does that mean there’s opportunity? Will there be some bargains to pick up? 

We asked Nomi what she expects the long-term interest rates might look like coming out of this. 

“There’s definitely an opportunity as people, unfortunately, have to make decisions in terms of whether they want to stay in their properties and, ultimately, if they want to downsize,” Nomi says. 

Doing so may mean opportunities for people who have more access to funds. Right now with rates where they are … well, they don’t get much lower. 

“I think this crisis has created a scenario where rates may have seen their bottom for investors, which means it’s a good time right now for people financing, whether it’s for residential, through commercial investment opportunities to lock in those low rates,” Nomi says. 

Looking to the future

Peter Schiff has been talking about the inevitable crash for some time. He warned of the 2008 housing crisis back in 2006. 

Now, he says we haven’t seen anything yet. The real crash is still to come. 

“I think that COVID-19 is the pin that is really putting a gaping hole in this bubble,” Peter says. 

Peter says that, in his opinion, the bubble really began to leak air in 2016 … but Donal Trump threw it for a loop by winning the presidency. 

“In that environment, the Fed was finally able to raise rates up to about two and a half … then all hell broke loose,” Peter says. 

In the fourth quarter of 2018, we had the biggest decline in the stock market since the Great Depression. 

That’s when the Fed did what Peter says he had been warning about. They aborted their attempt to normalize interest rates and started cutting them instead. 

The Fed also started expanding their balance sheet again … then COVID-19 came along and accelerated the process. 

“Everyone thinks that all we have to do is turn the economy back on and everything will go back to being great,” Peter says, “but we can’t re-inflate the bubble.”

Peter says that while COVID-19 is making it worse, the economic problems existed before COVID … and the government cure is far worse than the disease itself. 

It’s not just the shutdown of the economy … it’s that the government is financing the shut down with budget deficits and printing more money. 

Inflation is going to create destruction in the purchasing power of the dollar … which means the real crash is going to be far bigger now than it would have been had it come sooner. 

“People have been lulled into a false sense of security and complacency in thinking that we can print all this money and not have any negative consequences,” Peter says. 

All of this is going to show up in consumer prices in a big, big way. 

We have a reduction in supply and an increase in money … which means higher prices even as demand falls. Peter predicts this could cause the dollar to collapse. 

What does Peter recommend? Invest in gold, silver, mining stocks, oversee assets where income streams are coming in … currencies that are not the dollar that will gain the purchasing power that the dollar loses. 

“You need to be defensive now,” Peter says. 

For more expertise from Nomi and Peter, listen to the full episode!

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More From The Real Estate Guys™…

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