SPC Charity: Choose Love for Our Students

Teachers are good people but man do they not make any money!

Often times they have to pull money out of their own pocket to pay for things the School District cannot afford.

We decided to change that!

The DonorsChoose listing link.

Later that day…

We definitely scored one for the kids!

Here is what we got for the kids:

DonorsChoose.org was a little slow (and ~$200 of fees) the goodies arrived!

My students need supplies to support our Choose Love movement, a social emotional program that teaches children how to choose love in all different situations. We need clipboards, pillows, answer buzzers and much more.

My Students

My students are active, fun loving and excited to learn. They love hands on activities that allows them to engage in building and teamwork with one another. They come to class ready to learn and are eager to share their ideas with each other.

We continue to work together to build a community within our classroom that encourages each other to grow and learn from one another.

Its important that all students have a voice and that we as educators understand all of our students needs. We promote a learning environment that builds a culture within the classroom of love and understanding through learning. Every year I am blessed to have a loving and engaging group of students that encourage me to keep learning along side of them.

My Project

Our school is focusing on our Choose Love Movement this year. This social emotional program is encouraging students to choose love in all different types of situations. The program focuses on 4 components, courage, gratitude, forgiveness, and compassion. With the materials from this project, I am creating a Choose Love corner for my students to use as a space to express themselves honestly with no judgement or fear.

This Choose Love Corner is helping to “cultivate optimism, resilience, and personal responsibility” in all students.

I really want to encourage my students from an early age, a healthy way to express their emotions. A main focus of the corner will be the rug where students can take their Choose Love journals and share about anything they are feeling both at home and at school. The emphasis of the rug is also about different traits that I am hoping to instill in my students as well. Many of the items will be used by the students to make them feel comfortable sharing things in their journal that they may not feel comfortable talking about.

I am hoping that if we can teach students from an early stage and provide them with the life skills of coping with situations, it will continue to encourage a happier and stronger learning environment for all students.

138 – Fundamentals – Crypto Currency Basics with Andy Lapointe

YouTube Link: https://youtu.be/1vVQPdfl_So

Also check out Buck Joffrey’s podcast on cypto: https://itunes.apple.com/us/podcast/consensus-network-cryptocurrency-news-education/id1436793238?mt=2

Article Link: Text “simple” to 314-665-1767 to download the Hui Google Drive files and the 2018 Rental Property Analyzer

For a free electronic version of my bestselling book in 12+ categories text the word “ebook” to 587-317-6099.

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Join the Hui Deal Pipeline Club! SimplePassiveCashflow.com/club

Pardon the grammar – I’m an Engeneer, Enginere, Engenere… I’m good with math!

________Here are the Show Notes________

Is dealing in Cryptocurrency dangerous?

Bitcoin grew in value by 1,000% in 2017.

Ripple was the best performing crypto, which had gains of 36,018% last year due to its ease of use. Each coin of Ripple is worth a small fraction of a Bitcoin. The technology makes it easier for banks, payment providers and businesses to send payments globally. They promise to deliver an experience that is instant, traceable, and inexpensive.

NEM is an enterprise blockchain with “smart assets.” It can also be used to manage things like currencies, financial instruments, supply chains, and notarizations. Think how eBay or Amazon takes data from UPS or USPS to track your packages, but a lot bigger.

Other Cryptos:
Ardor
Stellar
Dash
Ethereum (2nd biggest Cypto)
Golem
Litecoin (getting in mainstream vernacular)

BitcoinLearningCenters.com by Andy LaPointe

Mr. LaPointe created this complete bitcoin learning system from the ground up!
You will learn practical insights into this global phenomenon. By the end
of the interview, you will also have a practical understanding of
cryptocurrencies, blockchain technology and Bitcoin.
The information that Andy LaPointe will share is entertaining, insightful and easy-
to-understand. No matter who you are or your background, the information he’ll
share will help anyone to get started with cryptocurrencies today.

You listeners will learn:
– What is a Blockchain?
– What is Bitcoin?
– What is cryptocurrency?
– How blockchain and Bitcoin are related.
– How to determine if investing into cryptocurrencies is right for you.
– What are some of the misconceptions about Bitcoin, cryptocurrency
and blockchain.
– How to create the right cryptocurrency portfolio for you and your
financial future.
– And much more!

ABOUT THE AUTHOR:
Prior to getting involved with blockchain technology in 2013, Mr. LaPointe spent 15 years in the corporate world as a Registered Investment Advisor (RIA), Series 7 Stockbroker and Mutual Fund Wholesaler. He offers deep knowledge of the financial markets, blockchain technology, asset allocation, risk tolerance and cryptocurrency.
Andy LaPointe lives in Northern Michigan and is available for interview by calling 1-231-676-0643 (Eastern Standard Time) or email: lapointeandy@yahoo.com
– Instant Availability
Or visit: www.BitcoinLearningSystems.com

2019 Launch

Most of you folks are hard-charging achieving types who listen to my podcast at 2X speed. For once you need to stop that just for this exercise.

Set the timer for 20-40 minutes and get into the right State.

Getting into this State is critical. Music, a little wine, whatever floats your boat…

Get a pen, paper, (or your computer/mobile device) and a quiet space and here we go…

 

5 things you accomplished in 2018?

Move around… do 10 push up, jumping jacks, squats!

5 more things you accomplished in 2018? Reflecting and celebrating the wins in 2018

Top 3 things that were impossible?

What did you do to make those three things possible?

[Health: Get to 155lbs]

[Wealth: Get rid of all turnkeys, do fund]

[Relationships: Create community]

[Personal (skill, hobby, enjoy?): Find something new and fun]

SMART check? Specific – Measurableble – Attainable – Realistic – Timely

On the last day of 2019… I will be immensely satisfied when I…

[Get down to 155 lbs and raised $3M in fund]

If it does not scare you bit… Its not high enough.

If you accomplish it what will it give you?

[A level that I can maintain and focus on quality.]

In TEN YEARS… I will be immensely satisfied when I…

[$25k passive a month with still being able to interact with a person a day.]

“We over estimate what we can do in one year and underestimate what we can do in ten years” -Tony Robbins

5 things you did NOT accomplished in 2018?

[Weight goals
Find a new hobby outlet
Operate in a less frantic mode]

Why not?

1) Disconnect
2) surrogate to accomplish the same why
3) used the wrong strategy
4) lacked knowledge/resources/people
5) you took the easy way
6) crabs in a bucket (peer group)

Creating the plan…

Break down the goal in four chunks:

1) Complete routine of activity 3 days a week
2) Evaluate progress in March 1
3) Possible add 4/5th day of activity
4) Evaluate progress in June 1 and at that point address diet

3 People hack: 1 person above you, at your level, and below you that you mentor

Setup environment

Four tendencies: upholder, rebel, questioner, obliger

Rewards

Taking action

Scheduling in the calendar (not recurring cause it won’t be special)

Every two weeks review big goals

Would you like an accountability partner?

 

136 – Changes in the Residential Lending World with Graham Parham

YouTube Link: https://youtu.be/AT6x3ViRPos

Article Link: Text “simple” to 314-665-1767 to download the Hui Google Drive files and the 2018 Rental Property Analyzer

For a free electronic version of my bestselling book in 12+ categories text the word “ebook” to 587-317-6099.

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Join the Hui Deal Pipeline Club! SimplePassiveCashflow.com/club

Pardon the grammar – I’m an Engeneer, Enginere, Engenere… I’m good with math!

________Here are the Show Notes________

Graham Parham: New Awards:

  • #1 in units at Highlands Residential Mortgage for 2017
  • #11 in state of Texas and 92nd in the US according to The Scottsman Guide and
  • Mortgage Executive Magazine – 1% top originators in the US
  • Top Ranked – Ask A Lender

 

Discussion today is 1-4 unit income properties, not owner-occupied.

  • 20% down on first ten financed properties? 25% for 2-4 units?
  • DTI considerations when using HELOC from primary residence to invest?
  • Credit scores down to 620. Max. credit score that helps?
  • Reserves?

New Fannie Mae Reserve Requirements for Investors with Multiple Properties Owned

The Old requirements were six months Principle, Interest, Taxes, and Insurance (PITI) on the subject property and two on all other properties up to 4 leveraged 1 – 4 family properties excluding the primary residence. Properties 5 – 10 would require six month PITI on all properties.

The New requirements are based on a percentage of the unpaid principal balance on each loan excluding the primary residence.

 

  • If a borrower has 2-4 financed properties, the reserves of 2% of the unpaid principal mortgage balances are required, excluding the principal residence and the subject property.

 

  1. If a borrower has 5 – 6 financed properties, 4% of the unpaid principal mortgage balances are required, excluding the principal residence and the subject property.
  2. If a borrower has 7 to 10 financed properties, 6% of the unpaid principal mortgage balances are required, excluding the principal residence and the subject property.

The aggregate UPB calculation does not include the mortgages and HELOCs that are on

  •               the subject property,
  •               the borrower’s principal residence,
  •               properties that are sold or pending sale, and
  •               accounts that will be paid by closing.

The subject property will still have monthly reserve requirements based on the total mortgage payment (PITI). Reserves are funds that you have access to liquid or non-liquid.  Reserves are funds you need to have after the closing your transaction. Funds for reserves cannot be your funds for down payment or closing cost.

Fannie Mae now will allow for 100% of the Non-Liquid funds, not 60%

Non-Liquid funds can be used for reserve requirements.”

 

  • IRA’s

 

  • 401K’s

 

  • SEP Funds

 

 

 

Gifts are NOT allowed on an investment property.

  •      Investor interest rates how much higher than owner-occupied?
  •      Mortgage sequencing. Example: if buyer wants to buy in Memphis today, Jacksonville next month, how should they plan?
  •      Overall, lending climate more lose or tighter than 1 year ago? 5 years ago?
  •      What should a prospective borrower do before contacting you?
  •      1031 exchanges Cost and funding
  •      What cost are covered in the exchange

What is UP with interest rates?

4 Factors that determine your mortgage interest rate:

  1. Credit Score

Credit Scores Adjustments

  •   740 +
  •   740 – 720
  •   720 – 700
  •   700 – 680
  •   680 – 640
  •   640 – 620
  1. % of down payment 20% or 25%
  2. Loan Amount Adjustments
  3. Property Type

What about the 15 Year fixed?

Does it make since to pay points?

What is the difference between Mortgage Brokers and Mortgage Bankers?

What are overlays?

Does Fannie Mae have a black list?

Are Appraisals regulated and by who?

Is there an appraisal black list?

What happens if the appraisal does not come in a contract price?

Closing cost differences between lenders

Should I pay cash for my investment properties or use leverage?

The next example will show the benefits of using 20% down leveraging for properties versus buying one property and paying CASH.

If you pay $150,000 in cash for one property, your net cash flow is $1245.00. By putting 20% down with an 80% loan to value and a 5% interest rate, your net cash flow is reduced to $600.81. Let’s not stop there. Keep in mind that 20% down payment on a $150,000 home is only $30,000. If you bought FIVE $150,000 homes and put 20% down on each with the same loan terms and monthly rents, you could increase your return on investment by $1759.05 a month to $3004.05. Invest your money wisely.

The net cash flows do not take into account the annual city, county and state property taxes and the annual hazard insurance. The numbers may vary considerately by the taxing authorities. You will have to include that information in your bottom line.

Graham W. Parham has been a Mortgage Loan Officer for over 18 years with 25 years

in sales and marketing. He is a leader of financial expertise in the North Texas

residential real estate market, developing a significant following among homebuyers

and investors. Known and respected industry-wide, Graham’s production consistently

ranks him as a top producer in this market place. According to Scottsman Guide

Graham ranked 92 nd in the US loan originators.

Graham offers invaluable insight into a purchaser’s likely requirements, providing an

exceptional business ethic of customer service and respect, catering to their needs from

pre-qualification to closing. He is a truly dedicated person, who strives to ensure that

each transaction is handled in a timely and stress free manner. By employing these

standards, Graham has established a solid reputation for going the extra mile to put

together the absolute best financing available for his clients. Graham prides himself on

staying ahead of the curve, keeping up to date with the latest products and industry

trends.

As an active investor himself, Graham has a strong insight on what his investment

buyers are looking for to accomplish their short and long term goals. Knowing that

investment loans strongly scrutinized, it is up Graham his team of underwriters who

understands rental property loans versus that of an owner occupied residence. His

general knowledge of REO properties and Turnkey providers coupled with a strong

operational staff allow his loan closings to be seamless and “On Time Every Time”

Highlands Residential Mortgage, LTD. is completely submerged in the real estate

investing industry and has access to many lenders nationally. Our clients benefit from

up to date guidance on all conventional investor loan programs, and less known

creative financing strategies. Knowing that an investment loan will be far more

scrutinized, it is Graham Parham and his team of underwriters who understand a loan

processed for a rental property versus that of an owner occupied residence.

Just as you would not seek legal counsel from someone who does not have a law

degree, nor should you trust a loan originator for your investment property loan from

someone that is not an investor themselves. Highlands Residential Mortgage, LTD. is

an unparalleled mortgage lender whose delivery sets us apart!

Graham Parham’s team mission is to consult every investor based on those

individualized situations and goals. Whether you are buying your first home or

investment property, we carefully look at your options that will give you the best

opportunity for success. Because we know how important your investment financing

strategy is, our extensive research and knowledge of those programs will be brought

forward in educating you as an investor, throughout the lending process.

“My goal is to continue assisting my clients for life and help them meet the ever-

changing needs life throws our way!”

To get access to the lending guide please sign up below:

is

135 – Interview – Financial Advice from a Broke Millenial with Erin Lowry

Erin Lowry (https://brokemillennial.com/) is the author of Broke Millenial, a book about how to stop scraping by and start getting your financial life in order.
She talks about how she learned about finances at a young age, how she gave up her dream school so she could live her dream life, and how living in New York inspired her to write her book, Broke Millenial.
“Invest your spare change,” may be a catchy line but you really can’t invest your spare change to wealth. It has to be more than spare change.
In the financial world, you are above nothing. Just because you have a college education doesn’t mean that is your way out of financial difficulty. You also need to be prepared to take non-professional jobs or jobs that might be below you.
Just like in any financial goal you have to figure out how to take a high-level idea and break it down into smaller parts. Think of whatever your long-term financial goals are and work backwards to break it down into something that is actually more achievable. A lot of people in their early twenties have beautiful, lofty dreams but no tangible steps on how to get themselves there.
Podcasts are great sources of information.
Saving is important but earning more is bigger. To earn more is a key part of building wealth.
The biggest thing when it comes to feeling in control of your money is that you have to identify what you truly value. Don’t allow other people to dictate where you should spend your money.

Cost Segregation & Bonus Depreciation

Fundamentals – Bonus Depreciation via Cost Segregation Studies with John Collins

Since Mr. Trump enacted new tax law, 100% Bonus Depreciation creates significant tax benefits in the acquisition year.

In one of my apartments $3M, 52-unit building is looking to get more than $266K in tax savings (at 37% tax rate) in his first year of ownership.

On syndications, depreciation is distributed to investors on the K-1 Form.

What is Cost Segregation?

Cost Segregation is the identification of building components and reclassifying the tax life on each of those components. Typical components that can be reclassified include a building’s non-structural elements, such as carpet, decorative lighting and trim, dedicated electrical and plumbing, and security systems; exterior land improvements, such as landscaping, curbs, sidewalks, fencing, and signage; and indirect construction costs, such as architect and engineering fees and construction permits.

Commercial properties establish a 39-year depreciation schedule, and residential properties establish a 27.5-year depreciation schedule. For example think of a 3 bedroom single family home in Birmingham, Alabama that is worth $100,000. Of that approximately $65,000 is determined to be the building value and $35,000 is determined to be the land value. Each year you can deduct 27.5th of the building value which is about $2,363 a year that can once again offset income gains. This can be taken for the next 27.5 years until all the value on paper is depleted. Unfortunately, you cannot deduct the land.

However, the IRS assigns a tax-life to each of the individual components.

Most components that qualify for accelerated depreciation can have their tax life reclassified to either 5, 7, or 15 years:

  • 5-year tax-life components: tangible, personal property assets (carpeting, decorative lighting and trim, dedicated electrical and plumbing, and security systems)
  • 7-year tax-life components: all telecommunication related systems (cabling, telephone, etc.)
  • 15-year tax-life components: land improvements (landscaping, curbs, sidewalks, fencing, and signage)

What is a Cost Segregation Study?

A Cost Segregation Study is a strategic, tax-saving tool that can be used by companies and investors who have constructed, purchased, expanded, or remodeled any kind of commercial real estate (including 1 to 4 unit residential rental properties). The study allows the owner to take advantage of accelerated depreciation deductions and defer federal and state income taxes on the reclassified building components mentioned above.

During a Cost Segregation Study, components of a specific property or leasehold improvement are identified and reclassified for depreciation over a shorter time (5, 7, or 15 years). For example, 30% to 90% of the total electrical costs in most buildings can qualify for 5 or 7-year depreciation. The result of a Cost Segregation Study is that a property owner’s tax obligation is reduced and his cash flow is increased.

Is Cost Segregation something new?

Cost Segregation is not new. On the contrary, it has been in existence since 1954 when the IRS allowed for certain personal assets to be accelerated into a shorter life class. However, it wasn’t until Hospital Corporation of America sued the IRS in 1997, and won, that the IRS revisited the issue of accelerated depreciation. The IRS ruled that property qualifying as tangible personal property under the former Investment Tax Credit (ITC) rules would also qualify for purposes of federal income tax depreciation under MACRS (Modified Accelerated Cost Recovery System).

The IRS Chief Attorney wrote a memo saying, “. . . Cost Segregation, for it to be properly applied, had to involve those with competencies in architecture, engineering or construction and/or construction techniques, in order for personal property assets to be accurately identified and segregated.” As a result of this memo, Cost Segregation became a viable tax-saving strategy allowed by the IRS.

What type of real estate is eligible?

Commercial real estate (including 1 to 4 unit residential rental properties) eligible for Cost Segregation includes buildings that have been purchased, constructed, expanded, or remodeled since 1987. A study is typically cost-effective for buildings purchased or remodeled at a cost greater than $100,000. A Cost Segregation Study is most efficient for new buildings under construction, but it can also uncover retroactive tax deductions for much older buildings.

What are the steps involved in the process?

From start to finish, the Cost Segregation process can be broken down into the following steps:

  1. Engage a reputable Cost Segregation firm that utilizes engineers and architects trained in Cost Segregation and its application to the proper allocation of assets.
  2. The engineer determines what documents are available (e.g. planning, construction, invoices, appraisal, and current tax depreciation) for reference and referral.
  3. The engineer then sets a schedule for surveying the subject property and gathering the available documents for review prior to arrival at the subject property.
  4. For those documents that are unavailable, time is then scheduled into the Cost Segregation process for document recreation using known industry standard costing data (Marshall & Swift and/or RS Means costing publications). After all necessary documents are acquired, it takes about 4 to 6 weeks to finish the process.
  5. The site survey is executed and completed. Time varies for each survey, but it can be completed within as little as an hour. During the survey, measurements are taken and all areas are photographed for IRS verification and substantiation of asset values.
  6. The engineer returns to the office and “crunches the numbers.” This is when all documents are reviewed in detail, assets are verified and measured against known costing data, and asset reallocation is applied.
  7. A review committee then examines the results of the analysis completed by the engineer of record to verify its veracity and confirms it meets and exceeds IRS guidelines per the Cost Segregation Audit Techniques Guide.
  8. Once approved, the study results are compiled into a final report that includes: all IRS tax code to substantiate the reallocated assets, spreadsheets identifying all assets categorized according to their building codes, representative photographs of the reallocated assets, and the engineer’s credentials for IRS review.
  9. Final report is issued. Digital copies are emailed to the client and the CPA of record for application to the client’s tax return.

Why bother? I’ll eventually get the deduction.

As investors, we like paper depreciation to occur earlier because that offsets gains earlier and gets more money in our pocket earlier. Just like you give a mouse a cookie…. Give an investor a dollar early and… they will turn em and burn em.

In other words, you are not creating more depreciation but you are shifting it earlier to take advantage of the time value of money concept.

On the project level in a single asset LLC arrangement the more you can lower your tax liability the more you can significantly increase your cash flow and create more value for investors.

A Cost Segregation Study in effect gives you an interest-free loan from the government for the first 15 years, which you will then repay interest-free over the remaining 25 years. Wouldn’t you rather have your money? There are also advantages to doing a study if the building is going to be sold (via 1031 exchange) or if the owner of the building dies.

Does the Cost Seg need to get done this year (Dec 2018) or do we just need to acquire in this year (2018)?

For bonus depreciation, we just need to acquire. The Cost Seg can be completed in the next year (2019).

How much will I save on taxes?

Most Cost Segregation firms will perform a free analysis if you provide your basic property information and tax rate. From the information you provide, they can provide a conservative estimate of the accelerated benefits you can expect, as well as their fixed fee proposed for the final study.

Typically, tax savings from 5% to 10% of the building’s original tax-basis are generated, but there are instances where it can be substantially more. Each property and circumstance is unique, so it requires a case-by-case approach to give you a definitive answer.

How much-accelerated depreciation can I get?

Certain types of commercial property can be grouped together to give us an idea of the percentage of those types of buildings eligible for accelerated depreciation. Your results may be greater, or less than those quoted here, but in general, property that falls into one of the following categories is most likely to result in accelerated depreciation within the specified ranges.

Commercial Property Types:

  • Apartment Buildings 15 – 25%
  • Dental/Medical 30 – 60%
  • Health Care 25 – 65%
  • Heavy Manufacturing 30 – 80%
  • Industrial 25 – 70%
  • Light Manufacturing 20 – 45%
  • Office Buildings 15 – 25%
  • Research & Development Facilities 30 – 75%
  • Restaurant 15 – 30%
  • Retail Centers 10 – 25%
  • Senior Living Facilities 15 – 30%
  • Warehouse 5 – 15%

Does Cost Segregation have other benefits?

Yes. Cost Segregation can provide additional tax benefits. It can reveal opportunities to reduce real estate tax liabilities and identify certain sales and use tax savings opportunities. Under certain circumstances, segregated assets may qualify for a special bonus depreciation allowed by multiple tax reconciliation acts enacted by Congress. Additionally, a Cost Segregation Study can

  • Maximize tax savings by adjusting the timing of deductions. When an asset’s life is shortened, depreciation expense is accelerated and tax payments are decreased during the early stages of a property’s life. This, in turn, releases cash for investment opportunities or current operating needs.
  • Create an audit trail. Improper documentation of cost and asset classifications can lead to an unfavorable audit adjustment. A properly documented Cost Segregation Study helps resolve IRS inquiries at the earliest stages.
  • Capture retroactive savings. Since 1996, taxpayers can capture immediate retroactive savings on property added since 1987. Previous rules, which provided a four-year catch-up period for retroactive savings, have been amended to allow taxpayers to take the entire amount of the adjustment in the year the Cost Segregation is completed . . . this alone is huge. This opportunity to recapture unrecognized depreciation in one year presents an opportunity to perform retroactive Cost Segregation analyses on older properties to increase cash flow in the current year.
  • Lower property insurance premiums. Since it generally costs less to insure personal property, versus real property, building components reallocated as personal property should reduce your insurance costs as well.

How much does a Cost Segregation Study cost? 


On average, the total fee will generally fall between 5% and 20% of the estimated Net Present Value tax savings shown on your free analysis. This can be impacted by how large or small the real estate project is. In addition, the location, accessibility, and quality of the records and documents impact the ultimate cost. Minimum fees can be as low as $2,000 for small projects, and some firms GUARANTEE a minimum of 500% ROI (fee vs. tax recovery) on projects over $500,000.

How long does a Cost Segregation Study take?

The time that a Cost Segregation Study takes depends on the size of the project and the completeness of the documentation that you can supply. Generally, it takes about 4 to 6 weeks from the time the appropriate documentation is received and recreated.

What is required of me to have a study done?

You need to provide as much of the original documentation pertaining to planning, construction, and current tax depreciation as you can. This could include a complete set of construction plans, current tax depreciation records such as tax returns, building cost budget information, final AIA (American Institute of Architects) application and a document of certification for payment or other cost information, change orders, direct or indirect costs paid by the owner that are not included in other documents, and other information depending upon the project.

What if I lack some of the needed documents?

Even if you lack some of the necessary documentation, a study can still be performed for you. Construction, engineering, and other specialists will do an extensive site visit. They will measure and estimate using currently accepted costing techniques and pricing guides (such as the IRS-recommended costing publications Marshall & Swift and RS Means) to determine the costs that qualify for shorter recovery life periods.

Can’t my CPA do a study for me?

CPAs are not qualified according to the IRS guidelines. However, most Cost Segregation firms will gladly work with them on a consulting basis to complete the work for you. Remember, the IRS Chief Counsel issued a memo that made it clear what constitutes proper “methodology” in applying Cost Segregation, and it must be done by people who are competent in architecture, engineering or construction and/or construction techniques. See “Is Cost Segregation something new?” above.

Will a study increase the chance of an audit?

A study conducted by a reputable Cost Segregation firm should strictly adhere to the IRS Cost Segregation Audit Techniques Guide. The type of study most firms perform actually decrease your chances of an audit because the study places you in Internal Revenue Code Tax Compliance. However, be aware there are six different Cost Segregation methods allowed by the IRS, and not all are of equal merit. There is currently no standard method, and there is still some ambiguity about which method is best. If you have heard conflicting information about what is, and is not possible regarding Cost Segregation, this is probably why – it depends on which method is being used.

Will I be assisted in the event of an audit?

A reputable Cost Segregation firm can assist you in the event of an audit. They will focus on doing the Cost Segregation Study to create documentation and support for conclusions so that these are easily communicated and resolved with the IRS. In fact, you should expect a final report that is “all inclusive.” It should quote specific Internal Revenue Codes related to the reallocated assets. Additionally, it should provide photographic evidence of these same assets for complete substantiation of the assessment.

Conclusion:

The Pro’s

  • Reduction in tax liability
  • The deferral of taxes
  • Bump in up front cash flow

The Con’s

  • Costs typically range $4,000-$8,000, depending on property size/asset value
  • Accurate and complete documentation is required and requires effort to collect
  • Cost segregation is not feasible below $100,000 property value

Cost Segregation studies is one of the easiest and quickest way to squeeze a little extra profit out of an investment. If you played race video games in your youth (or still do) it’s like paying for the inexpensive computer chip upgrade, its a no brainer. If you don’t get that reference, its “low hanging fruit.”

If this is a concept new to you, you may be able to go back to previous years taxes and get back some benefits this year. Often times getting a quote is free and quick.

A recent quote I got back for a few properties.

 

Who do I call for more information?

For more information on Cost Segregation or a free analysis, contact John Collins, Cost Segregation Specialist at Segregation Holding LLC: (907) 227-2440 or jcollins@segregationholding.com.

Segregation Holding LLC performs Cost Segregation Studies in all 50 states and throughout the globe for US tax-paying citizens owning investment property outside the US.

Addition Resources

Dental Smile Example

Pre-Construction Example

Ranch resort Example

Video

Combine this with an Opportunity Fun Zone deal and wow!

Ep. 14 – Nate Busch of Busch Tax Company – Podcast download here

Sample K1 Form

Hacking your HSA / FSA / Flex Spending accounts

I’m going to start out by saying please do not take this as legal/tax advice!

One rule I follow is “pigs get fat but hogs get slaughtered.”

But if there is a tax code or loophole within reason/ethical good faith you should exploit it as much as possible.

In 2017, I purchased a half acre in a turnkey Coffee farm in Panama in my Health Savings Account (HSA) for about $15,000.

HSA’s are truly awesome! You add money to an account tax-free (like a pre-tax 401k), don’t get taxed on the gains (like any retirement account), and you don’t have to pay taxes when you use it on Eligible Health Expenses (like a RothIRA).

You need a High Deductible health plan to be eligible for an HST. I’m going to get a little political here… health costs are on the rise because it bails people out for not being accountable (good diet, sleeping habits, stress, and exercise program). The company famous for the yellow Twinky bars cited rising health cost as their reason for going bankrupt… go figure.

You WILL have health expenses, MAY have retirement expense… in other words, you will likely die and have health expenses before you retire. So it makes sense to fund an HSA account before any 401K, Roth IRA, IRA, etc.

Here is some information for your entertainment purposes to see what you can start to use your HSA for:

USA Today article

More resources

Getting a doctor to sign off on your medical purchase as necessary will need a template:

Sample Letter of Medical Necessity for Hyperhidrosis Treatment

[Date]
[Insurer name]
Attn: [Name of individual]
[Address]

re: [Patient name]
[Policy number]

Dear [Insurer name]:

I am writing on behalf of [Patient name] to document the medical necessity of [insert treatment option here] for the treatment of hyperhidrosis. This letter provides information about the patient’s medical history and diagnosis and a statement summarizing my treatment rationale.

Hyperhidrosis, or excessive sweating, is a medical condition that can have a devastating effect on a patient’s quality of life, causing physical discomfort, secondary skin problems, social/emotional  sequelae such as anxiety and depression, and disruption of occupational and daily activities. This has certainly been true for [Patient name], who has been impacted by hyperhidrosis for [insert duration of symptoms here].  Specifically, [he or she] has had difficulties with [insert quality-of-life, social/emotional and/or career/daily living problems here].

[Discuss patient’s diagnosis, treatment history, and degree of illness]

[Insert patient’s name] has tried the aforementioned therapies thus far without success and I, therefore,  recommend [insert treatment option here] as the next logical choice for treating [his or her]   hyperhidrosis.

In light of this clinical information, and this patient’s condition, [insert treatment option here] is medically necessary and warrants coverage. Please contact me at [(000) 000-  0000] if you require additional information.

Sincerely,
[Physician’s name]

Here is what I put together to get massages for stress from dealing with SPC listeners who don’t listen to the podcasts before booking a call or people who don’t take action:

[2018.11.8]
[Insurer name]
Attn: [Lane Kawaoka’s HSA servicer]
[Address]

re: [Lane Kawaoka]
[Policy number]

Dear [Insurer name]:

I am writing on behalf of Lane Kawaoka to document the medical necessity of massage for the treatment of mental stress and muscular discomfort. This letter provides information about the patient’s medical history and diagnosis and a statement summarizing my treatment rationale.

“Mental stress and muscular discomfort”, is a medical condition that can have an effect on a patient’s quality of life, causing physical discomfort, secondary skin problems, social/ emotional sequelae such as anxiety and depression, and disruption of occupational and daily activities.  Specifically, he has had difficulties with discomfort performing his duties at work and exercise routine [insert quality-of-life, social/emotional and/or career/daily living problems here].

[Discuss the patient’s diagnosis, treatment history, and degree of illness]

Lane Kawaoka came into the office in early 2018 where we ran a cardiovascular and blood assessment.

Lane Kawaoka has tried the aforementioned therapies thus far without success and I, therefore, recommend massage as the next logical choice for treating him.

In light of this clinical information, and this patient’s condition, massage is medically necessary and warrants coverage. Please contact me at [(000) 000-0000] if you require additional information.

Sincerely,
[Physician’s name]

Paying your mortgage of in 4 to 8 years with “mortgage rate arbitrage”

Flip the Script on the Banks

Summary: Pay a 30-year mortgage in 5 to 8 years by paying back your mortgage with simple interest instead of amortized interest.

I recently discussed this in my Forbes article here.

Is this something new?

We all know it’s a sellers’ market, with the lack of deals out there and the majority of the Simple Passive Cashflow Podcast listeners looking for something to invest their cash in. Good times, if you ask me. This strategy is nothing new but now the strategies that are, “trending,” like bell bottoms, tights, and neon colors but forgotten. One of these old plays from the playbook is called the Mortgage Equity Arbitrage Strategy also known as, the Australian Banking system.

First off, let’s talk about good debt versus bad debt. Obviously, an 18% interest rate paid on something like a credit card is bad debt. But taking a 4% HELOC (Home Equity Line of Credit) or loan from your life insurance policy can be good debt. Especially, if you are putting the loan proceeds into AHP at 12%, a MFH Syndication at 20%, a Turnkey rental at 30%+, or another higher risk syndication at 35%+. Just don’t buy jet skis or other doodads with the money… I don’t know why it’s always jet skis as the example. Maybe something to do with the fact that it is a mini-boat, and boats are known as the worse purchase known to man.

What you do with the liquidity from the debt is what really matters. Traditionally, it has been good to go into debt for a college education paying 4-8%… unless you are getting a glass blowing degree… or maybe a psychology degree so you can trick yourself into thinking college was worth it… or Asian studies degree because you are going to have to get used to ramen noodles in your adult life… or a Communications degree to be able to spin your financial reality. Ok I admit, I had a pretty depressing college experience…

 

Other Resources:

Podcast #105 – Jordan Goodman – Affiliate connections + mortgage rate optimization + Dolphin mentality

 

SPC028 – Chris Myles explains the downside to using Helocs to pay off mortgages & a teaser on life insurance

HELOCs in Hawaii

 

Sample Inspection report

I would say this is a bad report because it’s not Prescriptive. It is very important to have a chat with your inspector so they know it’s not going to be a warm and fuzzy home to live in but a rental property. They will need to avoid citing nitpicky things because the seller is likely another investor and more sophisticated than a regular homeowner and will call BS at your repair requests.

This is where an hour of coaching will go a long way to maximize what you get at the negotiation table.

Now back to SimplePassiveCashflow.com/turnkey

 

   

Hui Mastermind – Tony Robbins UPW in LA

If you would like to just – soft commit form

We are forming a group mastermind like the last one in Sonoma.

We will be attending Tony Robbins Unleash the Power Within (UPW) in Los Angeles Convention Center on March 14-17, 2019. 

I attended it in 2016 and it was the inspiration behind my story in my book.

I’m normally not an excitable person (there is a lot of jumping around and dancing – which I’m not too big of a fan) but this UPW event the real deal!

Lowest prices through November 26th (I am currently negotiating an upgrade one or two levels so let’s plan on buying the General Admission for now)

General Admission tickets-regular price $1095-current price 2 tickets for $1095 or through me only 1 ticket for $547.50

Executive ticket-regular price $1395-current price 2 tickets for $1395 or through me only 1 ticket $697.50

VIP ticket-regular price $1695-current price 2 tickets for $1695 or through me only 1 ticket at $847.50

Diamond ticket-regular price $2395-save $500 through me only $1895 at this time

Diamond Premiere-regular price $2995- save $500 through me only $2495 at this time

Here is the direct link to Tony’s website.

I suggest bringing an accountability buddy or significant other. The worse thing is to come back to normal life without someone speaking the same “language” around you.

I see these motivational events as “baths” which you need to take from time to time. Even if you are someone who is internally motivated, this will take you to another level.

Why join the Hui:

  1. Learn the framework to be happy – best video segment ever
  2. Connect with people like minded
  3. You will leave this event changed – as silly as it sounds “things will never be the same”
  4. This event will be held in a smaller venue (12,000 people) which I was really excited about when I was planning this because it is a lot better environment than the normal sports arena setting where everyone is captive in their rows.
  5. You get to walk on burning coals!
  6. Learn more about the event here – note the LA event is not yet listed

Details are still being formed but we will likely get upgraded one or two levels if we come in as a large group. 

I am also arranging for a Monday decompression meeting to connect with other investors who attended from the Hui.

This event is more for personal development than investing. But it is certainly investing in yourself! After all… getting the passive cashflow is Simple but what you do after is the hard part.

I don’t personally guarantee investments because of course there is always a risk but I WILL guarantee your ROI if you come to this event! Call me and I will share my experience.

See what Tim Ferriss says about this event (last quarter of the end of video)

Reserve my spot (Due by Thanksgiving) – soft commit form

Trust me it’s going to be amazing!

After going in 2016, I made these goals in 2017. Some of which happened so of which I overshot.

 

 

So you are in!

Preparing for your first Unleashed the Power Within Seminar:

1) Come with an open mind.

2) Make a list of a few limiting beliefs. Everyone has these. Some common examples are I am not achieving what I want because… (I’m to young, too old, never went to college, a woman, I’m brown, I did not come from money). These are the things that subconsciously hold us back.
3) Prepare to tackle your biggest, hairy, huge goals.
4) Tony will bring it. He drops the F-bomb a lot. Mostly for shock value as again it is entirely on purpose. Note: he gives free tickets to some troubled kids and he tries to speak to a lot of the kids in the first few minutes who likely have never have heard him before.
5) Prepare to dance your ass off. Even if you can’t dance/hate to dance/have no legs… You will still want to dance. Get in that “puppy pit”.  For goodness sake… Live like you don’t give a fuck. Get comfortable with being uncomfortable. Dance because if only it is you trying to do something different.
6) Joseph McClellan will speak on day two and day four.  He is a good speaker too. This is not a 5k seminar so you do not get four days of Tony… Its a fraction of that.
7) Be prepared to show up early and go long. Like 8 am to 2 am long. Stay as close to the convention as possible it will be crazy leaving when everyone else does. Don’t try to skip out. If you are getting tired you are letting circumstances control you instead of your leading your state! It is often in the moments when you are close to your limits that the biggest breakthroughs happen, so don’t sell yourself short.
8) Firewalking is real. I thought it was a party trick when I did it and did NOT get into state. You can do it and you will remember it for the rest of your life. This will be trumped by day 3 transformation evening showcase.
9) Taking your spouse or buddy? It’s good that you will be on the same page when you get back to real life but consider not sitting together for part or all of the seminar. There is a lot of value to connecting with others there and getting outside of your normal conventions.  Don’t be afraid to talk to some people. Volunteers, there are a wealth of information about what’s coming next and what to do. You can be your true self when you don’t know the other person as they don’t know you or have any expectations of who you “should” be.
10) I would take notes and more importantly brainstorm action items and implantation plans.
11) Drink the kool-aide. Be all in. Dance, scream, visualize. Show up on time and stay till the end. Get your money’s worth. Do it! It’s worth it.
12) Tony is on another level in terms of hypnosis that makes NLP obsolete. Go with it.
13) Try to sit in the aisle so you can mix and mingle. This makes it easier to run out for a quick bathroom break. You will have to be in there a little earlier like 30 minutes scheduled to start. Also, try and find the bathroom that no one uses for quicker usage. don’t wash your hands it’s faster… Jk.
14) Read/listen to any of his books or audio program
15) Check out what is on YouTube e.g. his TED Talk
15) Watch I Am Not Your Guru on Netflix
16) Six Human Needs and Triad are the core of his work you can learn more in his TED Talk or on his website
17) If you’re not in the right state, not getting it, not feeling right etc. ask any of the leaders and trainers for help, they are amazing resources and have been through it so many times before so have seen, heard and experienced it all before.
18) Subscribe to UPW Facebook group for the event
19) On day two make a list of things you will Stop doing

What to bring to the Seminar

1) A heavy jacket or even blanker – Tony keeps the room extremely cold on purpose. It’s all part of his magic. Embrace it.
2)  You will be jumping for hours. No heels or dress shoes. The only type of shoes you should be wearing are tennis/keds/flats/basketball shoes. Most people will wear causal or gym type attire.
3) Don’t just bring snacks. Bring meals. I’m talking fruit, nuts, hummus, veggies, crackers, granola bars, etc. If you don’t, prepare to race 10,000 other people to be in front of the food line. Post-mates/Uber eats can be a good healthy option. If you are so compelled fast for the four days – and start the literal cellular autophagy – as you will learn the pain is all in your mind!
4) Notebook

Post-event:

1) Give yourself a couple of extra days after the event to catch up on sleep, decompress, review your notes, absorb and process what you learned and make a plan for how you will integrate changes in your life.  You will be tempted to plan to rush back into “life” straight afterward but to allow yourself to recover and to successfully integrate your learnings you need to give yourself a little time. There will be some discussion on this on the fourth day.
2) Stay tuned… I will plan an event Monday morning or Sunday evening.
I’ll try to get some of the following

Hot hands

Bars
Water
Bags
Jerky
Nuts

Official Event Info

Thursday: 11:30am – 10:30pm
Friday: 8:30am – 10:30pm
Saturday: 8:30am – 11:30pm
Sunday: 9:00am – 7:00pm
EVENT LOCATION
Los Angeles Convention Center
1201 S Figueroa St.
Los Angeles, CA 90015
South Hall GHJ
https://www.lacclink.com/
Outside food and beverages are not permitted in the LACC Center
with the exception of sealed bottled water and sealed light snacks.
Light snacks include single-serving items that would be consumed
by one person. For example, granola bars, protein bars, bags of
chips, crackers, beef jerky or whole fruit, etc. Empty refillable water
bottles are permitted and can be refilled on the main concourse at
LACC Center’s drinking fountains. Coolers and grocery bags are not
permitted in the LACC Center.