Ep. 89 | Why Real Estate Investing is So Popular - Teaching Tax Flow: The Podcast

Episode Transcript
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Intro (00:04):
Welcome to the Teaching Tax Flow podcast, where the goal
is to empower and educate you tolegally and ethically minimize
taxes paid over your lifetime.

John Tripolsky (00:17):
Hey, everyone, and welcome back to the podcast
episode 89 today. We are gonnadive head first into why real
estate investing is so popularin the tax world. But before you
do that and meet our amazingguest on this topic, let's take
a brief moment and thank ourepisode sponsor.

Ad Read (00:36):
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Hey, everybody, and welcome back to the Teaching
Tax Flow podcast. So I know thisis a topic that's come up a lot,
and it's not us just saying thatit comes up a lot for the sake
of saying that it comes up alot. It truly does. How in the
world does real estate investingplay a huge role in taxes? So,
obviously, you know this guythat's gonna hop on with us, the

(01:55):
the bald tax guy.
We say, he he has all theknowledge and no hair. Chris
Pacuro, welcome back to your ownshow as always, buddy.

Chris Picciurro (02:03):
John, you're always full of compliments.
Thank you very much, and youlook dapper as usual. You got
your beard trimmed. You don'tlook like the unfrozen kid man
lawyer, and I got your hair cutfor our event in Michigan
recently, so I'm impressed, man.It's good to be back.

We had a heat we had a heat wave coming up. I had
to do something with my life.Right? So it's you know, it is.
And and you know what?
Basically, I wish I could takemy hair and invest it in
something. So, you know, veryfitting to this show. And Chris,
I'll let you introduce our guesthere in a moment. But again,
this we hear this question somuch. Even since we started this
podcast.
Right? Literally almost a 100episodes ago, I feel like this

(02:40):
comes up at events. This comesup in random conversations. It
comes up in coffee shop, chats,whatever we have. So many people
are interested in this.
But, also, I'm not gonna callmyself an expert by any stretch
of the imagination. But I thinkthere's a lot of, kind of
mystery around this a littlebit. Right? Sometimes people
think it's a lot harder to getinto than it is. And, again,

(03:02):
I'll let you introduce ourguest, and I know he's got a
great story also.
He got

into the world of of REI. Absolutely. I mean,
real estate investing has a lotof tax advantages, but it also
has a lot of financial gain. Andand, and it's very favored in
our tax code. Not manyindustries are favored in our
tax code.
And, yeah, I mean, I think thatfear and not knowing how to get

(03:26):
into it holds people back. So wedon't we couldn't have a better
guest. Bill Allen's joining us,a fellow Tennessean. Sorry,
John. You're up in Michigan allthis time of year.
It's it's nice. But, Bill Allenis a friend, a person that I've
known for quite a while, someonethat I admire and look up to.

(03:46):
And although he's extremelysuccessful, he, in my opinion,
has an amazing heart becausehe's willing to share his
knowledge with not only adults,not only people getting started
in real estate investing, notonly with multimillion dollar
real estate investors, but alsokids and teens. And we're gonna
touch on that as well. So, Bill,welcome to the Teaching Tax Flow

(04:08):
Show.

Bill Allen (04:10):
Chris, John, thanks for having me.

Our pleasure. I mean so can you can you give us
an idea of just a little bit ofyour history and how you got
intrigued by real estate, howyou got bit by that bug, and
and, take us through thatjourney?

Bill Allen (04:25):
Yeah. So I was a navy pilot. I retired. I was a a
flight instructor. I flewhelicopters in the fleet and
then I went back as a flightinstructor many times.
I became a navy test pilot so Igot to fly all different types
of helicopters and airplanes.And, to be honest, like, along
the way, I just got addicted tothe TV shows. So the house
filming TV shows. And when Ilook back at my life, it's like

(04:45):
everything that I've just reallyenjoyed and and dove into really
deep, I think has come fromthese TV shows. Like, I got into
cooking when I was young.
It was Emerald Live. I used towatch that show all the time.
And then I just started, like,studying cooking and got, like,
way better at cooking. Like, Imean, to the point where I was
buying, like, cooking textbooks,like, French cookbooks, like,
textbooks and studying them andwanting to go to culinary

(05:07):
school. And then I startedwatching these flipping TV
shows, like, I and I I had ahouse in Pensacola and I just
took a sledgehammer to the sparebathroom in the hallway.
I was still single so I didn'thave, like, a wife to get upset
with me that I just destroyedthe bathroom. I didn't know how
to put it back together. So Ijust it was like demo day and I,
like, smashed the bathroom upin, like, 2 hours. And I was

(05:27):
like, oh, crap. I actually Ikept to figure out how to put
this back together.
And, and then, you know, justfigured it out, watched YouTube,
asked people, called my unclewho's a contractor in Maryland
when I was living in Florida,and and just put it back
together. Made it really prettyand I was like this is kind of
fun. I'd like to do this, like,more. And so that house turned

(05:47):
into a rental house. I went toEngland, got married.
We got pregnant pretty quickafter I got married when I got
back to the US. And, just, youknow, bought another rental
property and then I ended upflipping a house. I made $43,000
on that flip. It was like halfmy salary for the year as a navy
pilot. And that was like a gamechanger for me.
So, you know, putting $43,000into a newlyweds hands that, you

(06:12):
know, and never made more than$100,000 a year was life
changing. And so I just wanna domore of that. And so that got me
into real estate. I startedflipping houses, wholesaling
houses. We went from doing 1house a year to we did 67 houses
the 1st year, a 135 the yearafter that, a 187 after that.
We're doing, like, 200 houses ayear for a while. And, Annette,

(06:33):
like, the the first year I did 667 houses, we did almost
$700,000 of revenue. I had a$150,000 tax bill. And that was
the year before I met you,Chris. So $150,000 tax bill, I
was like, this is insane.
I I have to I I was like, Ididn't have it. You know, I had
to pay that money and, that'swhen I started learning in about
multifamily, about apartmentsand and passive real estate

(06:56):
investments. And, since then,I've I've been able to almost
pay no taxes each year. We dohave a year still, Chris, that
that I got a bad k one that thatgot they still owe me money. I
gotta figure out how to changethat k one because they they
they're holding about a $150,000hostage of my money to IRS.
So, that k one is messed up. Ithas to be changed. It will

(07:18):
eventually be changed when Iget, more time to figure out how
to convince the other partner ofmine to change it. And, but that
that's been the game is just howdo I use real estate to not pay
taxes? And and legally.
Like, legally, ethically not paytaxes because just like you
said, the tax code is writtenfor, business owners, real
estate investors, those kind offolks. So that's kind of, I

(07:39):
don't know, my story in a coupleminutes.

That is a and, you know, shameless plug, we do
have an episode k one fordummies. No offense to anyone
that listens because k ones canbe confusing. That's a tax form
that you receive if you're amember of an LLC, a member of a
partnership or a partner ofpartnership, or you own a
portion of an s corporation, orif you're a beneficiary of an
estate, you would receive a kone. And, you know, those those

(08:02):
can get pretty complicated, andsometimes they don't follow what
was in the operating agreement,and that that gets challenging.
But so you so when you flippedyour first home in Pensacola,
obviously, you were stationedthere.
Right? I I assume.

Bill Allen (08:17):
Yeah. That so that first house was a rental
property that I, like, smashedup the spare bathroom. I turned
that into a rental house. Andthen I went to England. I came
back, and I was stationed inMaryland.
So the first house I everflipped was in Southern
Maryland. I bought anotherrental there first. I fixed that
house up, rented it out. So werent we fixed this house up. I
bought a short sale.
I I finished the basement. Itwas a 1,000 square foot

(08:37):
basement, so I did that myself.And then I fixed up the house. I
rented that out and we we whilewe were doing that, we rented a
house in a cheaper area. So thathouse rented for, like, $27100 a
month and we rented a house inthe neighborhood for 2,000 a
month.
So that's what I when I livedthere for a couple years, I I
rented first. I found the areathat everybody wanted to be. We

(08:59):
didn't have older kids. Wedidn't care about the school
district. We were willing tolive in an area that was, like,
nice but close to base, close towhere I wanted to be, not have
to deal with all the traffic,and all the people that had
families wanted to live in thisother community called Wildwood.
So I bought a house there, fixedit up, I rented it out and I
kept the difference. So that'skinda how, the way my brain
works is very much like, youknow, could Do I have to live

(09:23):
there? Do I have I don't try tokeep up with the Joneses. I
tried to, you know, for 20 yearsI lived below my means. I saved
massive amounts of money.
I stacked it up in investmentsso that now I can live like
other people can. Why why do you

people on your team people on your team that
coach and mentor people. A lotof them have military
experience. My I don't know Inever I don't know if I ever
told you this, but my dad is aarmy veteran. He got drafted
into Vietnam. And, yeah, and sohe and when he came back, he was
on the GI Bill and really waswent to work at Chrysler.
Like most of the people thatgrew up in Detroit, their

(09:59):
parents were more, you know,blue collar, working working
working for the big 3, althoughhe got in eventually got into
computers and stuff. But, why doyou think so many people from
with a military background aresuccessful real estate
investors?

Bill Allen (10:14):
Well, number 1, you're kind of, like, forced
into it. You have to figure itout. So we moved so much. Like,
I moved 18 times in 20 years.

Wow.

Bill Allen (10:20):
So there's kinda, like, 2 sides. You either are
just a renter forever or you'relike, I'm gonna figure out how
to use this VA loan, a lot ofthe tools and things that we
have. I wanna buy a house. Iwanna be a homeowner, but I
still have to move all the time.So you're kind of, a lot of
times, like, forced in as anabsentee landlord in the
beginning.
But, what I think is I think Ithink I don't know that I think

(10:44):
they're successful. You asked mewhy they're successful. I think
they're successful because theyunderstand problem solving and
strategy in the military. And sowe are and we've also been shot
at. Like, we've risked ourlives, most of us.
And so, like, losing a littlebit of money on a house, like,
isn't that big of a deal whenyou've almost been killed a few
times. So, like, the riskanalysis of things, like, it's

(11:07):
risk benefit equation all thetime for the way my brain works.
It's just like, what's the riskhere and what's the outcome and
benefit? And if I can if I canmitigate the risk and greatly,
increase the benefit, then I'mgonna say yes. And so I think we
just probably make decisions alittle differently.
And I think that goes for anyanybody who's in a high risk
profession. So that could bedoctor, lawyer, police officer,

(11:29):
nurse, firefighter, a military.Like, all of those people are in
high risk professions from theway I look at. So they're used
to doing scenario basedtraining, simulations, things
like that to try to figure outwhat to say yes to and no to and
it's all about mitigating therisk. So a doctor obviously has
somebody who's on the operatingtable that could die.
A lawyer has somebody go to jailfor the rest of their lives that

(11:50):
they mess up. Firefighters,police officers, military
nurses, pretty obvious. And so,you know, you have a computer
system in your brain, I feellike, that's running in the
background that helps you makedecisions based on all your
training from the past. So, Isee a lot of, like, w two
employees and folks that arejust, you know, have worked a
job their whole life. They'reused to just kinda being, like,

(12:12):
being in a and I'm not I don'twanna, like, label everyone, but
they just the decision making isa little bit slower and their
their risk tolerance is a littlebit different versus somebody
who is like I mean, I've hadpeople try to crash me into the
ground, fly me into the water atnight, like, all kinds of stuff,
you know, that has been reallydangerous and scary.
I've actually end up, like,crashing a helicopter in England

(12:34):
when I was there. I wasn'tflying that the other guy was
flying, but I mean, it wasn't,like, horrible. We just, like,
smashed the tail, broke it off.Unfortunately, he made a great
landing and we walked away. Butthere's, you know, these are
things that are you're thinkingabout all the time.
Like, you have you lose friendsand stuff. So so a decision
about losing a little bit ofmoney is not not the end of the

(12:56):
world for me. And so but mostpeople, it's like that house is
like the biggest decision oftheir lives and they think,
like, if they lose, you know, 50or a $100,000, their lives over.
You know? And it's not reallythe case.

And, Bill, that's actually a great point
because I've talked So we I Iknow speaking personally for
myself, we were at your event,in Orlando. Wow. It was last
year. Already had Flip Hacklive, which was awesome. And
that was, to be honest, that wasmy first experience being in a
large group setting with realestate investors and
professionals just from all overthe country.
And it seemed like there were somany stories on how people got

(13:31):
into it. And then everybody itseemed like they all wanted
something, you know, a littlebit different out of it or how
they all operate, which wasgreat. But I can absolutely see
what you're saying. Some people,you know, just thinking of some
friends that we have up here inMichigan, they get so personally
attached to a to a property thatthey almost wanna make it theirs
so much that it, in a sense,cuts their legs off as far as

(13:54):
for for utilizing it as aninvestment. So I'm I'm glad you
brought that up too.
But one other thing too, I Iknow you mentioned a little bit
earlier on, or Chris had broughtit up. You know, talking about
kids, and now you I know youhave a couple events through one
of your organizations reallyhelping out the younger the
younger adults and childrengetting into the space. And I'm

(14:15):
super curious on this. So do yousee it as, you know, kind of
just coaching kids along andjust kinda trying to get that
mindset in a little bit earlieron is possible just with
entrepreneurship and theninvesting. And then also a
second part to that question is,how many times do you have to
have a conversation withsomebody that you're like,
listen.
It's not as easy as you maythink it is to get into real

(14:38):
real estate investing, but it'salso not as difficult over here.
Right? And some people I don'tthink realize that it's not
exactly like the TV shows. Thatthings do not get done in 30
minutes, and, you know, you'renot writing giant checks, you
know, every, every 5 minutes outof that too. So kind of a 2
part, the kids and then also,also, you know, how you have to
coach some of these adultsaround.

Bill Allen (14:59):
Yeah. The TV shows are so I'll answer this real
quick. TV shows are, like,staged. The numbers are totally
off. Like, if you do the math,they're probably like they're
probably making about 40% lessthan they say they're making on
the show.
Sometimes half of what they'remaking just because there's a
lot of numbers that aren't bakedin. But it makes for a good
entertainment and gets peopleinvolved like me. As far as the
kids go, we started this groupcalled Teenage Tycoon. We just

(15:20):
did our first, like, big kidsevent last week. We had 200
people there, a 100 kids andtheir parents.
It was incredible. Like, to seewhat these kids are doing, the
the reason why we did that andI'm so excited about is because
most people come into ourmastermind and coaching
programs, adults in the realestate investing program called
7 Figure Flipping. They come inthere because they want to

(15:41):
change the future for theirfamilies. They want to build
generational wealth, they wannachange the future for their
kids, and they want their, youknow, they want, like, their
ceiling to be their kids' floor.That's like the the the thing
that they talk about all thetime.
And I'm like, well why why don'twe just help teach the families
too? Like why are we waiting?Why do we have to wait for you

(16:02):
to build your business for 10years and your kids to be in
their twenties to be able to,you know, give that to them. Why
don't we just give it to themnow? And because what I see is
people in their forties, fiftiesthat are, like, financially
illiterate.
Their their mindset is brokenwhen it comes to money. They're
they try to fit into the systemand they didn't realize until

(16:23):
maybe they're in their thirties,forties, or even now that they
need a different type ofeducational model. They need to
understand money. It's a like,money's not bad thing. It's just
a tool.
It's not good or bad, frankly.And so all of that stuff, I was
like, what if we just do thatyoung? What if we could pour
into, like, you know, 6 yearolds, 7 year olds, 10 year olds,
15 year olds, 20 year olds, likeand do it earlier. And so we

(16:46):
started just seeing if thatthere was a market for that, if
they were interested in it. Andlast year, we did an event at my
office for kids aged 5 to 18.
It was just so cool to do thatwe wanted to start doing it at
scale. And so, and and frankly,what I love is the kids, they
have it. They don't like whenyou when you say you to do
something, they just do it. Theydon't they don't ask questions.

(17:09):
They don't they don't say, oh, Ican't do that.
Like, they don't know that theycan't do stuff. So they're just
like they're the best kids tocoach. Like, you know, the
adults are like, oh, I can't dothat or I can't say that or, oh,
no. Like, I tried that. Itdidn't work already.
Or I've been thinking aboutdoing that for years. Maybe
eventually I'll do it. And thekids are just like, I bring
somebody on, a speaker thattalks about, like, making money

(17:32):
on the Internet, buying stuff atyard sales, and selling it on
eBay. And next thing you know,their eBay account's set up.
That week, they've made, like,$300 on eBay and they're doing
backflips in their living room.
They're so excited. And theparent, if I told them to do it,
like, a month later, they'd belike, oh, I'm still trying to
figure out the perfect name formy eBay account. So I love that.
Like, I really have reallyenjoyed, you know, teaching the

(17:54):
kids. And it's not just the kidseither.
It's become like co viewing.They're doing it together.
Thursday nights, they're on thecouch together watching it on
the big screen TV in the livingroom when we have these mentors
come on. They're reading thebooks together. They're doing
the book clubs together.
They're watching the videostogether. They're involved and
engaged with their kids. And, Itell the parents, like, get the
kids dressed and bring them topractice, and and then I'll take

(18:15):
over from there. But they have aresponsibility too. You can't
just, like, drop your kid off.
When they don't wanna come, theydon't wanna go. You know what
I'm talking about. You gotta getyour kids dressed. You gotta get
them out the door. There'splenty of time where my son
doesn't wanna go to cub scouts,but when I get him to cub
scouts, he does not wanna leave.
He will not leave. I have todrag him out of there, and then
he's crying because he has toleave his friends. And so my job

(18:36):
is to get him dressed and gethim there. And then his friends
and the other kids and the otherpeople and the coaches, mentors,
they take it from there. And sothere's times where as a as a
parent, we just gotta get ourkids dressed.
We know what's best for them,and we gotta give it to them and
then let the coach do theirwork. So that's kind of the I
hope I answered your question,but they that what we're doing
with the kids, what I'm reallyexcited about, I mean, they're

(18:59):
reading books that I didn't readuntil I was in my thirties. You
know? And so they're readingbooks like Who Moved My Cheese,
The Go Giver, The MillionaireNext Door, The Compound Effect.
They're about to read Building aStory Brand.
And so and then these authorsI'm getting these authors to
come in and talk to the kidsafterwards. Like, Donald Miller
is gonna come in and talk to thekids. Like, it's incredible.

(19:21):
And, yeah, he won't come talk tome and my and he might now that
we've become friends, but, like,you know, Russell Brunson came
in and talked to the kids. Heruns a $1,000,000,000 company.
They do a $100,000,000 a year,and I've never been on a 1 hour
Zoom call with Russell, Youknow? And he he did it for the
kids because everybody wants togive back to these kids.

I think that's all. I mean, you just triggered
me on cub scouts. My dad wasn'tinto sports, but he was our pack
pack leader. And, you know, Iwas it was probably a pain to
get me ready for Cub Scouts, butI did that from from Tiger all
the way to Weeblow to ArrowLight, and then I ended up going
to the sports route in middleschool. But some of my best

(20:02):
memories with my dad because hereally you know, like, that was
more his thing, but it became mything.
And now I kinda feel bad that alot of parents probably don't
listen to this podcast, but ifthey did, you know, sorry if it
was a pain in the butt to getready. But I I I still have my
cub scout uniform downstairs,and and I still remember a lot
of those lessons.

Bill Allen (20:23):
I'll tell you what. I I I was an Eagle Scout. My dad
made me become an Eagle Scoutbefore I turned 16, or I wasn't
gonna get my driver's licenseuntil I became an Eagle scout.
Because he knew when I got mydriver's license, I was never
gonna go. I was the I was tough.
It was not easy to get me to go.It wasn't the cool or popular
thing at all in school. Myfriends made fun of me, but he

(20:43):
knew that one day I would lookback and I'd I'd be happy that I
did it. I'll tell you right now.I look back and I'm so happy
that my dad did that.
And I I don't even remember anyof the times I went kicking and
screaming. All I remember is theaccomplishment that I had, what
it looked like on myapplications now that I could
talk about it. When I go to themeetings, I'm a leader there and
none none of the rest of themare Eagle Scouts. Like, they're

(21:05):
just like, you know, it's it'sreally hard to get that and it's
yeah. It was just you look back.
Same thing with sports. The thechallenge is my my kid is the
coach's son. The coach's son,like, you can't be a prophet in
your own town. It just doesn'twork that way. So my kid is the
only kid at the event last weekwho was like, I don't wanna go,

(21:25):
dad.
This is not cool. Like and andhe's like, he doesn't wanna play
the game. All the other kids areplaying the game. They're loving
it. And I'm like, oh my gosh.
So the thing is we can teach ourkids this stuff, but you need
somebody else to to teach whatyou're teaching to give it that
emphasis and that your yourfamily and your kids are gonna
listen to somebody else morethan they're gonna listen to
you. But they're gonna look backone day and say, thank you dad

(21:47):
for putting me there. Thank youmom for putting me there. Thank
you for bringing this person inmy life. And drastically and
dramatically change thedirection of my future.
And that's why I do what I do.Like, that's why I hope to be
that person that can that canpartner with the parents that
want good values, want goodfinancial literacy for their
kids and themselves, frankly.Like, we're teaching the 40 year

(22:08):
olds just as much as we'reteaching the kids. And so that
that's been fun.

It's been really fun. I'm gonna steal
profit in your own town becauseit's it's I like that one. That
is

Bill Allen (22:19):
true. I didn't I didn't make that up. I didn't
make

that up.

That's right. I'll steal it from someone else.
Well, if we talk about the kidsand teens learning, we're gonna
touch on maybe some real estateinvesting for people that have a
significant of significantamount of income or assets. But
before we touch on that, whatwhat are maybe 1 or 2 hurdles
that you that that the persontrying to get that first deal,

(22:44):
that first flip, that they thatyou see are overcomeable. I
know, obviously, financing'schallenging.
If you are a veteran, which youyou there are some special,
lending programs which are welldeserved. But what are 1 or 2
hurdles to get that first deal,and and is it is it hard are you
seeing it's hard for people totake the mentality that, look. I

(23:06):
might do my first flip, and Imight actually break even, but
I'm gonna learn a a ton. Andthat's gonna be payment enough.

Bill Allen (23:13):
Yeah. There's there's really, like, 2 2 paths
that I see. So a lot of peoplethink there there's an active
path and a passive path in realestate. And so I think you need
to really be committed if you'regonna be a flipper or you're
gonna be a wholesaler or you'regonna be the one that buys the
apartments and fixes them up orsomebody that has rental
property, is that's a veryactive side of real estate. And

(23:33):
and accept the fact that you'reyou're grabbing yourself another
job for a while, while you buildthat active income.
And that was me. I was tradingmy time for money in the
beginning. I was understandingit. I was learning it, and I was
in on the active side. There's awhole another side that's just
passive side.
Like you said, if you're a highincomer, high net worth person
that has money, now you can buypassive income through an

(23:54):
apartment investment, a loan tosomebody, things like that,
where you can actually just,like, buy the cash flow. So
those are the 2 paths. I usuallytell people, like, if you love
your job, if you make a bunch ofmoney, and your time would
produce more results inside ofyour business than it would
going to learn real estate onthe side, then put it into your
business, produce more money,and then go invest it passively.

(24:16):
So that's what I I like, I don'tknow everything about
multifamily apartmentinvestment. My partners are very
good at operating the buildings,running the numbers, managing
the property manager, managingeverything.
I'm very good at making moneyand putting it in the
apartments. Right? So my job isto make more active income and
spend my time doing that thangoing to learn every single

(24:38):
thing about the details aboutthe underwriting of the
apartment. So those are the twoareas that I would point people.
Now, if you wanna go the activeroute, just understand it takes
some time and but it's a skillset that nobody could ever take
from you for the rest of yourlife.
Like, you'll understand realestate, and I, like, I love that
asset class. Like, it's a totalcheat code when I wanna go buy

(24:59):
my own personal house. Peoplecall me all the time asking me
about their house. I just lookedat a contract for the friend, a
friend of mine that was sellinghis house, and he was like, this
looks fishy. And I was like, itis.
Don't take that contract. Thethe real estate agent didn't
know. The attorney wasn't sure.Like, I was like, I've seen this
before. I I wouldn't I did abunch of research on the buyer.
Like, bad deal. And so it'ssomething that you can use in

(25:22):
lots of different areas of yourlife. So what I would say is if
edge if real estate'sinteresting to you, go become an
expert at it. Like, figure outhow to become an expert. And the
way you do it is by doing it andskinning your knee or by, you
know, finding somebody else thatwill mentor you and help you
along the way.
But even with the mentor, you'restill gonna skin your knee. It's
just not gonna hurt as

bad. But I would say if you're if you're
someone that's getting involvedin the active side of things,
there are definitely some taxadvantages that you can offset.
You know, there are rules.There's there's rep status,
short term rental loophole,material participation, and
those are all in we we talkabout those in our podcast and
not promote our teaching tax foreducational library, but that's
that's all in there. But but toremember, if you're active, if

(26:05):
it's your primary work thatyou're doing, there are a ton of
tax advantages where you can youcan offset other income, may
either your own or your spouse,in the current year so that you
could you could accelerate someof the deductions through that,
if you do what's called the costsegregation study and offset
that other income.

(26:25):
So the point is in act if you'rethat active person, if you built
just think about it like this.If you're constantly building
your real estate portfolio,you're not gonna pay much in
tax. That's the that's the bestway to think about it. Now if
you're passive, you might notenjoy you might not be able to
offset some of your otherincome, but I would argue that
passive investing could be verybeneficial. You know, a lot of

(26:48):
times someone will come in andthen wanna flip it to Bill,
kinda how how a deal would work.
But let's say you have someonethat wants to invest in a in a
in an apartment complex. Theythey have a $1,000. They're some
what's called an accreditedinvestor, so they're they're at
a good amount of income or havea $1,000,000 worth of net assets
minus their their primary home,and they wanna put a $100,000

(27:08):
and get what we call mailboxmoney. Well, they might not be
able to offset their w two wageswith some of the depreciation
deduction, but guess what?They're getting mailbox money.
And if you have a significantamount of income, you're
probably paying a 35% tax. So ifyou can get an 8% I'm just
making numbers. An 8% return taxfree, right, you would have to

(27:29):
make 11, 12% somewhere else andpotentially have to manage it.
So there's a lot of that is anice advantage of being a
passive investor. Having taxfree income could be just as
powerful as offsetting taxableincome somewhere else.

Bill Allen (27:45):
Yeah. Totally agree. I think a lot of people like,
and just some people, like, oh,I can't take advantage of the
tax benefit as a real estateprofessional, so I'm not going
to invest in this. It what Ilove about apartments is it's
it's as close to a 100% passiveas I've ever found. The key is
finding the right partner,finding the right, person who's

(28:05):
syndicating and running thedeal.
You wanna know who's gonna runthat project for the next 5 to
30 years. Right? Depending onwhat the timeline is on the on
the project. That's the key.Everybody can make a deal look
really good on paper, but whenthe rubber hits the road, you
wanna invest with people who youknow are in the trenches doing
the right thing because they'remaking the decisions with your
money and everybody else'smoney.

(28:26):
So, but I mean you got you getcash flow and you get net worth
growth. So for any investment Ilook at 3 things, cash flow, net
worth growth, and tax benefit.And so even if you can't use the
tax benefit from a syndicationor apartment building
investment, you're still gettingthe cash flow and you're getting
the net worth growth. So it'slike when you look at the stock
market, if the stock hasdividends and it's gonna grow

(28:48):
and the tax benefits are usuallylike short term or long term
capital. So the long termcapital gains are taxed better.
Right? And so apartments, samething. Just because you can't
use the tax benefit doesn't meanit's not a great investment.
It's a 100% passive and usuallywe're seeing returns upwards of
16, 17% plus average annualreturn. And so we actually

(29:09):
haven't produced less than 24%in the last 3 years average
annual return.
And, we're selling a buildingright now that was, like, one
one of the ones that wasn'tperforming that well. It's
probably gonna see somewherebetween 13 to 15% then in 1
year. So and and that's thoseare not, like, indicative of
future returns. Everything hasrisk. Right?
But, like, it's a great assetclass. Like, everybody's gotta

(29:31):
live somewhere. There's nohousing. We're a rent becoming a
renter nation. So theseapartments are great
opportunities for you to, stackcash, and it's also a great
inflation hedge.
So the key, I think, is is tounderstand it and get to know it
a little bit so so you knowwhere you're putting your money
and and what it can do for you.But yeah. It's hard for me to
say no to apartments. I'd putall my I'd put all my money in

(29:53):
there. That's where all my

money I mean, on the passive side, here's if
you're listening to this, here'sthe way you gotta think about
this. Imagine that you yourfavorite dessert. I mean, mine's
chocolate bumpy cake from aplace Saunders in Detroit. But
imagine your favorite dessert.Imagine that by eating it,
you're not gonna lose anyweight, but you can eat as much
as you want of it and not gain apound.

(30:16):
That's what passive investingis. You right? Because you're
getting the delayed tax, butyou're getting the income. And
because of the what we call thedepreciation deduction, you
might you might get a big loss.You might get a big deduction
the 1st year you enter into anapartment syndication.
Just because you can't use thatloss the 1st year, it carries
forward in the future to offsetincome. So tax free income and

(30:37):
growth, especially for people ata high marginal tax rate, is
very, very powerful. So, yeah,if you could eat your favorite
dessert and not gain any weight,you're gonna be happy. And so if
you get cash

Bill Allen (30:47):
I'm gonna steal that one. You can have the problem in
your mouth. Else again.

Well, hey. Hey. You know, apartment investing is
I look at it as passiveinvesting is kinda like lifting
weights and and active investingis kinda like cardio. You get
that immediate result if you'reactive, but you gotta have both.
I really think both are aregood.

Bill Allen (31:03):
And And I do. Like, I take I take all the money that
I make in real estate andcoaching and education and all
the different places, and I dumpit all in apartments. Like, I
just put $200,000 in our lastdeal. We just closed 355 units
last Friday again. So 2.90before that, 355.
And, you know, I put as muchmoney as I possibly can in these
things. I mean, you know, you domy taxes, so you see my k one.

And I and I've seen people that you've worked
with come in as a passiveinvestor into into a
syndication, do a couple, andthen and then actually get
interested in it and start doingother things too because now
they're comfortable with it too.They might go they might have
that confidence or they might togo or they could have that that
they have that stable amount ofincome there and they might take

(31:44):
a risk somewhere else. And so,yeah, there there's a lot of
benefits to real estateinvesting all the way from, you
know, if you're an accreditedinvestor and you're looking at
the syndication or or or maybelike you said, Bill, you you can
you can invest. We have someother, content. You know,
sometimes you run into peoplethat have a lot of money in
their in their 401 k or an oldIRA.

(32:07):
You could you could it's timesyou roll it into a self directed
account and use that to investin. Oh, investments like no they
got lending and and somesyndications will accept that
money. So where would someonego, like, if someone's more, you
know, interested in learning alittle bit more about where they
fit in between active andpassive? I know you've got a ton

(32:29):
of resources and a a verypopular YouTube channel I've
seen too, so correct them. Yeah.

Bill Allen (32:35):
Yeah. It's mostly my YouTube channel is mostly
aviation stuff and and money andand we we do interviews in the
cockpit. My my name, Bill Allen.You can check it out on YouTube
and Instagram. It's atbillallenrei.
You can just send me a messageon on there or, we have a, I
always am raising money. So,like, I have a portal that you

(32:56):
can go check out. It talks,like, the webinars are in there.
Everything's in there. Any dealthat we've done in the past and
current, you can go check itout.
It's7figuremultifamily.investnext.com.
So it's the number 7. So7figuremultifamily.investnext.com.
That's a great place to go just,you know, check it out. And and
even if you're like, I'm notready to invest.
I just wanna understand whatsome of these apartments look

(33:17):
like. You can go in there andlook at the PDF, watch the
webinar, watch the call that wedo, and, you know, spend 40
minutes hearing other people'squestions and understanding a
little bit more about who we areand what we do. So, I would
love, you know, if you're anaccredited investor, even if
you're not accredited, jump inthere, get to know us a little
bit, and and see, like, if we oryou don't even understand what

(33:38):
that is. Like, you can schedulea call with us in there and and
talk through it. Like I said,you gotta pick your partner
right.
You gotta pick the person thathas your values. They they have
integrity, somebody you wannawork with, and and get to know
them. So the best thing youcould do is watch a webinar with
us and say, yeah. Those 3 guysare people that I wanna work
with. Chad, Bill, and Jason arepeople that I feel like I could

(33:58):
work with.
And that's the most importantpart. I'll tell you that right
now.

And, yeah, I mean, my business partner and I
have invested in syndication aswell. And then, you know, we've
realized that there's somethings I like to do active, but
for the most part, I likepassive. And I and I'll Bill,
like you said, I'm much betteroff doing what I do and and
working and spending time withyou know, my kids are in that
season now that they my time'sticking on them. Right? You
know, they're 15, 14, and 11,and I I I'm I started a family a

(34:26):
little later than other people.
I was in my, you know, 30, 31,or my early thirties and when it
started. And now, you know, Iit's so fun to to hang out with
them. So absolutely. Well, I Ihave 5 questions. You know,
Journey t, I I used to do this.
Every episode, we had to guess,and for I don't know what
happened, why I went away fromit. But we're gonna go 5 I don't

(34:46):
know.

Maybe maybe you scared them off too much. I
don't know. Bill, I'd be alittle I'd be a little afraid
because I don't even a, I don'tremember what his questions
were. B, I don't know if hetweaked the darn things. So he
might well, you know, like youlike you mentioned, you're used
to getting shot at a little bit.
So I just

Bill Allen (35:01):
I think it'll be fine. You'll be good. The couple
questions on the podcast will bealright.

Alright. I'll start we'll start with the easy
an easy one. What's one fun factabout yourself that people
wouldn't know if they went toyour YouTube channel or checked
out on Facebook or LinkedIn?

Bill Allen (35:14):
When I was a kid, I used to love to break dance. Oh,
little little was it AlfonsoRibeiro or whatever?

What was that dude that he he he was did all
the break dancing and those

Bill Allen (35:25):
I'm not that old Chris.

Oh, I know. I'm sorry. I am no boom box. No
booming system. Well said.
What is your favorite cereal?

Bill Allen (35:36):
Cinnamon toast crunch. Interesting. That was my
sister's. I still eat it. Ithink I had a bowl 2 nights ago.

I'm a big cereal fan. It's my like, if I'm
just lazy and I need a need abowl of cereal.

Bill Allen (35:49):
Close second would be Cookie Crisp. I could keep
going. I like all the sugarycereals because I wasn't allowed
to eat them when I was.

Oh, Golden Graham's for me. Yeah. We had
Rice Krispies. Golden Graham's,I love cookie cookie crisp is
had used to have baseball cardsin it back in the day. You're
now this is tough for you.
I mean, obviously and and whenpeople get to know you, you're
very modest guy. I know you youtravel. You get to vacation a
lot. You you have a airplanethat you can utilize, for work.

(36:15):
But what's your favoritevacation destination?
Yours might be

Bill Allen (36:18):
The Maldives. It's in the Indian Ocean. It's a
island chain in the IndianOcean. It's Maldives incredible.
I've been there twice.
Absolutely in unbelievable.Like, I love to sit on the beach
and snorkel and see the fish.Like, it's my favorite.

I like it. 2 more. Ideal weekend?

Bill Allen (36:39):
Beach somewhere. Okay. Beach or or offshore
fishing. Like, Like, I wanna bedoing something like that. So
yeah.
If I just wanna relax, I wannabe on the beach. And I I I just
booked my trip to Ocean City,Maryland. We've been going there
every year. I grew up, just onthat beach when I was a kid, and
I'm so excited about it. Like, Icannot wait to go.

(37:01):
We almost didn't go this yearbecause we're going on Disney
cruise in a couple weeks. And Isaid, we have to do it. So we're
doing it the week right beforeschool starts. So I just booked
it. Didn't look back.
I'd be on the beach somewherelike surfing, weight,
skimboarding, bodyboarding,playing beach volleyball,
pickleball, whatever. But I Ineed to have sand and saltwater.

John, you know we couldn't have an episode
without mentioning pickleball.This might be the first one. I
didn't mention it.

I was I was just about to say this this one
actually goes down in history.Like, I feel like brought

Bill Allen (37:32):
it up because you guys talked about it before the
show. If you didn't bring it up,I wouldn't have said

I we're gonna we're gonna mail you a little
trophy. I don't know what it'sgonna look like. It's probably
just gonna be paper mache, but,yes, I'm very shocked. I'm
surprised that Chris hasn'tbrought it up, you know, 2 or 3
times. We should do, like, theteaching tax flow drinking game
with pickleball.
And then by the time we get tothe end of it, everybody will
just be so hammered. They won'teven know what we're talking
about. Give us 5 stars.

I I like it.

Bill Allen (37:55):
You should give 5 stars. So if you're listening to
this right now, just leave a 5star review, especially for this
show instead of telling us yourfavorite one. Bill is your
favorite.

I love it. I love it. And and, you know, you
never know. You could could endup in a blind pickleball place.
Final question.
If you could have dinner with 1person, this person could be
alive or deceased, who would itbe?

Bill Allen (38:24):
Alive or deceased? Can I pick Jesus?

Actually, that's who I picked. When
someone someone asked me that ona podcast, so I stole it. Yep.

Bill Allen (38:32):
Okay. So most people say I can't pick that. If I
couldn't pick that, it wouldprobably be, like, George
Washington or or Martin LutherKing Junior. Somebody like just
massively instrumental inhistory. No.
I those those they're all great.I just found a way to say 3.
That's alright.

I'm I'm sure that I'll get along. They all
have they're all leaders intheir own way.

Awesome, you guys. Awesome. Well, I hate to
cut this one short, but I knowwe can talk on this topic
absolutely forever. And, Bill, Igot a a million questions. I
think every time I see you now,I'll, you know, just start
chipping away at them.
But, again, I you know, thefirst time I ever seen you speak
or really been around youraudience was at, you know, Flip
Pack Live, which, I mean, thatwas a fantastic event. I I I

(39:14):
don't know how many hundreds ofpeople you had there, or maybe
pushing a 1,000. The place waspacked, but great event.

Bill Allen (39:20):
I think, yeah, I think we had, like, 1100 people
that year that you guys werethere. Yeah.

Dude, that was that was awesome. And, again,
it's I think the biggest thingthat I took away from that,
again, not not being in the taxworld every single day and not
being in the real estateinvesting world every single
day, is just the different typesof people that are in it. So I
think I mean, not that I evergive any advice to anybody, but
this is, again, coming fromsomebody in the middle. There's
almost no reason why you can'tget into that space. Right?

(39:45):
Is that Bill, would you agreewith that? I mean, obviously,
unless you got something elsegoing on.

But

Bill Allen (39:49):
I I totally agree. I totally agree. Real estate does
not discriminate. So, like, itdoesn't matter what your
background is. It doesn't matterthe color of your skin.
It doesn't matter if you're aman or a woman. None of it
matters. Like, you can get intoit for sure. It's possible. It
doesn't matter if you'rehomeless.
Like, I there's a 20 year oldkid that's making $700,000 net
profit in my community right nowand we've got a, like, 75 year

(40:11):
old no. 82 year old woman who'smaking, like, 4 or $500,000 a
year in real estate. So, like,it does not matter. It does not
discriminate. You can get intoit.
You just have to have the rightmindset, the right path, the
right mentor, the right people,the right influence. And and a
little bit of skill set and alot of kind of, like, grit and
determination in the beginning.You can do it. For sure. It's

(40:32):
not easy, but it's simple.
That's the best way to close

it out. So again, thank you thank you for
taking the time to join us.Chris, I guess thank you too.
You know, I don't tell you thankyou for joining your own show,
but, you know, thanks, pal. Mypleasure's on.
Alright, gentlemen. Well, getthank thank you so much for
joining us, everybody, here onthe Teaching Tax Full podcast.
We're gonna go ahead and wrapthis one up, and we will see you

(40:55):
back here same time, butdifferent day and a different
topic here on the show. Hey,everyone, and thanks for hanging
out with us here on the TeachingTax Full podcast. As I
mentioned, thank you, Chris.
Thank you, Bill, for taking thetime to discuss this topic with
us. I know a lot of people inthe community have been asking

(41:18):
about this directly, indirectly,just to have questions,
conversationally. So we're gladto do this. This is a great one.
Couldn't think of anybody betterthan Bill Allen to join us and
discuss this topic on realestate investing.
As Bill had mentioned, he's gothis hands into a lot of stuff,
very successful in this world asobviously as everybody else

(41:38):
knows too, Chris being the taxguy, especially in the real
estate world, it's great to getthese 2 gentlemen together. We
won't call it hash it out by astretch of imaginations because
seems sounds like they believein both the same stuff, which
makes the conversations a loteasier to have. So I do wanna
highlight a few things here thatBill had mentioned and we
started to talk about a bit isreally the barriers that you may

(42:01):
think exist when it comes toreal estate investing probably
don't exist. And really, youmight just be in your own way,
frankly, frankly put in regardsto that. So definitely connect
with Bill and his team.
Any questions on that topic oranything on those topics, I
should say, they are a fantasticsource of information as well as

(42:21):
teaching tax flow. As always,anything on the tax side, we are
here to assist with. So asalways, don't get in your own
way. Let us know how we canhelp. See everybody very soon.

Disclaimer (42:36):
Investment advisory services are offered through
Cabin Advisors, a registeredinvestment adviser. Securities
are offered through CabinSecurities, a registered broker
dealer. The content of thispodcast does not constitute an
offer of securities. Offeringscan only be made through an
offering memorandum, and youshould carefully examine the
risk factors and otherinformation contained in the
memorandum.

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Ep. 89 | Why Real Estate Investing is So Popular

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Ep. 89 | Why Real Estate Investing is So Popular