Deal Room 060526

Good morning and welcome to The Deal Room Live, the daily real estate deal tank powered by Titan Impact Group, a global leader in AI-driven real estate investing and funding, where the real estate world meets speed, precision, and profit. And bring us your deal so we can put it into our AI model that analyzes and structures real estate deals in minutes, generates all the docs you need to get the deal done, and gives you a verified, unbiased breakdown of due diligence reports. The investors get the advantage of getting fully vetted AI-analyzed deals that cut their due diligence time down by 60%.

So you're in the right place.

Let's deal room now and get into today's opportunity.

Awesome.

Good morning.

Good morning.

Quick question.

Yes.

Can you deep dive Impact? It's an influencer platform. I'm thinking that we might want to use that for talking about some of our things in the future, like maybe having a handful of influencers, for example, talk about the Opportunity Zone book. Just ask questions. What is Opportunity Zones? And then we know who those influencers are. We go there, we build a campaign with them, we get them to ask the question, and then we supply the answer so we can look like an expert to all their followers.

Okay.

I'll deep dive.

That sounds cool. Oh, and then the other thing, you and Blake are being invited to start a business with Catherine and I on doing our AI 2.0 thing. So we want to talk to you guys about spearheading that.

Okay. AI 2.0.

So you know how Deal Hunter exists? Yes. So like Catherine has been doing this for, I don't know how long. I'll wait for her to pay attention so that I can be engaged in the conversation. Pickle Juice, are you hearing?

It's hot.

It's hot.

It's hot.

I'm like, can't pay attention. It's so hot. She can't pay attention.

It's so hot.

I can't pay attention. I'm talking to Katya about how we can get her and Blake to spearhead the company on our AI integration thing. People are like, well, what are you trying to do? Sell me a coaching program? And we're like, no, these are just tools that we developed and we're sharing them and selling them to you. And so remember last night I talked to you about that epiphany or yesterday at lunch. And so if we had Blake and Katya, like because nobody believes two old farts like us know anything about AI until we tell them. And then when we do it, so if you got a Blake and Kathy out there going, we got this cool AI, debate and switch, and kids are like, look what our grandparents taught us.

We are— oh my gosh, parents, that's scary, right? Not grandparents, pretty darn close, man. Old enough to be. There's people our age who are grandparents, who are grandparents.

I'm a grandparent already, like, but not to a 21-year-old at your age. So my dad is 62, I'm 51, so him and I could have played football together when we were kids. That's all I know.

Uh, it is hot, it's dying here.

Holy—

Catherine, are you available this weekend sometime to do an hour and a half at Club Scottsdale? I see that your weekend— like, I see space in your weekend calendar, but I don't know if that's if I'm allowed to.

And I'm here this afternoon at Club Scottsdale.

Okay.

I have a meeting.

Okay.

I need to catch you. I have a meeting at— from 1:30 to 2:30 here at Club Scottsdale with Michael. Okay. I'm wide open the rest of the time because I know you want me to do some videos, right?

Yes. So can I book you from 2:30 to 4?

No way.

Yes.

Not today. Not today. Not today. No, not today.

We got nothing after, ma'am.

We're leaving town Monday. We 100% got 9,000 things to do on today.

I know, but that's so important because she needs to film what's happening next week and how it's happening.

It ain't gonna happen if she films. How about that?

Okay, what about an hour? Not an hour and a half.

Not even one minute.

30.

Not even 35 seconds.

No, man.

30 minutes.

Let's make a deal.

Oh, here's how it goes. Tomorrow. There's a— there's—

tomorrow works too.

Again, you can do it when the things that we need to do are done. It's not about a time frame. It's about we have disclosure documents that need to be finished. We have to have 100% preparation because we're going into relationship conversations. We're not able to pitch. So without our, without our product being ready on the backend, we're going in 100% like blind, basically. Like they're not going to be able to see what we do. So if we don't have that stuff in order prior to going, there's no point in going because we're not there to pitch anybody. Have you read the email from Nate yet?

So Laura, do you have time? Right after this call so that we can list out everything that needs to get done and the help I need around these disclosure documents? Or do you have a call or a meeting?

I have time right after.

I have a call at 11.

But with all the people we're meeting today, we still have to get ourselves ready to travel on Monday, from Monday to Thursday next week. So I, again, I'm not seeing any time to try to prioritize for that. I just want to get done what we need to get done.

That's fair. That's fair. But maybe this weekend, if you have—

at some point, maybe this weekend, but we really need to get done with the to-do list that we already have in front of us.

So I, and I just need that to-do list listed out so that—

well, I, we've done— well, right. We've done that list out multiple times. So, and we're at the point of United Tiny Homes priority, disclosure documents priority. There's 4 disclosure documents that we need to have ready. The Avesta website. Needs to be ready. We have, we still have to plan our weekend, so to speak, because we have open house that we're going to. You can probably do videos through that open house thing or whatever.

What open house?

We got an open house that we've got to go to that we scheduled and you sent your PFS, remember? Okay. So we got, we're going to that open, like we didn't get, we didn't get to go in because we don't have the POF. We still have to fill out that form for HV Capital. We have that meeting with Deanna on Saturday. That couple things on her thing is going to have to wait until then. But the big thing with her is getting her to fill out the HB Capital information. So we need to like pull whatever information she already gave us into that HB Capital thing so we can get a POF on those. And all we're really looking for, you may need to email Jeffrey back and say what we're looking for is a prequalification letter of what are we, what are we able to buy up to? $4 million, $5 million. What's our, what's our cap? So we want to figure out what they need for us to get that prequalification. Does that make sense?

So disclosure docs, I'm clear. Deanna, Outback, you said we have 4. You said we have 4.

We have the data center that I want to make sure— I think Avestor has all the stuff up there for it, right? But we're just using it as a, as a, as a, as bait. It's chump because people are like, oh, can I do that one? No, it's closed.

So we're live streaming. So we're clear.

You wanted the list.

Okay. So The data center's done.

Right.

So what are the other?

Data center, RV resort, luxury, and then the Altadena and Palisades.

You're talking about Katia's project?

I'm talking about the entire restoration project in California. I'm not going to call it Katia's project and Mystic's project. I'm going to call it the California project for HGTV.

I also got an email back from the broker that I'll share with you during this podcast so that we can move forward.

Okay, that'll work.

You got an email back from him, Katya?

Yes, I did. I'm so surprised that he doesn't respond to you because he responds to me within 5 minutes every time.

He has not responded to me. Maybe my number— I don't know if it's just unrecognizable. It's California, it says California. Okay, that's good, that's good news.

So weird, but he's so nice.

We may— what we may have to do is just a group text or a group email there to get that done. So anyway, yes, we will work on contact. Like, Catherine's running video way before she's setting up the computer. So your videos are getting prioritized, but we have, we have a couple other things we got to crank out.

So, no, I totally understand. I just feel like the process of what you guys are doing, like going to the events, being in the middle of everything, this is exactly what people want to see. So I love capturing it, but I totally understand about the priority.

I want you to understand, I want you to keep the enthusiasm toward that. However, we are in a situation where we had 3 deals go south and we need to focus on cash flow and capital raising more than we need to focus on content. Good morning, bro. So, and that's all I'm wanting to do is stay present to the idea that we have to focus on the priority of cash flow and contracts more than content and stuff. I, I'm 100% content needs to be made and had though, and staying fresh with it is important. But I have to, I have to stand on what we're trying to accomplish. We're heading out of town and it's a very stressful operation to do that, packing everything up, being able to perform while we're there. And put the, put the podcast together while we're there. Focused conversations with people. It's so much easier to talk to people when you, when you have something to just be like, here, here's a QR code. What do you, what do you like to do in the winters where you're at? What do you like, where do you like to go on vacation? What's your, what's your nonprofit about? Those are the conversations we have to have. And oh, by the way, here's my, here's my QR code. Scan that, learn about it later. And so that's what we're trying to achieve. Going to this event is intentional conversations, intentional meeting people and stuff. I still need you, Catherine, to talk to me, respond to his email that he sent to you because he sent me one separate from you.

Him and I have been going back and forth all morning.

Okay. So did he talk to you about who to introduce you to?

No.

Okay. That's the conversation he had with me. And so that's, so we probably want to have that, have you have that conversation with him as well. Right. So going to these types of events, it's important to be every time you go. Because if you're not, it's a waste of time. It's a waste of resource and it's a waste of, it's a waste of opportunity. So always going with the intention of. Side note to that, Catherine, you had a meeting, you had a question. Somebody's got a conference investor conference coming up here in Scottsdale. You were talking to Katie about it this morning.

It's called InvestHer conference.

Oh, the InvestHer conference. Okay. So why, why not go and pillage that crowd?

I will happily go and be part of the networking part of it, but I'm not gonna pay $2,500 to go to a conference that I know more than the speakers do.

I totally understand that. So that's what I'm saying. What, at what level can you go and pillage that crowd?

$2,500 or just show up to the hotel, which is what Katie and I talked about.

Right. Is there some networking event that occurs outside of that?

In the hallway, just networking in the hallways.

Interesting. And that's the cheapest ticket is $2,500? Really?

It was so, and this was one of the conferences that I expected to go here and like it'd be elevated. Instead, I discovered I was here and it was a waste of time and money. But the connections I made, I made a few. Katie was one of them.

Right. To you, it's there. But I think what is important is, and maybe we could have planned it better, was for you to go to that conference again as a speaker, not as a, not as a, yes.

Definitely love to go as a speaker for sure.

So if that opportunity arises, take it. We'll figure out how to get in there and do that. Again, when you go into those, you want to come out being the expert. I agree. Anyway, side notes on all that. The idea is that going to, going to conferences, roadshows, events, like we had an event here last night, we got to talk to quite a few people. We talked to a guy about cost segregation, which was amazing. And that's what I was talking to Kathy and Blake wasn't here yet, but Kathy and Blake can help legitimize us putting together those AI 2.0 packages for people, right? And what we're thinking about doing is starting an LLC and having you guys as the, as the face of it. And we'll supply the system and you guys go out there, sell it, promote it, teach it. Like we'll show you guys how to do it. And you guys, you guys will be able to run the company. We'll, and we'll be on the, on the sidelines to be there in case anything goes astray, but the system's in place, isn't it? So trying a little technique from her.

Definitely.

I understand.

Like, I'm sitting, I'm actively engaged.

Well, I'm waggling my head at the leader over there to see if I get it any far. If it's too hard, we gotta go home.

No, I'm trying to— my brain's just going through all the details and trying to fully understand. Because you threw the idea out last night, it was late, and I haven't had It was lunch.

We were at lunch when I met her, mentioned it. But the idea is that Katya and Blake, because how many kids did we meet last night? They're like, oh, I run an AI company. I run an AI company. I run an AI company. I'm like, there's 6 people here that run AI companies. What do they know? Nothing. They ask AI to tell them, like, so you run an AI company.

Yeah, they just print us the results.

You know how to ask AI good questions and come up with something great. Cool. And then we start talking to them about our AI and they go, what does that mean? What does that do? And it's like, How can we be teaching you something? You're supposed to be the brilliance here, right? But then when there's people like us, we had lunch with yesterday was Mark. He does cost segregation studies and analysis. Let's go through that for a minute. You guys understand what a cost segregation program is?

That's what we were over.

Oh, sorry. We talked about that yesterday, right?

The idea, the idea was that certain things get written off in a certain amount of time, right? And so if I go buy something as an investment property, I want to get the write-off. You guys understand the write-offs of paying taxes, right? That's what the left Luxury property, right? When you're in property, luxury properties are what we're going after. When you're a cost segregation guy, like this building we're sitting in had cost segregation study done to it before Michael paid taxes. So the owner of this building bought this building and then he had a cost segregation study done, which helped him reduce his tax burden that year. Michael got a $10 million paycheck selling the company. So when you pay, when you, when you declare $10 million income, you got to pay $3 million in taxes. How do you avoid that? Go spend it on something. Instead of spending that $3 million on paying taxes, he spent $3 million on buying a building. So when he bought the building, the IRS says that you can write off portions of that building as deduction, right? You can deduct part of it. Like when you, if you're working, if you work a contract job, if you work a job and get a paycheck, And they take the taxes out. You do a standard deduction. It doesn't mean shit. Like they give you a certain amount per year and that's it. Hold on one second. Good morning. Yes, absolutely. I'm sorry, I'm in a meeting right now, but can I call you back? I seen your ad on Facebook this morning and wanted to talk to you about your pro— your pro— is it the truck and the trailers and the boxes?

Yes, sir.

You call me back whenever, right off this number. I don't want to bother you. All right. Appreciate it. What's your name? Ryan. My name's Tommy. I'll call you back in about 45 minutes. All right.

Bye.

So that's a dumpster rental business we're going to buy for $50,000. But anyway, the cost segregation side of things is Michael bought the building with $3 million. So when he bought it, the IRS says you can only write off, you have to take the $3 million and divide it over 39 years. And then you can write that off every year for 39 years. So if you take 39 and divide that by $3 million, it's only like $150,000 a year. Michael's got a $3 million tax bill. So he spent that on the building, but he only got $150,000 deduction. Does that make sense? No. Well, does it, does it like, he still has to, he only gets to deduct $150,000 instead of $3 million. You got to figure out where to come up with another 3 months, another $2,900,000, $2,800,000, right?

Yes, ma'am.

Okay. So when you say tax deduction, for example, if you owe $200,000 in taxes, but you invest $150,000 in real estate, that means that now you only owe $50,000 in taxes?

No, because the earned $50,000 is divided over 39 years.

Okay. I need to go.

And let's do— let's pull out a calculator real quick and figure that out. Do $150,000 divided by 39.

Okay, that's $3,846.

You only get to write off $3,000 every year for the next 39 years unless you do cost segregation. So here's, here's how cost segregation works. That house only is deducted— you only get to deduct $3,900 a year. So go back, ready? Just erase doing that. Scratch it. Be like, we're not going to do write-off 39 years.

F that.

I'm going to do a cost segregation study and I'm going to write off every single part of that building. So you see these lights over my head? They only last 5 years. So I get to write 100% of those off. Those lights cost $3,500 and I— and they're only going to last for 5 years. So I get to— I get to all 100% of that $3,500. Now, do you see what I just did? If I take the building over 39 years, how much was my thing?

$3,000 per year.

If I take the lights day one, I get $3,500.

Okay.

And how many, how much other stuff do I have in here? Lights is one part of this whole building. So if I cut the building up into little pieces, meaning light, floor, windows, like—

And do you do cost segregation in everything?

That's the difference. Segregation. But take the word segregate. We take the cost of every component of the building and add a lifetime to it. The IRS has a list of what lifetime is for light bulbs, for flooring, for windows, for drapes, for carpeting, for whatever. So whatever you got in there, the IRS has a life limit for it. Some 5 years, some 10 years, some 15 years, some going all the way to 39 years. Right. So what you do is you tear it, take it apart, you itemize everything in your building, and then you see what you can write off 100% of, and you'll come up with $3 million really fast that way. Okay. Right.

So the thing you want to understand, like, Cecily, I'm sorry, not Cecily, Katya, what you were like, I saw how you were like, well, if you have to pay $200,000 in taxes, buy a $200,000 building, it's, there's only a percentage of that $200,000 you can write off, right? That's why it's important. So for instance, oil and gas, why we always do an oil and gas fund at the end of the year, because somebody, if they have a $100,000 tax bill, they can invest $100,000 into the oil and gas. Last year they got a tax—

can I, can I throw a timeout? When you get an income and you get a tax bill, you have to pay. Either pay Uncle Sam or invest it. What works better? You're going to spend the money no matter what. There's people are like, how do you, how do you get out of paying taxes? You invest it. So you literally have to have the money to do something with it. Like, you can't get to the end of the year, have no money left. This is where tax planning is important. That's why I'm interrupting here, because Tax time gives you that opportunity to plan for the end of the year when you got a tax bill. And when you got a $200,000 tax bill, we'll show you how to not pay taxes but reinvest it so that the next year you double your income or increase your income, not double it, increase it. Go ahead, finish what you're saying.

So last year, our oil and gas fund gave our investors a 95.6% tax appreciation. So they invested $100,000 and they got tax depreciation of $95,000, we'll just say. And now, now all they have to pay taxes on $5,000 and they continue to get cash flow from that. So they're going to get their full $100,000 back from the cash flow of the deal. So they can now take that $100,000 and invest it into something else. Does that make sense?

Because if you pay taxes with it, you just open up learning centers in Minnesota. That's what you're doing.

Here's the piece that I want you to understand is that not all tax— not all investments have the same tax advantage. So you can, you can invest for different reasons. You can invest for cash flow, you can invest for appreciation, you can invest for depreciation, you can invest for tax planning. Like, there's a lot. That's why we have to be clear. It's not just one answer. There's multiple reasons that you can be investing, and you need to know what the specific goal is for that investment because it's not a blanket answer.

Can we— can I run an example up here on the screen real quick?

And it's good to—

you had a question, go ahead and ask your question.

And I love that you're asking this, and it right now it may feel like it doesn't matter, but I promise you in the future it's going to matter because when we go in and out of these deals and you have money, I don't want you to think, woohoo, I got a windfall, now I can go buy, I don't know, like a bunch of shoes, right? Like Clyde still, I want to plan for, yes, this profit is coming in and this profit needs to be allocated. We're going to offset the taxes and keep growing it. Right. So I have one more thing I want to say is that here's what I love about this. One of the reasons I love this country, right, is because you make a profit and there's only 1,400 pages that are all about paying taxes. And then there's 34,000 that are about not paying taxes. Because they want you— they're literally giving you the opportunity to take what you grew and grow it into something bigger, right? And nobody talks about this, rather than just like spending it and it's all gone, right? So when— I, I hope that you're— hope that you're getting this. Is this making sense? What I'm saying is that they want you to grow it and they incentivize you to grow it rather than just piss it away.

So I don't know any other nice way to say Can you guys see the board?

Yes, they can see it.

So ideally you'd want to have the appreciation investment, cash flow investment, depreciation investment, and tax strategy investment. Like you'd want to have a well-rounded—

I want to run a case study. I want to run a case study on it before it gets completely off the rails.

Sorry.

So, uh, because it's way simpler than what we're, what we're bringing up to the table. It's still very— I don't know why it does that. So, all right. We'll try it anyway. Katia, let's pretend you got that deal that was $10 million, right? Where we gave, we bought that $10 million property. We did all the, all the stuff to it. We sold it and we sold it for $20 million. Are you tracking with me?

You're muted, Katia.

Sorry about that. Can you click the three dots on the corner of your camera and then click unblur background?

It's already unblurred. It's just not.

Oh, really?

Okay.

No problem then.

It literally does this and it won't. We need to get better cameras.

It's okay.

I can keep track and write everything down too.

I know.

See, I don't know, maybe try the more button. Let me go get the lights off real quick. Maybe with the lights off, it'll grab the background.

That's as clear as I can get it.

No worries.

It won't.

It won't.

It's all good.

This sucks. Maybe.

Oh, if you bring it closer, if you make the writing white.

Try white. All right. All right. So let's pretend we bought that $10 million deal, right? We sold it for $20 million. And what we do is we got $10 million in profit that we split 50/50, right? Which brings us to a total of $5 million for Katia and $5 million for Land Shark Mastermind. Right? Are you tracking?

Sorry, I was muted.

Yes. Okay. So on the $5 million that you get, we'll go up here on the $5 million. You get your tax burden because you're a person is going to be capital gains. So it's going to be what? How much do 32% of $5 million—

real quick, mathematically, did you say 2?

32.

That's 1.6.

So out of capital gains, your capital gains is going to be $1.6 million, do $5 million times 15%. $750,000. This is, this is earned income for us as a corporation. As an individual, you're going to have capital gains, which is 32%. Is that understood?

Yes.

So as a corporation, you pay less as an individual, you pay more.

Okay.

Right.

Okay.

So to get out of paying $1.6 million, you got to figure out what to do with it, because if you're going to pay $1.6 million to Uncle Sam, you're stuck. Right? So let's do the math. How much do you have left over from the $5 million when you, when you You do 0.6, about $3.6 million leftover, right?

$3.4. Is it always that corporations are taxed 15%? Always. That's just the rule.

That's the rules to the game.

Okay. This is why it's important to have an LLC before you take the check. Because when you take the check in your name, this is what you have to pay. And this would only matter for like an LLC, like sole proprietorship. So like if you're registered as an S corp, if you're only registered as a sole proprietor, you will pay 32%. So it has to be an S corporation with a board, all that stuff.

So is it the same with like our self-employment income? Like even like being a real estate agent?

Like, no, because that's active income. When passive income, we teach people about passive income. But what happens with passive income to your personal account, it gets taxed as capital gain. Okay.

Capital gains is less.

Well, not all passive income, just the stuff that you get from selling something. If it's passive income, coming in as like checks from the bank for rent, that's not capital gain. If you sell the mobile home park, what you get after your proceeds, the profit, the profit, that's capital gains. So Katia is trying to figure out how to buy a horse, go on vacation, do things. She's got a catamaran she's going to buy and sail around the world in, all that stuff. Right. And she can do that on $3.4 million as long as she understands when she got $5 million, that $1.6 million got to go somewhere. Right.

So right now I have an option. What?

I have control over the $1.6 million from day one until the end of the year. Yeah. You have control of it until December 31st.

Yeah.

What are you going to do with it? Are you going to grow it? Are you going to be a good steward? Are you just going to like—

So let's talk about that for a minute because this is to the government. This has got to go to the taxes. So you got $3.4 million to play on, right? But you have to pay $1.6 million to the tax man. So this needs to become investment. And the reason why is because if you invest that 1.6, you can spend all of this on your play stuff as long as you invest this. To invest this into needs to make you enough to match that, right?

Okay.

Because if you do 1.6 times 3, what does that come out to? Um, 58 or 4.8. So you're at 4.8. Now you see how you can make your 1.6 back into the $5 million.

Yes.

Right. And you're going to just rinse and repeat doing that. But you're going to do that instead of paying taxes with it. You're going to buy assets with it. This is where cost segregation becomes a thing because I'm going to go over here to the business, for example. Let's just do this first. So my tax bill as a, as a, as a company, what is $750,000 minus the $5 million?

$5 million minus $750,000.

$4.25 million. Right. So I have, I have $4.25 million that is basically profit for my company. And in my company, all of you are board members, so it has to get split that way. And so the $50,000 right here goes to the tax man. How do I avoid paying those taxes to the tax man, right? And how I do that is by making sure that I, and I, I have something that I can write off here for that $750K. And I do that with assets, liabilities, and that's basically all you have: assets, liabilities, and labor. Okay. Those are the things that you can basically write off as a corporation. So assets would be be land. Can anybody tell me what a liability would be in business?

Like, I'm just kidding.

Would overhead be a liability?

Huh?

Overhead or vehicles? No, a vehicle.

A vehicle.

That's right. Like machinery. Machines, right?

And they're a liability because they depreciate in value.

They depreciate.

They depreciate.

They depreciate. So, and I'm breaking this down for you to understand what it does, what we do to pay taxes here. And then, and then this here is literally like labor is help. Employees, contractors, whatever, right? The components to getting the stuff done. There's more that can be written off, but this is the example. Assets for a company to go and buy assets, they get to write off 100% of that first day. So if I go buy, if I go buy a piece of land for $750,000, I'll get 100% of that written off, depreciate it right there because I bought it to expand my business. Liabilities such as machines, those are spread out over time. So if I buy a truck, they only let me to write, they only let me write off, say I buy a truck for $100,000, they make me take $20,000 $25,000 a year because it— they'll let— or $20,000 a year because they'll let me write it off for 5 years. I can't write it— I can write it off all in year 1, but then I can't write it off again ever. So I could write off a $100,000 truck, either 100% of it or do 20% of it times 5 years. Does that make sense? On a liability. And then on a labor— on labor, I'm only allowed to deduct 50% of that. Uncle Sam doesn't— Uncle Sam's like, you don't get to write off all your labor. You get to write off 50% of it, but you're still going to pay me taxes on the other side.

So assets is $100,000, right? Is that what it says?

Okay.

And then liabilities is split up.

I either pay, get 100% day one, or I get 20% over the 5 years that they say it'll be worthy. Right.

Okay.

And then isn't that, uh, it starts with an A, I'm trying to blank on the term, amortization? Amortization is spreading something out over time, but then the there's another A word called appreciation. And so that's why you're able to get 100% of this asset on day one is because it appreciates over time. It won't depreciate. Typically your liability depreciates, assets appreciate, liabilities depreciate, and then labor, it's just a flat half split down the middle. I gave you this example because now we're going to go back over to personal. Over here in personal, when you, when you have the tax bill of $1.6 million, You have to buy all assets. You can't buy liabilities. You don't get the same write-off there. You can't hire labor as a person, so you're not getting that either. So this is why Catherine coaches to buy more passive income is because the idea is that with that $1.6 million, you buy something that turns into a 3x or 4x multiplier, right? Because it appreciates and assets appreciating bring more income. More passive income means more ability to write it off. So on that asset where we talked about Mike Michael buying this building, Michael bought the building. When Michael bought the building, let's just say Michael bought the building for $9 million, or I'm sorry, let's say Katia bought the building. We're going to, because we're going to use Michael's example. Katia needs, is going to buy the building for $9 million. She's going to put the $1.6 million down as the down payment, right? What she can do is because it's a building, she can, it's a liability, right? Like we said, machinery, equipment, building, Land is 100% because it's going to appreciate, but a building depreciates. Why? Because you got maintenance and issues, right? So with the land, with the building going to depreciate, they'll give Katya 39 years to spread out $9 million. So when you do the math real quick on that, 39 divided by 1— 39 divided by $9 million, $230,000, $230,000 around. So your tax, your tax relief is $230,000 per year, right? So at a tax relief of $230,000 per year and you have a $1.6 million $1.6 million tax bill. Somebody do the math on that. You still got to do like a $1.1, $1.2 million tax bill, right? And you only had, you only had $1.6 million to start out, right? Like you kept, you held aside $1.6 million to pay taxes with, but when you went and bought the building, it's only going to let you depreciate it $230,000 at a time for 39 years.

So you're getting the $1.6 million, you're not having to pay that. You're getting another asset or another investment. And you're, you're, and you're getting a tax deduction of $200,000 a year.

You're only— but you're only going to get— because they're going to give you the $9 million, the building. You bought it for $9 million. You put $1.6 million down. What you were going to pay taxes with, you use $1.6 million. I'm trying to teach cost segregation because we did cost segregation over there for the company. It's easy to do with a company, but for a person, you can't. It's hard to do. You only get— you can only depreciate your asset one time. Your building gets to depreciate one All right. Over 39 years, right?

What if you buy another building?

You only had $1.6 million to play with.

Oh, you need to make more money.

Right.

Okay.

So now if you, if you only can deduct $230,000, you still have to pay Uncle Sam $1.3 something, right? So let me show you, let me show you what cost segregation does. Instead of, instead of trying to deduct the $9 million and that's it, we're still going to deduct that. But what we're going to do is we're, and we'll carry this down like this. What we're going to do is we're going to tag in there all the things that it has, like the the flooring, the lights, the windows. Let's say, remember we said that machinery gets written off. This building came with car lifts in it. There's a total of 15 car lifts in here. It has 27 refrigerators.

Like, would the desks and chairs also be—

desks and chairs. Like, see what I'm doing now? See what we're doing? We're making a grocery list. And with this grocery list, what we're going to be able to do is— this was $5,000, this was $4,000, this $17,000. These are, these are, these are $30,000. These are—

will your building most likely be associated with some business? So then, so then you would transform the building into a corporation?

No, you're going to, what you're going to do is you're going to buy the building and eventually it becomes a corporation.

Yeah. Okay.

But going in, you as an investor need to cost segregate so you don't have to pay $1.6 million. So you're going to take the building and you're going to break it into all these little pieces so that what you can do, because you get $5,000 for flooring, but you have to do it over 5 years. This is a list of everything you can, you can write off instead of 39 years. You can do it over 5, right? So the total for flooring, the total for lights, the total for windows, the total for car lifts, the total for desks, the total for chairs, the total for everything in this building, right? Every single thing gets a total and you divide those totals by 5 years and you go—

And always 5.

Always 5.

5.

If those are all 5-year products, huh?

So they can be—

the IRS tells you how many years you can write it out for. Some things you can take what's called bonus depreciation 100% day one, like land doesn't require any maintenance because anything you do to it increases in value, right? So you get 100% on land but nothing else. So like this car lift that's in here, it has a 5-year lifespan. I'm going to be able to write off $6,000 every year for 5 years, right? Does that make sense? You got a system I think Cicely got the light bulb moment. Go.

Well, okay, I lost my question. Sorry, my brain is going off. I'll come back. Come back.

Let me just—

I know, I see the fireworks. That's okay. Let— like, enjoy the— enjoy the pretty fireworks and go. There you go.

As an individual— so this is Katya doing this, right? As an individual, would it be— would it be worth it for her to at this point turn into a corporation? Because now she's having—

she will, but she didn't do that, so So again, if she bought it as a corporation and got the check, if she got her, she got her $5 million as a check to the corporation, it'd be that story over there.

Okay. That makes sense.

Right. But high net worth individuals, even though they own corporations, they still have to take checks in their name.

And all these things are paid. So all these, the flooring, the lighting, all these things, what is that paid with? Is that paid with a loan? Is that paid with the cash that came from the $5 million? Is that paid? Is that? Where is that being paid from?

So here's the thing. She bought the building for $1.6 million, right? And so when we bought the building, in order for her to get a better deduction, because just buying the building, this is all she gets, right? But if you hire Mark to do a cost segregation study, Mark comes in, he looks at the building and he says, your building has all these things in it. And he provides us with a price for all those things. And then he provides us with what the IRS is willing to let you write them off 4 so that we can build a grocery list. Because if you go through here and figure out what all these come out to, your goal is to get to the point that you have $1.6 million disappear, right? Because you're trying to add all this up and chew up that $1.6 million you used as a down payment.

So you get a building, you get all your stuff, you get your $1.6 million. It's not liquid cash. But it's basically put back into something that will grow more wealth for the future.

You have two choices with $1.6 million. Pay taxes with it or invest it.

Or reinvest it.

When you invest it, Uncle Sam says your investment can get between 10% and 100% depreciation or deduction, depending on what you invest into. If you just invest straight into a building, you're only going to be able to get— what's 39 divided by 100%? That's 39%, right? 30. You're only going to get 39%. You're only going to be able to write off 39% of your building.

Is this some— somewhere, is it similar to like a 1031 exchange or is this completely separate? Okay.

Completely separate. Because the 1031 exchange, you're taking your capital gain. Katia could— Katia could do this with her $1.6 million and go and buy something, right? But here's the problem. She has nothing to really swap into because she didn't own it or run it long enough. So technically she can't 1031 that money because all it was was raw land and she flipped it. She didn't build it and then, and then sell it because you have to do like-kind property. So unless she goes and buys more raw land and does it again.

Oh, like-kind property.

Like-kind property.

Okay.

Right. And it has to be like-kind all the way to the point that if there was debt on it, you have to include the debt too. So if you go buy something on a 1031 exchange for $5 million and you only have $2 million in capital gains, You got to take a $3 million debt. And then when you go and sell it for $10 million, when you go buy the next property, you got to buy another property and have $3 million in debt on it.

Okay.

One more question. And I'll— so the, for the cost segregation, we have somebody that does a case study for us to find all these things. So we now can show proof that this is what we're doing with the $1.6 million.

No, it's not proof. What it is that the $1.6 bought the building and then you got to write off everything in it.

But the case study is helping us find those things.

Right. And then what you do is when you file your taxes, you're telling the IRS that you didn't just buy a building. You bought a building that has lights, carpet, LVT, shades, drapes, chairs, desks, car lifts. You're telling them you're going to list everything that you have in the building, like an inventory. And then you're going to put the deduction next to that, what you want to get as your deduction, all the way up to the point of 1.6. What's your question?

No, that was so— it was just very silly of me because I, like, in my brain, I just realized though, so you're not paying for— because when Cicely asked, like, how are all those things like flooring, lights, windows, cars being paid for? I was like, how are they being paid for? But the $1.6 million is the down payment for the building that already has those things.

Correct.

And then the only reason that we're doing that tax segregation study is to determine how much of the $1.6 that we already paid gets written off. Okay, I understand.

And again, to this point, why not just do a 1031? You can 100%. In your situation, Katia, it's rough for you to do. But if you did a 1031, and we're going to have people here to talk about 1031, you go with a 1031, you have to pay people to manage your 1031.

Now you can't manage it by yourself.

No, called a qualified intermediary. Because here's how the tax laws work. If you take the money before you invest it, you have to pay your taxes on it.

As soon as it becomes yours, game's over.

You get a tax bill. So then that's why you got to invest, so that by the end of the year you hand that to your tax man and you go, hey, here's all my deductions, I'm not paying shit, thank you. And if you use that person to be the go-between, then you're like, I never touched the money. In a 1031, you have to use what's called a qualified intermediary who takes— basically takes your money, holds it for 180 days, and while he has it, he's making 6% interest on it. And then at the end, when he, when he helps you move your money from point A to point B, takes 2%, 1 to 2%.

Okay.

So you're still, you're transferring that money to other people's pockets, but it's a little bit less encumbersome on you to have to figure out I'm buying this and doing this and stuff like that.

Okay.

Plus you might, you're doing cost segregation to help your personal income, not your business income, because your business income already comes with the ability to do write-offs. Like crazy. And so all you're doing inside of your personal income is acting like a business, but you're doing it in a way that's written into the tax code to be that way, right? Like I said, typically if you just earn a paycheck and they take your— they deduct your taxes automatically, at the end of the year they give you what's called a— you go to H&R Block, they call it a standardized deduction, and they just say this is what every American typically spends. So we're going to— you overpaid your income taxes, you're going to be able to get some money back because we only needed, we only needed $50,000 and you paid $80,000. So we're going to give you $3,000 back, right? So, and that's how that works. And so you go in and say, but wait a minute, I have all these other deductions. You can increase your tax return because you got out of standardized deduction and go into itemized deduction. And when you itemize, you have to sit there and prove everything you're trying to itemize. So when I was a registered nurse, super easy for me to itemize. And that's why I understand cost segregation on a purchase. Is because when I was a W-2 employee, I itemized everything. I itemized the clothes I wore, I itemized the car I drove, I itemized all the courses I took. I was a nerd. Everything I did became a, became a cost because you can depreciate it, right? Like my clothes brand new were worth more day one than they were at end of year. So when I, when I donated my clothes, I got, say I spent $10,000 that year on scrubs, I got to write off $3,000 on scrubs because I bought them. But then when I donated them at the end of the year, I got the other 70% back.

Okay.

Right. And so it was based on how I was able to write it off.

So you're understanding—

same rules apply in real estate.

Like the 34,000 pages of IRS.

So you said there's 1,400 in paying taxes.

There's 1,400 pages of the IRS code is all about paying taxes. Then you have 34,000 on how to not have to legally.

Blake could find out exactly how many pages.

I'm sure he's driving right now.

He's all about this information so we can, like, expand on it. I said, where do we read this information so we can expand on it? Like, this was, like, eye-opening so much. So, like, you said, like, case studies because it, like, helps with the reticular activator yesterday.

How do we—

how do we dig into it to where we can, like, really obsess?

So one of my favorite books is Tax Loopholes for the Rich. Hold on, let me— it's in—

Laura, can you go to my favorite I think the better, I think the better place is to go to CatherineBell.ai and have that conversation. No, I'll find it. It's Kiyosaki. It's in the Kiyosaki.

That was, that book was an eye-opener for me. I was like, oh my gosh. And just as a real estate investor, different ideas. And they continue to update the tax code. So we are, again, this is why having a tax planner, the person who gets out in front versus a tax preparer, because once the deed's done, it's done. This is super important. So we have partnered with with Tax Hive, and they're going to be coming in and teaching more about all of this. So again, this is just something that we get to learn and continue learning. And here's a great lesson, and I was thinking about this, and again, how— again, you get like— so decades ago when Christopher and I had our company, it was interviewing people, and I was really clear, like, look, like, are you going to be able to help us plan out into the future so We're not paying taxes. Like, we're doing everything legally. Anyway, she's like, I know how to do this. Anyways, long story short, she had no idea. She was a tax preparer, not a tax planner. And again, just because somebody says that— she was part of the reason why I trust but verify, speaking to her other clients and having other clients— like, had I actually interviewed other clients of hers, I would have discovered very quickly she actually has no idea when it comes to tax planning. Tax preparing, she was fine, but tax planning, not at all. So two very different skill sets. So you're going to need really good—

well, they're two different people. A tax preparer and a CPA are two different people. We met a tax preparer last night and a tax planner and a cost segregation guy, and we had all those conversations.

Laura put the book there. That was an eye-opener for me and for Laura too. The other thing I wanted to follow up on before we close out is is we all gave you all homework yesterday. So this is more homework, this book. But what was the homework from yesterday? Does anybody remember?

Yes, it was to go to 5 groups on Facebook and then to go on from Tommy's side, and then 5 groups on Facebook from Catherine's side.

Okay, who did it? I just added the groups.

We're supposed to talk on the groups? I just added them yesterday.

Okay, okay, Adam, for now. And then, and then The goal is to, starting next week, go and get— go to Catherine's page, for example. Go to the post that she just made about going live. Share that to as many— I think you get 9 groups and you could just literally click the share button, scroll through it. Normally it'll say share to my page, share it to your page, but then go back and share it to groups too. Groups that you join and spam the group with it. I don't like— again, people are like, oh, I don't spam. Get rid of the idea that it's spam, because with the amount of crap out there right now, you— we have good, we have good product. That is not spam. It's like regurgitated stuff stuffed into a can. We do— we are fresher than a freaking banana on a— on a—

well, we're providing value, so we are not spam.

But one thing about that, I found out if you actually posted the same group too many times, you have to space it out. I accidentally got Catherine's account temporarily banned just because I was posting too much. So that's just one thing to keep in mind, it's just the diversity of different groups. But you said the keywords, posting too much in one place, right? So you're going to have a moderate level of this in that you're going to go once a day and do this. Once a day is not too much, and doing 9 groups is not too much. It gives you those options. So just be mindful of doing the same 9 groups, move it No, you need to have a rotating list.

So you can have a spreadsheet that tracks, and so that you make sure you rotate through.

The Spreadsheet Queen would love to have that. But if you're just able to count the 9 and then skip the next 9 and then skip, like, it, it can be really simple to do. Because again, you, you'd have to go back to a spreadsheet, look, and then go over here and look, and it becomes, it becomes, I want, I want to make this not work. I want to make this a skill, a habit set, skill set, like scratching, uh, snitch on your body. Like, I need to get out and advertise it, share this among 9 groups, boom, next day. That's where you want to be with it. So, but if you go and share— if you go and share 9 posts to 9 groups, and that would be 81 in one day, that's a little bit excessive though, and that could get you banned. So calm down, Blake, don't do that anymore.

Look, I've been put in Facebook jail so many times, I think— I think the max groups you can post to in a day is like 35 and I like exceeded that multiple times. So we're good.

So the goal for that is to post— are we po— what is it that we're trying to get them to this, right? We're trying to get them here to Land Shark.

We're trying to get them to whatever we put on Catherine's page. So Catherine might have shared on her page is a picture about Land Shark. Whenever you go to her page and you click the share button to share to groups, that's the one you're choosing. So when it pops up on your page, it's presenting you with what the algorithm thinks you want to see. We want you to tell the algorithm, thank you for that, I'm going to share it with 9 other— and 9 other places, not 9 other people, but in 9 other places. So whatever it is, whether it's a static image about Land Shark, a video about Wealth Wise Women, something about the conference, whatever, you can see this on her page, or you can see it on a WhatsApp group because I'm posting it there as well. So, and then in Facebook, I started sending out messages to people on Facebook about stuff because I'm coming across more and more Deals. And the idea is that everyone in here should be trying to run at least 130 deals a month, one deal a day, right? Go up to 100 if you can, but that's 3 deals a day. But with this, it's just the social currency we're trying to utilize to expand the brand, not just the podcast, but the brand itself. Like the webinars that we're having every other, like we are now doing a podcast every day and a webinar every, every Tuesday Thursday. Like, we are doing so much media content right now, it is ridiculous. We are producing more content than anybody I know. And the only way that becomes valuable is people know where to get it, know where to come and see it. And that comes through us sharing it out from Washington, sharing it out from California, sharing it out from Florida. All of our Florida people are MIA today, so they are—

us West Coast people are true, hard and true, right?

Well, we should have more people joining us next week, Neil and Robert, Mara.

But whatever you're— to answer your question, Cislyn, whatever your, whatever your algorithm's telling you is important is what you should be posting out.

Okay.

This would actually be a really great mini class for Katya and Blake to teach.

They gotta do it first. They can't teach it until they know how to do it. So we'll get 'em to that point. Blake's gotta quit doing Tokyo Drift though.

I wanted to ask you guys, do you guys, is there value if I can get people to Club Scottsdale, and like, is there value for you guys if I can get people from like Danville, Pleasanton, like there's like some high-end areas around here that have like country club golf courses. Is there value for you or the brand or the team to get people there? So it's Club Scottsdale, like to—

we want to, we want to have live, we want to host live people here too. Like we love you guys on Zoom, but we want to have people sitting behind us too and talking to them about their deal and what they want to do. And so I would like to set it up as like a classroom eventually where people are coming to run deals every day for a couple hours, learning how to do it, mingling on it, talking about it. But if we, when we get one to get together and do it, like that's the goal. I'm trying to actually set up, I'm trying to set up that meeting with that, that guy that we called yesterday. He never called me back, but I want to reach out to him and I want to reach out to this guy that's got the concrete He's got the concrete or not concrete, the dumpster. So I almost feel like this building was getting cooler and now they're fucking opening doors and right.

They like totally ruined it. Sorry. Or it's really hot and they just opened the big bay doors to move the vehicles out. So letting all the AC out that we just collected.

That's messed up.

Yeah. Anyway, is this valuable today? I'd like to know.

Like, yeah, I wanna make sure that he answers Cicely's question.

I'm sorry. Cicely's question.

I'm getting people coming in.

Cicely did answer your question.

Oh, you did. I was just think, cuz I'm thinking of networking. Things like around here in certain areas. And I was thinking if it's helpful or adds any value to you to get people to know about Club Scottsdale from some of the areas around here that might—

Absolutely.

Okay.

And you can tell them, be like, I'm part of the mastermind that runs out of Club Scottsdale. So if you're ever in Scottsdale, go by and see them. Stop in and see the podcast, but go check them out too. So definitely.

So what are your takeaways for today or even this week? Because we taught a lot this week.

I took away all these awesome notes. And I'm so excited. I promise they're here, and I'm excited to see the comparison, like the flowchart between the individual and then the corporation. And then I'm really curious in purchasing the tax loopholes for the rich. And then I never even knew that the IRS incentivizes people to invest their taxes instead of just paying them. I've never heard that in my life, right? So I thought that you were like— I thought that you just pay the taxes and that's what you do, and there's no creativity around it, and there's just one way and that's it. So that was great.

Again, this is what school doesn't teach you because they want to keep you stuck in the rat race, stuck in the trap, right? So yes, we're pulling back the curtains. Anybody that wants to learn more about this, like, again, join us. It's pretty awesome.

So based on that note, then let's wrap it up with a prayer real quick. Heavenly Father, we thank everyone for the blessing of this day and the blessing of this life and the ability to go out and do all things. And it is in your grace that we're able to do those. So we ask that you give us the power, the patience, and, uh, glory in your son's name. Amen.

Okay, you guys have an extraordinary weekend. Katya, I'll be in communication with you. We'll get clear when I can play with you and get some more videos done.

I've been adding videos those into the thing, and then everyone is posted every time you add one.

So I added Cicely and Adrian because they did a bunch of videos and stuff, and then I also sent you the email from Ryan with the folder of the Champagne and Cowboys and those others.

Yes, perfect.

I have an idea for videos, make it easy for you, Catherine. So if you have— if you have— while you're working, you're working on your computer, if you're you're just running around, you're doing stuff. If Tommy— or Tommy can just record you walking, you may not have to speak, but you can always go back and do a voiceover with a script. And a voiceover can— you could just— ChatGPT can write the script, and it usually— you don't have to keep editing it. It could go super fast. So if you feel overwhelmed with the video, that's what I'm doing on the videos that I'm— I don't have time to be in front of, like, have my hair done, makeup done. I'm getting clips, and then doing a voiceover.

So I'm just putting him into the folder, letting you and Cathy and them do everything. Okay.

And I just sent you a message, so if you could give me feedback on the wallpapers, that would be perfect so that you can get those ready. And then—

perfect.

Beautiful. Here's the other piece I'd love is we need to update my wallpapers with the upcoming— here's the upcoming— oh, this is actually really good. We have an upcoming— the 7 streams series. Let me put this in here for you. So here is the link if you guys want to go there. You can see the series that we're doing of the upcoming classes that we're doing, the 7 Streams of Income case studies. They're all case studies, so you can't invest in anything. It's just, it's what's happened in the past. But moving forward in the club that we're creating, people will be able to participate in deals like this in as a part part of the club. So we are working on the legal docs and once we get that set up, we're gonna have a very short window for people to be able to actually join the club and be a part of creating those multiple streams of passive income. So awesome. Did you get the— I put the link. So there you go. So we can be promoting all of those and I want to be creating, updating my banners and all of that for every single week for each one that we've got coming forward.

So, okay, sounds good.

Awesome sauce. Okay, you're all amazing. I appreciate you, and we'll be talking to you all later.

Thank you.

Okay, bye guys.