BP was one of the influences that led me to start real estate investing, along with Ken and Robert. Im halfway through the process of my first purchase. Found a overly leveraged landlord that needed to sell urgently and cheaply. Soon having an apartment rented to nurses by the room near my city's hospital which will cashflow HALF of what I currently earn at my job. This started out as me just devouring hours of videos and books from all of you authors and thinking about real estate 24/7 for a year while saving money for first investment. Grind, grind, grind !!! Wish me luck guys !

40:00 Depreciation is magic 50:00 LLC facts

It would be amazing to have him come back and have a less experienced buyer interview him so the information will be more understandable and easier to relate to. The video was very informative and great.

I retired 21 years ago at 45. I didn't have a pile of money and had no plan to retire. I was a software engineer working at startups and had one pay off a $100k so I decided to take off work and develop my own app to sell. My plan was to go back to work when the money ran low. I absolutely loved writing code and creating consumer apps. But wanted to create my own app. This was when the web was starting out so there wasn't a lot of social media or info on "retiring early". A strange thing happened...the money lasted much longer than I had imaged. I also got into gardening and playing basketball which was fun. I owned my home in San Jose CA with a $2200/mo mortgage payment. I could see without that mortgage payment that wow my expenses were really low. So I fixed up that house (had to refi with no doc loan) and sold for a $400k profit. Moved to Phoenix bought a house for $305k, sold that 6 months later for a $60k profit (just before the crash) and bought a $265k house closer to central Phoenix. Bought a second house in central Phoenix for $200k during the crash. Basically I've lived off cap gain on houses I lived in. I try to buy dumps in OK areas and I fix them up, sell, repeat. I do all the work myself, another hobby. I generally keep the cap gain below the $250k tax free limit ($500k when I was married). So my taxable income over 21 years has been below the limit needed to file so I don't even fill out Fed or State income tax forms. Weird feeling. I don't invest (other than my home) because I suck at investing and it's a job I don't like. So no income from investments. $0 income triggered qualifying for Medicaid so $0 health care costs. I loved Medicaid. No stress having to pick an insurance company, everything is paid for, no co-pays. Medicaid only considers income, not wealth. That saved me a lot of money. Then I found out because I was on Medicaid I could also get a smartphone and data plan for free (Lifeline). My average spend in the past 10 years has been $600/mo. Crazy right? I self insure my home, don't heat in winter, hot water heater off in summer, no clothes dryer, eat Keto so limited diet (never eat out). $600 includes everything including $100/mo for property tax. I love living simple. I don't have cable TV or even a couch. It's been a strange trip. There are options to retire early, not pay income taxes. I get no one believes any of this is possible. 21 years ago I wouldn't have believed it either. Today I'm fixing my remaining central Phoenix home to sell later this year or spring 2023 and moving to SE Asia. As a 65 year old single white dude it's pretty cool I'll be able to date/marry a very young attractive woman who will be a great wife. I can even have kids and have the funds to make sure my kids get through college. No sure I will, but pretty sweet option to have. The one tip I have is how important marriage is to any financial plan a person has. The biggest risk to retiring early for example is divorce. Never hear that mentioned. When there's a big pile of money people can start seeing being divorced as a way to get more control over that money. Also I couldn't live the way I do, and want, while being married. Chances of find another person to live like this is pretty much impossible. I'm not against marriage, only marriage in the US and most western countries. It's a bad financial contract.

Thank you for making this episode, I have been rambling in my mind about what I should do about my goals with taxes. Now I will have less questions for my CPA...

Such a valuable episode!

I’m about 3/4 through Tom’s book! Great content! Thank you!😊

Ah! I get this now. When I was 35, I used credit cards to renovate a home, and buy a car (for business only, not pleasure). My method would have worked, except I did not have any financial education. And yes, my asset did not cover my expenses, I did not know about CAP rates. I did have to go bankrupt, but in the process I learned from my mistake, and today I have an amazing spending plan, where I can document my money movement. I can definitely now see that using credit would have helped me build wealth, but I just didn't know how. Buying and hold makes sense, but only if a person understands all of the expenses to run a property (plus emergency funds should be calculated into that equation, me thinks).

Tom W is a master mind on taxes. Great learnings from his books and this discussion

Love this. More tax and insurance strategy shows. Thanks for the hard work, BP!

Excellent Podcast episode. Mini-course on Real Estate investing all in one package. A question I have for Tom Wheelhouse is whether using Statutory Trusts (Wyoming, Nevada, etc) for each rental property, held within one LLC (From a state that has a charging order only for creditor remedy) would protect one property's claims from each of the others and the LLC protecting all properties from an outside/personal or other claims?

Thank you Tom W! Thank you for educating and sharing us your passion.

Really good information! I took pages of notes and now I have so much information I have to act on.

Great information! He's simplifying the situation with the amazon like deals around the country, for example in WI the state actually paid Foxconn to build there, it wasn't just a reduction in taxes. The benefit to the communities that pay large companies to move in are highly contested.

Love this show. For years, many BP shows focused on "20 doors in 1 year" type of stories. Not much on financial side of real estate investment. It is nice change to see!

Tom is great CPA, i register his website to learn more on my tax preparer practice already

Hi David: great show. We have a few rental properties that are paid off, under an LLC. Understand it’s dangerous if get sued. But how do you get mortgage for an LLC? Mortgage companies wouldn’t lend to an LLC. Thanks Susan

It’s a real education ..awesome learning

This actually saved me. I love my W2 work and have my 2 businesses built on outsourcing and VA. My problem is my 2 businesses are now gaining profit more than my W2. My initial plan was I need to invest in short term rental to take advantage of depreciation for my active businesses. It turned out, what I was doing is correct. My 2 businesses are already passive since I just audit and create systems which just requires 2 hours a week - less than 100 hours in a year. Turn your active income to passive income. Invest passively in Real estate and take depreciation losses on the profits in the passive income. Thank you!

How do you go about calculating the value of the property versus value of the land when determining standard straight-line depreciation? Also, for example, let's say I bought a property in January 2022 for $775,000 but I put $750,000 into renovations on the property and furnishing, designing, etc. but it took until October 2023 to complete the project. Does the 27.5 straight-line depreciation start this year at the new value of the property or does it start at the purchase price? This is a real example of an active Airbnb. Please advise.

Tom mentioned an online/DIY cost segregation tools for single family houses we could use. Anyone have more info on this or specific links they can reference?

I’m constantly battling my Dave Ramsey investor friends (in a friendly way) and looking forward to sharing his quote: “If you are afraid of debt then what you are your really afraid of is the asset not performing financially.” Stew on that for a little bit.

This is great. My question is: How do you create loss through short term rentals when the goal is cash flow? What am I missing? Depreciation can help...but not very significant.

You guys are both incredible great job guys

Love these solo deep dive discussion with David with guests or with QA. So informative, engaging, and enlightening.

Thank you for this invaluable content 🙏

Love the comment on hire professional to do it .. I can really feel it as I worked in IT consulting. Unfortunately most real estate agents are not giving their 100% effort - especially when they are the seller agent. I sold my house in 2021 at market price with no mark-up and the agent that I used did not help much to drive traffic nor getting better offer. I might be able to sell it for same price thru sale-by-owner and save the 3% commission.

This is one of the best information on the tube!

Amazing episode! Speaker is very intelligent and clearly explain all questions

Phenomenal info! Thank you guys!!

Amazing information, THANK YOU

Thank you both ❤

Wow! Great podcast! Lots of great take-always and nuggets of insight.

Great content! Thank you

Excellent video thanks for your time

Thank you for sharing

Hi David. Thanks for sharing this information. I am thinking about investing in a 37 unit JV out of state. All 6 partners have a percentage of ownership, voting rights, sign on the loan and an active role. My role would be to prepare and update the financials. Would the hours spent in this role count towards material participation? Thank you!

Thank you so much for this content

Thanks for having Tom W. on this helpful informative tax strategies podcast he dished out alot of meat and potatoes keep the gems coming .

Can a second owner of the house take 27.5 year depreciation if the first owner already used this option? And one more question if anyone would care to answer. David mentioned that his paid off properties were sitting ducks for scammers who knew how to abuse the title companies system to take over the ownership of the paid off property to sell it fraudulently to unsuspecting buyer. How to protect such paid off properties if one doesn’t want to put another loan on it? What are the steps and ways to protect our paid off real estate? Thank you for the great content in each and every video you produce here.

This is awesome! It has opened my mind and eyes to adjust my strategy going forward🙏Thank you so much!!

Great information, thank you so much for sharing it with us!!

I absolutely love bigger pocket. The information they give is priceless!! I’m working to start my real estate journey. the more I listen the more confident I get!. I’m really glad I stumbled across this content. Life changing!

Just found your channel and I’m so glad I did cause I’m interested in investing in real estate and I had no idea where to start. Thanks so much for this invaluable content.

i just purchased a $1.5 million off-market seller-financed 7-unit apartment building in Phoenix, Arizona. I'm gonna look into having a cost segregation done and using bonus depreciation & if it makes sense for my situation... My other 30 units of multi-family consist of 4 plexes, a 6 unit & 1 acre of land and I never looked into it because I always thought they were too small of buildings and purchase price has anyone else ever done a cost segregation or used bonus depreciation? Was it worth it? Thxs for Sharing!

Fantastic conversation!

Really loving your videos

Thank you ❤

Can I write off the interest on a seller financed property?

If you have long term capital gains from stock or crypto can you buy a property and do cost segregation to deduct you gains?

Can I write off the depreciation of a

Awesome information 🔥💪🔥

Thank u

Thanks for sharing

This was amazing info!!!!!

Great information.

So Much KNOWLEDGE! Great video

24:23 - why we are never going to have a loss if you use your equity? Can someone explain?

Excellent content

Thank you for keeping the interview on topic and providing the most information in the shortest time. My time is super limited and you are providing a valuable video. I am becoming a subscriber!

Love it , sooooo good ( great video)

how do I find a local CPA that is in your network?

In the control everything segment what if you don't have the intention to become passive in your self-employment business for instance I'm going to run a service based business teaching meditation I'm going to continue to do that I'm not going to step out and abdicate that so it's a bit confusing your guest would Define terms for people like me that don't have I'm working understanding of the tax law and lingo. Thank you!

What if fail to make the llc payments to the state? What happens to the llc ownership of the property?

Does working as a real estate photographer and/or real estate stager qualify as real estate professional hours according to Tom? Thanks

Have you’re own business! Let’s talk amazing products and services! Great video BP!!

Thank for being a Segway from the professionals to us cuz I NEED these analogies and clarifications!!!

I will definitely start reading after watching this video.

Man Tom is awesome he makes just about every other tax person seem subpar. I read his book a while back and was shocked when I spoke to several tax attorneys and accountants who knew nothing about it or what’s discussed in the book. 😢

Tom Excellent as always

One of the best videos I’ve watched on this channel. So much info! Thank you 🙏🏾

Fantastic episode!

What an incredible episode!!! I hope you guys do more podcasts like this. Some episodes with hard money lenders would be nice too.

So much new information that my brain can’t catch up. I have to watch and rewatch 😳

I cant seem to find anything about the Section 469 C7 Election on the IRS website. Any links you can share?

David mention you start with your team to raise fund to buy luxury house for Shortterm rental, can I have more information how to join?

Nailed it!!

Does depreciation apply to condos/apartments?

OK, my Accountant told me not to get an LLC even though I have three rental properties because he said that my insurance will cover any damages as well as my umbrella policy. What do you have to say about that? That may be confused that having an LLC would be redundant and maybe not necessary if I have a $2 million liability policy.

Hi Guys, very informative, When he says 500 hours is a month or a Year?

I love the idea of taking active income to passive. If you own a rental property and have a rental company manage it for you, would that count as passive because you personally spend less than 500 hours on it?

Great Information

We have 4 rentals in the same LLC (no loans). So we purchased a 3 million unbrella policy.

The depreciation is basically the "wear and tear" of the property. Awesome knowledge! 👌

Lol the king of analogy has met his match! 😂

Brilliant!!

Great knowledge! Thank you for the video guys!

It when you avoid taxes do you qualify for the real estate

Hi David and Tom, I love this video.., actually I love all Bigger Pockets videos, I am starting to invest in real state and would like to ask if you can guide me were to go to get a tax specialist or accountant, CPA so that I receive professional help. Tom, Does your firm has offices in Michigan, I live in Michigan and would like to be guided by you.

Thank you for an amazing guest and great advices!

depreciation is 27.5 years for residential and 39 years for commercial property. For a Cost Seg study hire a reputable firm (has engineers, accountants working in the firm). the same as you would for a 1031 exchange, you want a qualified intermediary in place.

Tom is a "flipping genius"(to mix youtube metaphors) in explaining taxes, it's amazing. Great video from experts in tax and real estate.

I HAVE WAITED SO LONG TO HEAR THIS!!! Yayyyy!!!!

49:10 LLC

Why are LLC harder in Tennessee?

If you don't depreciation doesn't the irs act like you did when you sell?

i’m just saying Tom never really specified if getting an LLC is the right thing to do or not. 52:18

Great guest, thanks Tom and David!

How do I make the feature films I Invest inn and Produce deductible?

How about creating a living trust and placing your LLC (s) into that trust? Is that not the best way to go into Incognito?