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Real Estate Investors, Stock Traders, and Business Owners guide to preserve their wealth, protect their assets, and prosper in the future.
Episodes
Wednesday Jun 12, 2019
Wednesday Jun 12, 2019
How can you insure your property using a limited liability company (LLC)? What’s the best type of insurance to obtain? Today, Clint Coons of Anderson Business Advisors talks to Drew Maconachy of Maconachy Stradley Insurance. Drew discusses the importance of insurance and provides information on planning for multifamily, commercial, and other policies.
Highlights/Topics:
- Insurance Policies: Understand intrinsic value of what and why you’re buying
- Teach and Preach: Drew generates organic growth by spreading his gospel on insurance
- Be proactive and make it a priority to get an insurance policy; don’t wait until it’s too late to solve a problem
- How to avoid biggest mistakes made with insurance policies for properties:
- Find in-the-know industry experts who understand your needs; don’t go to a family member or representative who sells auto insurance
- Only buy what you need; not sripped-down policies that don’t offer adequate protection and coverage
- Make sure insurance policy handles most common claims, including ordinance and law, business interruption, and water backup coverage
- Consider purchasing the following coverage through insurance policies:
- Commercial package that includes:
- Property coverage to insure buildings, their contents, and loss of rent.
- General liability coverage if someone slips, trips, or falls on your property
- Additional coverage and insurance policies:
- Umbrella policy for additional liability coverage
- Pollution coverage for older buildings or that have increased exposure to moisture because mold is usually excluded in most policies
- Directors and Officers (D&O) coverage if accepting money from outside/third-party investors that could file a lawsuit against you
- Commercial package that includes:
- Ask the right people, the right questions:
- Do you cover loss of rents? Is there water backup coverage on the liability side? Is there assault-and-battery coverage included? What about dog bite coverage?
Resources
Drew Maconachy’s Phone Number: 330-966-5170
Essential Elements of a Commercial Insurance Policy - Drew Maconachy
How to Win Insurance Inspection - Drew Maconachy
Saturday Jun 08, 2019
Saturday Jun 08, 2019
What do you want to be when you grow up? Do you dream about making millions of dollars and driving luxury vehicles? That’s a great goal; unless you “major in” student loan debt. Today, Toby Mathis of Anderson Business Advisors talks to Clay and Evan Manship. They’re the owners and founders of Mainstay Property Group, which exclusively sells Indianapolis real estate and offers consulting, coaching, and advising through the process. They’re also familiar with figuring out life and a way to deal with their six-figure student loan debt.
Highlights/Topics:
- Mainstay’s mantra is to provide value via equity through wholesale transactions: Clay and Evan have completed about 1,200 property transactions
- Rich Dad Poor Dad transformed how they looked at life; instead of working 100 hours a week as investment bankers, they could own buy and sell houses
- Bought first house in 2013 for $2,400, put $1,000 down to make monthly mortgage payment $94, leased it for $650 a month, and selling it now for $120,000
- Graduating from negative net worth, going door-to-door to raise private capital, living in their parents’ home to owning several homes and a successful real estate business
- 270 rejections for 23 year olds who didn’t know what they were doing; then, along comes Jeb (#271) on BiggerPockets.com with $30 grand
- Lesson Learned: Build a portfolio and niche by identifying a service to procure investment opportunities to help build other people’s portfolios
- Cafeteria Service: Evan and Clay’s “secret sauce” is procuring properties
- Wholesaling isn’t about waiting for deals, but going out and finding them; keep business model moving by starting the process
- First Faceplant on First House Flipped: Bought house for $125 and put $125 into it, but made newbie mistake of over-leveraging money and lost $36,000
- Tuition and Textbook Mismanagement: Paid a lot of money for a college degree, but paid a lot less for one year to flip property degree
- Evan and Clay’s communication process with people who buy properties from them: What are you looking for? How can we customize a solution that achieves those goals?
- Advice for getting into real estate: Know the game you’re playing before you can get good at it, get to First Base, don’t be afraid to swing the bat, and build the best team
- Why do you need a degree? What’s the return? Millennials are renting, not buying houses because of so much student debt
- Passionate about non-profit organization to implement financial education into high schools and lead students down the path of financial independence or wealth generation
Resources
Rich Dad Poor Dad by Guy Kiyosaki
Wednesday Jun 05, 2019
Wednesday Jun 05, 2019
Toby Mathis and Jeff Webb of Anderson Advisors answer your tax questions and provide the psychology behind it all. They help you understand why the laws are written the way they are, so you can be a better steward of your money. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- When can I pay family members employed by my corporation - annually or regular intervals? Depends on federal and state laws, but no IRS rule regarding pay schedule
- Should an LLC or individual lease car used primarily for business; what are the tax consequences? Brings liability to business; have appropriate and adequate insurance
- What are bookkeeping and tax implications of LLC being taxed as C Corp? Bookkeeping is the same for all business structures; LLC is state designation, but doesn’t have stock
- Should I use Quicken or QuickBooks for bookkeeping? Software doesn’t always need to be purchase; go with QuickBooks or use spreadsheets
- Can I deduct my real estate training seminar costs? Depends on where you want to deduct it (if on Schedule C, then no) and if you’re already in the real estate business
- Are you a real estate professional, if you have a property management company? Possibly, if you have 750 hours of real estate professional time and material participation
- What’s the best way to utilize a 1031 exchange? Sell and buy real estate
- Can income from self-employment be offset by Tesla tax benefit/credit? Yes
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
Self-Employment Tax (Social Security and Medicare Taxes)
What business type is right for you?
Delaware Statutory Trust (DST)
Real Estate Investment Trust (REIT)
Using Cost Segregation in Residential Real Estate
Tesla Electric Vehicle and Solar Incentives
Anderson Advisors Tax and Asset Protection Event
Saturday Jun 01, 2019
Saturday Jun 01, 2019
A 1031 exchange lets you defer gain on the sale of real estate. However, many variables are involved that can go wrong and leave you without a property to close into. Then, you’ll have taxable gain. Today, Clint Coons of Anderson Business Advisors talks to Scott Hendrix, wealth manager at Upstream Investment Partners. Scott shares the perfect backup solution to save 1031 exchanges.
Highlights/Topics:
- Fastest growing area of Scott’s business: Real estate investors who want to sell property that’s gone up in value above what they originally purchased it at
- Delaware Statutory Trust (DST): Legitimate replacement property recognized by the IRS, but relatively unknown option for real estate investors doing a 1031 exchange
- Tax Cuts and Jobs Act (TCJA): Rules out all appreciated assets, except real estate, as eligible transfer under Section 1031
- 1031s don’t work without a qualified intermediary (QI) that holds and sends funds for specific time periods
- Similarities and differences between DST and Real Estate Investment Trust (REIT):
- Both are passive real estate ownership
- REITs are not eligible as replacement properties
- REITs are not legally structured as actual property under management
- DST owns the real estate that qualifies as legitimate reinvestment of tax-deferred gains under 1031 exchange; REIT may or may not own it, so it doesn't qualify
- Find and Identify DSTs: Work with advisors/brokers to look at available open trusts, find trusts that meet your needs and goals, and use them as a backup:
- Investors have only 45 days from closing date on property being relinquished to identify where they intend to reinvest their proceeds
- If intended deal doesn’t work after 45 days, IRS makes you liable for capital gains tax and depreciation recapture tax (if applicable)
- DSTs offer classes of real estate assets to give investors an opportunity to passively own a class of real estate without any expertise, but interest in additional diversification
- Return Rate: 90% of net operating cash flow comes back to investor on a monthly basis at an annual rate; rates vary depending on prevailing conditions
- 1031s can be repeated; sponsor provides notification about selling property and can tax defer it again under Section 1031 or take their gains and incur tax liability
- Sponsors usually liquidate their entire portfolio at one time; but they could choose to sell only a portion, depending on current condition of real estate market
- Biggest Risk with DST: Once you're an investor in a piece of property, you can’t get out of it until a buyer comes along - could take years
- Three reasons real estate investors use DST as a backup plan:
- Can be named backup property during 45-day identification period
- Taxable boot (a.k.a. leftover cash)
- Still want to own real estate, but don't want to do the work; done being a landlord and dealing with tenants, plumbers, contractors, and building inspectors
Resources
Scott Hendrix’s Phone Number: 512-861-0523
Delaware Statutory Trust (DST)
Real Estate Investment Trust (REIT)
Clint Coons’ Webinar on Qualified Opportunity Zones
Wednesday May 29, 2019
Wednesday May 29, 2019
If you make a mistake and don’t have the proper title insurance policy in place to protect you and your assets when transferring real estate, you can blow it. Title insurance is an important part of real estate investing. Today, Clint Coons of Anderson Business Advisors talks to Latra Szal, attorney and chief operating officer (COO) of Texas National Title. She describes all the critical aspects of title insurance.
Highlights/Topics:
- A day in the life of Latra: Work with clients, real estate agents, and investors to help them navigate transactions and get them through closing
- Piece of the Pie: Title insurance is tiny piece of real estate transaction that can go wrong when processed improperly
- Common mistakes made:
- People take title in their name because it’s easier and faster, but haven’t created their LLC; altering warranty deeds may change/end coverage
- People want to get into individual financing arena by loaning their money to other investors to purchase and renovate a property to resell it without title insurance
- Additional Insured Endorsement: Moderate fee for investors to transfer or change name on insurance policy from individual to their LLC to extend coverage
- Title Commitment: Identifies owner of property and prior existing liens
- Differences between American Land Title Association (ALTA) states vs. states with other insurance regulations could change or end coverage
- 50/50 Split: Lenders either don’t care about transferring title from individuals to their entity, or have an issue with it; depends on how the loan is structured
- Avoid do-it-yourself (DIY) approach to deed preparation; an attorney or someone specialized should handle it to prevent mistakes
- Two ways to title Series LLC: Deed it directly into name of series, or deed it to parent LLC with notation at bottom of deed
- When loaning money on real estate, get the right title insurance policy to protect your interest and have quality escrow company conduct data research
- Real estate investors should ask the right questions and use keywords to make sure title company understands particular model and transaction
Resources
American Land Title Association (ALTA)
Saturday May 25, 2019
Saturday May 25, 2019
People are often drawn to real estate after watching TV shows that focus on flipping houses to make money. Today, Toby Mathis of Anderson Business Advisors talks to Aaron Adams, CEO of Alpine Property Management and Alpine Capital Solutions. Also, Aaron’s working on writing another book, Tips Tricks Foreclosures & Flips: Secrets of a Millionaire Landlord.
Highlights/Topics:
- From Carleton Sheets to Robert Kiyosaki: Captivated by concept of real estate education
- Pieces of Property: Aaron has 3,000 single family homes in five markets, a handful of apartment buildings, six mobile home parks, and 20 Airbnbs
- Process of purchasing properties, inheriting tenants, and rehabbing/renovating
- Learn by doing and have a general understanding about construction to be in real estate;
- Rule of Thumb: For most construction jobs, a contractor’s costs for materials and labor should equal each other
- Active vs. Passive: Make no mistake, flipping is active income, but passive income can change your life
- Turnkey Investing Model: Buy properties that generate at least 7% net on rent
- Nation of Renters: 70% of Americans can’t afford to buy a home where they live
- Tool turned Crutch: Student loan debt has gone from millions to trillions; 300% increase
- Killing millennials’ ability to buy property; rents are going up, homeownership is falling
- Secret Sauce Ingredients: Follow light rail plans, focus on first-generation Hispanic neighborhoods, and find public/private partnerships
- Biggest mistake Aaron made was lack of financial control; he waited too long to hire an accountant/bookkeeper and trusted people who ended up stealing money from him
- Aaron’s Biggest Gamechanger: Don’t limit opportunities; disconnect your ego from staking a flag and saying, “This is what I do.”
- Investors typically buy houses via annuities, savings accounts, and retirement money
- Key to Real Estate: Follow the feds, builders, and trends; achieve education with action
Resources
Alpine Capital Solutions on Facebook
Carleton Sheets’ No Down Payment Infomercial
Rich Dad Poor Dad by Robert Kiyosaki
Average Americans can't afford a home in 70 percent of the country
Federal Housing Administration (FHA)
Wednesday May 22, 2019
Wednesday May 22, 2019
Like all things in this world, it helps to know a few of the rules. Toby Mathis and Jeff Webb of Anderson Advisors are here to help. Do you have a tax question? Submit it to taxtuesday@andersonadvisors.
Highlights/Topics:
- What rate am I taxed at for my LLC? It depends; you choose how it will be taxed on SS-4
- Can I buy personal items or pay off personal bills with my business credit card? Yes, but the entity type dictates how it’s taxed
- What investment opportunities can be considered that have no tax liability, minimum risk, and at least a 10% annual return? Doesn’t exist; try investment real estate, IUL insurance
- Can I deduct real estate education expenses, even though I don’t have any profits? Yes, it’s not necessarily about profits, but how long you’ve been in the business
- Can my LLC create its own self-directed IRA? No, vice versa; self-directed IRA would create LLC, or it’s a prohibited transaction
- What constitutes being a real estate professional? 750 hours of professional time in real estate and material participation in real estate activities
- Do you have to be a real estate professional to do a cost segregation at tax time? No, but if you have losses in excess of your real estate income, then be a real estate professional to offset your other income and pay less in taxes
- If I were to have an online health coaching business where people can complete purchase transactions through an automated Website, how will the income produced be taxed? It’s not always ordinary income; depends on what you’re selling
- How old does a child have to be before putting the business in their name? 18 years old
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
Index Universal Life (IUL) Insurance
Uniform Gift to Minors Act (UGMA)
Form 5695 for Solar Tax Credit
Form 4562 - Depreciation and Amortization
Saturday May 18, 2019
Saturday May 18, 2019
Cryptocurrency? Sounds almost top secret or like something you've heard about on the dark web. Actually, cryptocurrency is a fascinating form of digital currency that seems to be sweeping the nation. Today, Clint Coons of Anderson Business Advisors talks to Steve Streetman, an avid cryptocurrency investor and real estate speaker, teacher, coach, and agent. Also, Steve is the president of Streetsmart Investments LLC, where he leads acquisition, property management, and business development. Steve has worked in cryptography and high-end computer modeling for more than 30 years. He has successfully acquired multiple commercial properties and is currently active in self-storage, student housing, and assisted living projects. Despite its negative stigma, Steve believes that cryptocurrency is here to stay - at least for a few more years. He shares how real estate and cryptocurrency can work together to make a positive impact.
Highlights/Topics:
- What is cryptocurrency? Online digital token; every transaction goes on a Blockchain (series of blocks of data chained together to view future and past transactions)
- Actual vs. Cryptocurrency: Buying power of dollar gets less every year, but cryptocurrency isn’t intentionally devalued
- Types of cryptocurrency, and where they get their value:
- Currency Token:
- Bitcoin: Gets value from supply and demand
- Trade Options (Troptions): Coins designed to be barter currency
- Security Token: Representation of value and ownership via:
- Initial Coin Offering (ICO), or
- Initial Public Offering (IPO)
- Currency Token:
- Ways to invest in cryptocurrency:
- Mining: Requires advanced computers to perform “hash” function faster; winner-takes-all approach to get your block done first to get cryptocurrency
- Buy land/property; cryptocurrency appreciation is taxable
- Get loan secured by your cryptocurrency to buy real estate
- Use cryptocurrency as collateral to avoid tax event; escrow companies hold it
- Companies may accept cryptocurrencies to make rental properties appear cool, updated, and modern to appeal to millennials
- Collect Rent: Give your digital wallet address to tenant; they send you the cryptocurrency
- Exchange Currency: Just like you trade dollars for euros, trade crypto for crypto or Fiat
- Real estate is low-hanging fruit for cryptocurrency to make substantial improvements
Contact Steve for more information, as well as to enter to win a free copy of his soon-to-be available book, Cryptocurrency and Real Estate.
Resources
RealInvestors Real Estate Services
Laws that Govern the Securities Industry
Wednesday May 15, 2019
Wednesday May 15, 2019
Mike Finocchiaro started his first company when he was 18 years old. But wishes he wouldn’t have waited so long. Today, Toby Mathis of Anderson Business Advisors talks to Mike about his journey into entrepreneurship. How much earlier could he have started? In the womb, rocking out with his mom? There’s no time like the present. If you have an idea that you believe in, start a company and grow it. You can make anything happen, if you’re willing to take the lumps that come with it. The only limitation is if you could take what it is to keep moving forward, you’re going to get to where you want to be.
Highlights/Topics:
- Come Together Entertainment: A “big” company doing Hollywood parties, started by an 18-year-old working out of a row home and saving cash
- Music is the heartbeat of Mike’s production company; leveraged his experience setting up shows, concerts, and festivals efficiently and quickly
- Rock and roll ride into corporate world to tap into latest and greatest
- Legalese and Liability: Mike Finn Productions rebranded Big Fin Productions; create entity that’s larger than yourself in every aspect
- Mike’s Mistakes: The name thing, don’t wait to get things started, think before reacting
- Santa’s Roadies Charity: Real meaning of Christmas is not about gifts, but giving
- Companies and their charities can change lives; non-profit process is pretty simple
- Going forward, follow your gut; know right from wrong, and make anything happen
Resources
From Traumatic Brain Injury To Nonprofit VICTORY!
Saturday May 11, 2019
Saturday May 11, 2019
Do you know about RAL? What it stands for? You probably should because you or a loved one may need it someday. Today, Clint Coons of Anderson Business Advisors welcomes Gene Guarino of Residential Assisted Living (RAL) Academy. It’s never too late to start an RAL business, which provides a tremendous service and peace of mind for residents and their families.
Highlights/Topics:
- When and how Gene got into real estate business; no money down, no credit, no clue
- What’s not RAL? Old-folks home, hospital, skilled nursing facility, nursing home, or independent living
- What is RAL? Single-family home converted to house seniors who receive 24x7 care; about 98% of them are moving into the last place they will ever live
- Conversion can include grab bars, smoke detectors, wider doors, and other changes
- Real estate investor can lease home to an operator as a long-term, low-impact tenant
- Location, Location, Location: Buy new vs. repurposing existing property into RAL
- Do good, and do well; protect assets and generate income
- Finding a home to buy for RAL is easy; find the tenant/operator first
- How much can you earn with RAL? Avg. $4,000 per month/person to live in home
- Potential Risks and Liabilities: Do you operate properly? Do it right, don’t get sued
- Professional Liability Insurance Policy for RAL costs less than $1 per day/resident
- Dispelling RAL Myths: Doesn’t need to be multifamily or commercial setting; residential and commercial financing is possible
- 3 things needed: Senior-safe house, standard operating procedures (SOPs), and qualified manager
- 3-legged Stool: Residents, caregivers/staff, and business
Resources
Residential Assisted Living Academy