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Tax Benefits of a Landlord

Episode 007

John Larson and the Real Estate Cowboys talk passive income real estate investing.

Hear new episodes every Sunday morning at 8 a.m. The Cowboys invited Howard Schulman on the podcast to talk about tax benefits for landlords and other areas of real estate.

Keep the #CowboyCoffee hot while listening to John, and the Cowboys talk about how to #BeACowboy and earn passive income in real estate.

Episode Transcript

Announcer: Have you thought about becoming financially free through real estate investing, but don’t have the time or knowledge to get started? Welcome to the Real Estate Cowboys podcast. Each week we discuss passive income investment opportunities in the red-hot Texas market. John Larson and the real estate Cowboys will show you how to leverage their team to build wealth in real estate through passive investment opportunities. And now here’s John.  

John Larson: Yes, so I want to talk a little bit about the different ways that real estate real estate pays you, and especially when you’re a landlord and you’re owning rental properties. A lot of new investors or people that aren’t very sophisticated in this type of model, they just look at a rental property and they think, well, what’s the rate of return on the cash flow generated from the rental income. That’s usually the go to. From there, most people are going to think about, well, the equity appreciation, right? Property goes up in value. I got some dollars in there as well, so I’ll do a refinance or sell the property. I’m actually able to make that equity tangible. That’s another rate of return that I can get on my investment. But there’s other ways that real estate pays you, and one of the big ways is the tax benefits, and that’s what we have Howard on the show today to talk about, but outside of taxes, you got to think, uh, you leverage property, which I’m a big advocate of taking advantage of this Fannie Mae finance sites out there, right? Twenty percent down, 25 percent down. Fannie Mae’s going to cut you a check for the majority of that property. And then we’re going to stick a tenant in there that’s going to pay your principal and interest payment each month, right? So that’s another way that real estate pays you. Now, let’s say also you buy a property for $100,000 and the appraisal comes back at $110,000. That’s something I like to call an equity capture; instant equity in a property. Another way is the hedge against inflation, so you lock in a loan today at five percent, five and a quarter, whatever it may be, we know as years go on, inflation goes up, right?  

John Larson: So those purchasing dollars, they’re not as strong. So that’s another big way that real estate pays you. So we’re going to kind of touch on all those ways a little bit further in the show down the line with Howard. But let’s just give a real quick example of the way that all of these opportunities can pay you back on real estate. So let’s say you purchase a $100,000 home and you only have to put $20,000 down. You get an 80 % loan, so you’re only out of pocket $20,000 for this property. And now let’s say after a year, that property appreciates to $108,000. That right there, that eight percent increase because you only put $20,000 down and it just increased $8,000. That’s a 40 percent rate of return right there.  

John Larson: Just on appreciation. So it’s also something that’s happening quite often in the DFW market, which is why I love Texas and Dallas so much. So that right there is gonna get you a 40% rate of return in year one. How many investment opportunities out there are going to be able to get you that? Not many. So then from there, let’s say that your property just, lets be very conservative. That property cash flows $100 a month and that’s after maybe some repairs or maintenance here, maybe you have a little vacancy in the timeframe, but a $100 per month, that’s $1,200 per year on that initial down payment of $20,000. That’s an additional 6 % return. And then after that, you’re talking about your principal pay down by the tenant.  Now let’s say you’re paying that rental income that’s coming in $100 of that each month goes to the principal pay down. That’s another 6 % return. And then now going into taxes, where really, if you hire the right person, the right CPA who’s very knowledgeable when it comes to all the ways that you can take advantage of write-offs by being a landlord, and with rental properties, you can see another 40 % rate of return on your money just by taking advantage of all those write-offs.  

Johnny Collins: John, it’s not just about taxes, though. You know I love the concept of alignment before the assignment, right? Just in terms of getting involved in a turnkey product, a turnkey company. That’s why it’s so important to get involved with you guys and the real estate Cowboys, right? Because from there, and not only do you get the benefit of using you myself, but we’re also gonna bring in somebody like Howard later on, they can kind of take us through a process to where you make money.  What I love about real estate investing is not just about the concept of slaying the dragon in the house, it’s about making and saving money. Even Amanda needs to start thinking about what I’m making and saving money. And that’s what this is about.  

John Larson: Exactly. And if you take advantage of all of these ways that real estate pays, you really can start multiplying your rental portfolio with no additional money out of pocket. Sure. You know, you start with one or two homes, five years down the line, you can be up to 10 and you wouldn’t even have to come out of pocket with any additional funds. These properties, if you do it the right way and you work with the right team, they pay for themselves. And so, you know, I also want to talk about, and we’re going to delve into this a little bit further, the top 10 tax deductions that are out there for landlords. Okay. And the number one thing is depreciation.  

Amanda Guerra: We’re about to bring Howard and so we’re going to take a quick little break here, but coming up we’re going to talk to Howard  There’s so much stuff you guys have covered, so many amazing topics so far and I know Howard has all the answers and all the tips, so make sure to keep it right here. In the meantime, head to our website, real estate Cowboys at DFW dot. and check out everything you need to know about real estate investing in there. And coming up, we are going to talk to Howard Schulman, CPA with more than 40 years of experience, so stick around we’ll be right back.    

Amanda Guerra: Welcome back to the Real Estate Cowboys radio show. Today we are talking about taxes and real estate investing. We have a very special guest on and I know you guys are really eager to get to Howard, so I’m gonna let you take it away and bring in Howard. 

Johnny Collins: You know, I’ve never really that eager to get to Howard. He’s kind of like a grumpy young man. He’s only about two years older than me but I do really appreciate him. He’s actually my personal CPA and he fusses at me quite often. Every chance he gets actually, he criticizes.  

Amanda Guerra: I think that’s a good thing. That’s a good thing for you, Johnny.  

Johnny Collins: But every now and then it’s like, Howard, give me a break. I’m doing my best. “Well, your best is not paying the bills, son.” (Laughs) 

Amanda Guerra: That is why we have Howard as well. He’s going to keep us all in line.  

Johnny Collins: Definitely. Howard Schulman is my friend. He has. He’s got years of experience. So I’m just going to go ahead and just turn it over to Howard. Howard, tell them who you’re with and all that stuff too.  

Howard Schulman: Well, I’m a partner with Bulloch Depertis Schulman & Seger.  I started in upstate New York as a CPA and a Mexican restaurant chain thought they had a major tax problems. So I came down here, met my wife, and ended up in Dallas. Rest is history. Anyways, by the way, I thought it was a great intro by John Larson. I just thought he kinda missed two things that in my years of experience, uh, and I’ve had some clients make a fortune, at least what I thought was fortunate in the real estate industry. In fact, one, I mentioned to John, was a Harvard lawyer, one of the best appellate attorneys in New York State, who made his real fortune in real estate, not from practicing law. In fact, he didn’t have to charge for services.  

Howard Schulman: But John, two things I think that it’s important for people to realize is real estate, relatively speaking, is about as secure an investment with the least down risk of anything. Because remember, some of the downturns in real estate that we’ve had in the past 30 years here in Dallas, in three years, most of those, that real estate already came back up in value, plus.  

John Larson: That’s a great point.  

Howard Schulman: All right? So I think you got to remember that all in all real estate is about as secured investment as you can have. And the other thing that I like about real estate is that you control the investment. When you invest in the stock market, you’re dependent on what the CEOs of these other companies are doing and you don’t know if they’re cooking the books. You don’t know if they’re straight or not. Um, and the other problem with it, if you invest in mutual funds heavily in mutual funds, they have so much money to invest, they have to invest in some losers and they cannot get rid of those losers all at once because they’ll usually investing millions of dollars and you can’t just get rid of a million dollars investing like that.  So, um, I think overall for somebody who wants to really build up wealth, they can do it in real estate and build up a business with real estate.  

John Larson: Yeah, that absolutely makes sense. Howard. So right before we went to break, I want to get into the top 10 tax deductions for landlords. And number one on my list is depreciation. And so there were some new things that changed with depreciation that actually helped real estate investors even more with the bonus depreciation. So can you kinda walk us through what that looks like and how depreciation is a great tool when it comes right offside on real estate?  

Howard Schulman: Well, depreciation is by far, from a tax standpoint, the greatest thing that you have going. For example, if you invest in good real estate, does it really depreciate in value, or you by buying it is expecting it to appreciate, especially with inflation. You are over the years expecting it to appreciate. The building itself, the structure can be depreciated over 27 and a half years, but many CPAs don’t ask the question what personal property is in a building, whether it’s commercial or residential. Personal property can be actually elected to be expensed or depreciated it over five years, and I’ll pick one common piece of thing in a property. How about carpet? How often you see them around property carpeting, that is personal property, Or light fixtures for example, or appliances. All these things can actually be elected to be expensed; in the worst case scenario is on residential properties. So for 27 and a half years, basically that’s about three percent or four percent. However, you want… 

John Larson: I got three-point-six, Howard, three-point-six. Exactly.  

Howard Schulman: You’re exactly correct. Three-point-six, three, six. But um, if you are depreciating it like that, you’re now getting and let’s say you get a modest two percent, okay. So at the worse case scenario, if you have $100,000 piece of property, you’re getting effectively a three or two percent return plus another three and a half percent return. You’re getting five and a half percent with what I consider to be extremely low risk investing. Like I said, real estate is about as secure as you can get.  

John Larson: I completely agree. And so you know, one thing I noticed with the new tax reform on the bonus depreciation – that used to only be what, 50 percent for a new asset, right? But now they are also including used assets as well, so before it made more sense to go and buy a brand new property and use it as a rental.  

Howard Schulman: Well, and here’s something that’s very big. For commercial, if you buy a piece of property that’s rented out for retail or for restaurant, which is really class retail, you can write off the first $250,000 of leasehold improvements. I mean, depreciation is big, but one of the other things that you haven’t even mentioned and you alluded to, is you can sell this, these properties, too. You hold a piece of property for over one year, but let’s say 10 years, you are now getting capital gain treatment, which is much less than your ordinary income tax rates. So, um, that’s a big thing that people kind of forget about.  

John Larson: No. Yeah, that makes a lot of sense. So another thing I have on here is mortgage interest. So we advocate leveraging these properties, right? Take advantage of the money while you can, right? We still have low rates, under six percent. If you’re putting 25 percent down now today, I think you’re rate, you’re at five to five and a quarter, something like that on a 30 year fixed loan. Now you’re also able to, am I correct in this, deduct the mortgage interest that you pay each month on the property?  

Howard Schulman: Oh yeah. You can deduct all the interest fully. It’s not limited. Um, and it all can be at $2,000,000 property versus your homestead is limited, but rental property has no limitations. It’s more like a business. Any expense you incur in that business is tax deductible. For example, driving. If, for some reason you want to drive over to the house and pick up the rent, or you have a piece of property in Denver so you decide you’re going to fly up to Denver because once a year, you want to check out that property; that trip to Denver, to the extent that you’re there for the property, it’s tax deductible. So all travel expenses related to it, any repairs, uh one of the things that is a little loser. Um, they, they’ve tried to tighten up, at the same time they’ve made it a little safer, is if you make an improvement, you’re supposed to depreciate it. But, if it’s within 10 percent of the rental and it’s an improvement, you can expense it and nobody will say anything.  

John Larson: That’s great. And you actually just hit number three, four and five on my list. I had repairs. I had local travel. Um, and so you could, you could do it one of two ways. You could, uh, just write off the gas, the upkeep of the vehicle, repairs to the vehicle, or you could just do the standard mileage rate. Either/or.  

Howard Schulman: Correct.  Usually just because of the small amount of mileage that is average in most real estate would be .53 and you just used the 53 and a half cents. However, it’s not just managing the property. Let’s say you are actually active and out driving around looking at the property versus relying on you to acquire the property for them. Right. That also is a business expense because you’re out looking for the property.  

John Larson: Right. And so I know a lot of investors that invest with us in California or other areas around the country and they like taking advantage of the long distance travel write off because yeah, they have a property here, but maybe they have some family here as well. It’s an opportunity to go check on your property and still see your family and write off, you know, hotel, airfare, things of that nature.  

Johnny Collins: It’s just about knowing the code. One thing I’ll say about Howard, you know, I told you he’s my personal CPA. You know, I got into a full-fledged fight with the IRS, you know, Howard just bullied him. I was afraid to talk to him. He said, don’t be afraid, let me call for you and before I look up, you know, it’s resolved. So you have to have somebody that not only just knows the code or knows the code in its totality, but also somebody that knows how to work it. So I always say the tax code was written for individuals with money so that you can leverage it and make it work for you and Howard brings that to the table. So I think you can be really comfortable with your clients. And for those of you that call on Howard, and I think you should. This is my ringing endorsement, right? Uh, that he’s going to get it done for you.  

Howard Schulman: Real quickly, if you’ve got a piece of a group of properties and you’re running a business, any expenses you incur in conducting that business, it’s usually tax deductible. In fact, I can’t even think of an exception to that rule.  

John Larson: Yeah. We got some more deductions that we’re going to run through with Howard and get into more information on all the different tax benefits that you have by being a landlord and owning rental properties when we get back. Right? Amanda?  

Amanda Guerra: Yeah. Thank you guys so much for joining us on this Sunday morning. We’re going to be back to talk more with Howard coming up.   

Amanda Guerra: And welcome back to the Real Estate Cowboys radio show. Hope you guys are having a good day so far. So we are in the middle of a great discussion here. We are talking about taxes when it comes to real estate, how to save you money, how to take advantage of it. We’re going through a list right now of the top 10 deductions and also some tax tips. If you missed our previous segment or if you would like to see the whole list, a whole list, make sure to head to our website, Uh, so let’s bring back in Howard Schulman and a great conversation you guys were having.  

Johnny Collins: Look, this is phenomenal information.  Just don’t stop. Let’s just go right back into it, John.  

John Larson: Yeah. So I’m at number six on my list. I put home office. So a lot of my investors, they own their properties in an LLC, and they’ve set up a business. So Howard, would they be able to take advantage of any home office expenses or anything like that?  

Howard Schulman: Again, if they have a business, a home office is logical unless you have a regular office, but if you only own one or two pieces of property, even three pieces of property, I would not consider that a business. Now let’s say you take somebody who’s active and is running 10, 15 properties, rentals, or even just private homes, but I would say at that point you’ve reached, definitely reached the business and yeah, you have a reason for having an office in the home. You have to have a logical reason. It is not the red flag that people think it is, but it really has to be an office that you are using for the business.  

Johnny Collins: Right. So yeah, so I would just say be careful of that. Don’t take advantage of that. You need to be at, Hey, 10, 15 properties, something like that before we can start qualifying your home office as an expense.  

Howard Schulman: Correct.  Then if you actually have a home office, like I said before, anything ordinary, necessary you use for the business is deductible. If you’re using your cell phone at least 50 to 60 percent for managing your property,  I’d take 100 percent of it. How about the Internet? Do you use the Internet to look to find properties to do something? MLS and whatever. Then certainly the internet is deductible and if you’re using the internet, you would have a computer. You’d be sitting in a chair, you’re sitting at a desk. 

Johnny Collins: Yes. It’s a great time to say this. Very important for you to just have a great real estate professional or a tax, a counselor, in general, to make sure you’re doing it right because people show up. You wanna, make sure you have all these ducks in a row. Right?  

Howard Schulman: I’m being redundant here. Remember what I said, which I’ll rephrase it this way. What if you do something in business and incur expenses, ordinary and necessary in that business? It’s deductible.  

John Larson: Yeah, exactly, and so that’s why it’s so, so, so important. If you’re going to start being a real estate investor, you need a professional like Howard helping you out to make sure that you’re taking advantage of all these things, that the government’s just giving you. Take advantage of all this stuff. That is why people invest in real estate. This, is one of the main reasons, in my opinion. Too many people get caught up, what is my rate return on my cash flow for my rental income? What happens if you have to replace a roof this one year? Well, one, you’re gonna be able to write off the expense. That’s your cash flow for the year. It’s a lot.  

Johnny Collins: I’ll take it a step further. Too many people get caught up in why don’t these big organizations pay taxes? Because the using the tax code to their advantage. What we’re telling you is you can do the same thing on your level as long as you have the right person helping you. Is that fair?  

John Larson: That’s absolutely, absolutely fair. 

Howard Schulman: I also want to point out something that you brought up. You said a lot of people are going LLCs on their rental properties to protect them from lawsuits, or that’s what I’m assuming. An investor in real estate, actually called me from New York and invested in a lot of real estate here. Um, and I was referred to her and I discovered she was relying on LLCs and the lawyers to protect her and had crappy insurance companies and crappy insurance policies. I would say it’d be more important to less have the LLC and having good insurance. I think, John, you would agree with me. Don’t be cheap with your insurance. Make sure you have good insurance policies on your properties.  

John Larson: Howard, I like that you just lead me into that because insurance was number nine on my list of deductions. So any premium. So Howard’s basically saying take advantage of some of these premiums, right? So you know, fire, theft, flood insurance, and any landlord liability insurance is also tax deductible.  

Howard Schulman: Right? And if it’s investment versus a casualty loss, you know, a personal casualty loss has to do, if you have the adjusted gross income of $100,000 actually has to exceed $10,100 to be deductible. But if it’s a business loss, rental property, then it’s not subject to that 10 percent limitation.  

John Larson: Gotcha. So I employees and independent contractors on there. So whenever you hire anyone to perform a service for your rental, you can deduct their wages as a business expense, right? 

Howard Schulman: Correct. 

John Larson: Um, and then casualty and theft losses. So I know a lot of investors that like to buy those C and D class properties that aren’t in the best neighborhoods, so theft and crime is a little bit more prevalent in those areas. So Howard, if they were, let’s give a hypothetical situation here. A property goes vacant, you hire some crews to go and start doing the renovation. Let’s say I just installed brand new furnace and then that night someone breaks in and steals it. Am I getting some sort of tax benefit for that? 

Howard Schulman: Yeah, because it’s going to increase your repair for the property. I would say though that um, for the most part you’re gonna make better returns buying property where land and real estate is appreciating versus depreciating. 

John Larson: You’re preaching to the choir right now, that’s pretty much what I focus on is properties where I could leave the house unlocked. No one’s going to go in there and break into it.  

Johnny Collins: Yeah, but John, what’s happening is people are watching, you know, all these TV shows and they’re going into these horrible neighborhoods and please don’t misconstrue what I’m saying. I’ve,  gone into a lot of horrible neighborhoods and I love horrible neighborhoods. Okay. Me Personally, right?  But with that stated, you know, you want something that’s going to keep giving. You don’t have to give all your results to the property. You want the product to give the resources to you specifically in your pocket. So I think appreciation is one of the greatest benefits of buying right. And I commend you guys. From day one that’s what you all been preaching.  

John Larson: That’s all we preach.  

Howard Schulman: It certainly is. Um, but that’s why I would advocate buying in good areas. Now, if you’re extremely wealthy, well then you can afford to buy the property in bad areas, wait till it turns around because eventually what’s bad is going to turn around, but is it going to turn around in your lifetime or are we looking at 75 years from now. 

John Larson: right? Well, we’re seeing that process accelerating in a market like Dallas, which, you know, Dallas, I read a stat the other day. Most new people can’t move to Dallas out of the entire country. Almost 150,000 people moved to Dallas last year. So you’re seeing a lot of these areas going through this gentrification process a lot quicker than you would in other major metros across the US.  

Howard Schulman: Yeah. But you got people moving in also from the San Francisco area, the Chicago, Illinois area, the New York City that can Connecticut area. And to them, this looks like a God haven. 

Johnny Collins: They’re coming in, they’re buying their mom a house, their son a house, their daughter a house. A summer home.  

John Larson: Exactly. Well, we’re going to be going to a break in a second, and I’m going to keep you around a little bit longer, Howard, because we’re having a great conversation here. But the last thing I have on here is legal and professional services. So that’s where you come in. So a CPA service can be written off, right? And an attorney, if you had to hire an attorney to maybe do an eviction or something like that, that service can be written off. And then also if you’re outsourcing your property management, which I recommend you do because we’re all talking about passive income here, and if you’re buying rental properties and managing them yourself, that’s a full-time job. So I recommend hiring a property manager. Those property management fees that you pay each month are also tax deductible.  

Howard Schulman: Yeah. That’s why the property management, you can do property management with one or two pieces of property and I have seen it, but that’s why I like having 10, 15 properties.  Now it becomes a business. The property management company in my mind becomes much more useful and/or if you got build yourself up to 25 properties, you might want to just hire your own property manager.  

Amanda Guerra: Alright. Well, we’re gonna go to a commercial break here like you said, but since Howard has so much good information, we’re going to keep him a little bit around. If you’re just tuning in, we’re talking today about taxes when it comes to real estate. We’ve been giving you some great deductions. The top 10, I believe, also some great tax tips. So if you missed out on some of those, if you were just like to hear them again or if you want to get ahold of Albert, asked him some questions. Uh, we have all of that on our website. Had to real estate, Cowboys, DFW DOT com. One more time. Real estate Cowboys. DFW.   

Amanda Guerra: All hope you guys are having a good Sunday so far. Welcome back to the real estate Cowboys radio show. Uh, so we are talking about real estate and when it comes to taxes and we’ve been joined by Howard Schulman who is a CPA with more than 40 years of experience. I’m gonna let you guys get back into it because we got a few more minutes with Howard. You’re so good. We had to keep you around for three whole segments.  

John Larson: Yeah. Last thing I want to touch on was a vacation rentals. So last week we had David Keener on the show who’s a partner of mine where we do vacation rental opportunities in Belize specifically, but I wanted to touch on vacation rentals a little bit because that’s also popular. It’s a popular investment option. So from what I’ve heard, Howard, and tell me if I’m right or wrong, uh, you can rent out of vacation home virtually tax-free in some cases, but what type of boxes do I need to check?  

Howard Schulman: Well, I don’t know, tax free, if you’re making a profit and still profit, but if you use the property two weeks or less than 10 percent of the number of days rented, um, you basically get all the full tax benefits of your expenses against the income, and you get to use the property for two weeks out of the year. Most people I know tha comes to time sharing, for example, um, I’ve yet to see that makes sense to me, but good vacation properties is not a negative, I would say that’s a positive way versus a timeshare.  

John Larson: Yeah. So what we’re doing is we’re doing a fractional ownership model. A US LLC buys a Belizian LLC, there’s partners that own the property, and each of them use it about two weeks a year. That’s exactly spot on. So, uh, no, that’s great. That’s very helpful information. Um, Amanda, let’s turn it over to Mr. Collins for this week’s motivational message.  

Amanda Guerra: Yes. so Howard, at this time, every week we have a Johnny Collins weekly words of motivation. He leads us to something, so since you like to give Johnny a hard time, we’re going to let you tell us if it’s good or not. If you like the motivational words he leaves us with. So, Johnny, you’re on the spot.  

Johnny Collins: You know, first of all, let me just say this. I’m not going to give him a chance to do that because I’m going to incorporate him. Howard, that word, I love the concept of the cost of fear. You know, what it costs people to just simply sit on the sideline. or stay on the sideline as I like to say, and not get in the game. One thing that I’ve watched is responsible people with good minds, with clear objectives, sit on the sideline, you know, make maybe $150,000 a year with joint income coming into the house and save, you know, just do a good job.  But what I always say is you really have to understand just how important and how beneficial that real estate can be. And so what greater person that have been here with me today and you to kind of talk about that we were talking off the air on how you can take some of these tools and implement it into your savings, our portfolios, and strategies, and really set yourself up for retirement. Will you just talk about that a little bit? 

Howard Schulman: Well, I just said that there’s very low risk in real estate and if you have the fear of buying property because you don’t know what you’re doing, then either get with a realtor that you can trust and there are people out there that are good and go to John Larson who, that’s his business looking for value properties where you buy them below market, and it doesn’t have to be way below market to make a good investment in real estate.  

Johnny Collins: Watch this, Howard, and you correct me if I’m wrong, I’ve seen some of the best deals in real estate be purchased above market value and with appreciation and some of the other write-offs, they still win. 

Howard Schulman: That is true.  

Johnny Collins: So the numbers don’t lie in the real estate game and you’re a numbers guy, right?  I want you to talk about maybe just some examples of people that you know, that have used real estate as a hedge and their investment portfolios. They weren’t afraid to get off the sidelines and get in the game and have you had these people live comfortably? I mean, do they live good lives? 

Howard Schulman: I have seen people that started that way and it ended up being that’s their main source of income for the rest of their lives. And I’m talking about people that I’ve seen start with relatively low and ended up with over $20 million dollars in the seventies in small towns.  I mean, to be blunt and I’m going to pick on my religion now. Jewish. Okay. The people that I know that are Jewish, very few of them, in fact, I can’t think of one. I’m sure there were some that made it in software, software investing like Visa with Amazon or something like that. But there’s few and far between of those Bezos and Bill Gates with Microsoft. The general people that I know that have made wealth, it’s all been real estate, all been real estate.  

Johnny Collins: My God. And the great part about real estate is it doesn’t care what you look like, what your gender is, what your color is.  

Howard Schulman: And there’s one thing that is great that we haven’t even touched on for tax advantage. Um, if you have children that you want to leave stuff too; when you die and you own this property, let’s say you bought a piece of property for $100,000 and it’s now worth $300,000, they get a step up in basis. It is now worth $300,000 to them for tax purposes. So you just made for your kids, $200,000 tax-free.  

Johnny Collins: So, what you’re saying, what you’re telling me then is, if you don’t get off the bench in stop being afraid and get in the real estate game, you’re not just cheating yourself, you’re cheating your legacy, you’re cheating your children. Now, I want y’all to wrap your mind around this, and this is the motivational moment. If this doesn’t motivate you, you’re not motivatable, right? If you can’t go and look at your grandchildren and have a desire, a passion to leave something significant for them, right? If you can’t go look at your children and had that same desire and passion to want to leave something significant for them. You know what? God bless you. Maybe real estate is not for you. You know, maybe just giving is not for you, but if you look at them and you want to do something great and you want to leave them something that far supersedes your lifetime, and even your children’s children’s lifetime, if done properly, real estate is the way, so don’t be afraid.  Don’t allow fear. Don’t allow the cost of fear to be so great in your life that your children have to pay for. Your children can go out and do what they want to do it. They got to take a job immediately just to pay the bills. Be that uncle, be that grandfather, that parent that leaves their children enough resources where they can truly go out and, and do what it is that their heart’s desire would like to do. 

Howard Schulman: That’s a great motivational speech. And like I said before if you do have a fear that you can’t pick the properties, believe me, there are people around like John that can do that for you. Just go see John or somebody just. It doesn’t take rocket science to figure out, oh, this piece of property is worth X, Y, Z and I’m not getting taken. And like I said before, it’s about a security investment. In fact, I’ll rephrase that. It is the most secure investment I know.  

John Larson: Howard. Love it.  And I’m going to take it from there. It’s all about working with the right team. That’s why I started the Real Estate Cowboys. So if you are out there listening to this show and you are interested in this rental property, sound good to you, all the tax benefits and the deductions that are available to you as a landlord. All you gotta do is go to, and just put your information in and you’ll get a package from us that talks about all these passive income opportunities in real estate and you’ll also be able to speak with a member of our team and we also have a really cool quiz on our website. I call it my passive investor quiz. You just answer 10 questions and it tells you what type of investor you are. Do you like private money lending?  You want something that’s a little bit more work, a little bit more safe, lot more passive. Maybe you’re a private money lender. Maybe you’re a guy that wants to see these great returns that we just talked about today that you can get through owning property, through owning rentals, and then maybe you’re a single family rental guy or maybe you are someone that wants to use the property and you like to go on vacations and you’re about to retire or you are retired. Maybe vacation rentals. Maybe the idea of Belize is best for you. Go on and take that quiz and find out what type of passive investor you are.  

Amanda Guerra: Yeah, and we do want to mention if you guys have any questions at all if you just have a question we haven’t covered here on one of the shows. If you have a question for you Howard or for John or Johnny, we do a check the inbox there and it’s going to be one of us. We’re going to be the ones who are going to get back to you, so make sure to head to Howard, thank you so much for being with us today. Glad to be here. All right, well you guys have a great rest of your Sunday and we will see you next Sunday at 8:00. Have a great day.  

Announcer: All opinions expressed by the host of the show are the opinions of American Real Estate Investments LLC and do not reflect the opinions of guests or sponsors. No personal or professional advice on this program should be considered an endorsement to follow a real estate financing or investment strategy. Before acting on any information, seek advice from your financial tax, mortgage or real estate advisor, as the information is not guaranteed and investment strategies have the potential for profit or loss.