Ever wondered if multiple income streams are good for anything other than, well, income? I have.
Transcript: Hi, I’m Jeff Brown the “BalwdGuy”. What we’re going to address today is the idea of multiple streams of income. Everybody talks about them, but the examples we’re going to use today are going to be streams of income, that before you start getting them in retirement, you might be able to use them to enhance each other. Here’s an example: so you buy some real estate and it generates income and over time you may even get them free and clear of any loans. Meanwhile, back into the ranch, you’ve been investing in EIULs which gives, ultimately, retirement income that is a tax free. But what if the tax-free part of your EIUL income begins coming in say, five or ten years before you retire? You can start speeding up some free-and-clearing of your existing portfolio on the investment side. Or, you can begin reinvesting that tax-free income in the years preceding your retirement, because you don’t need it now, and all of a sudden, you’ve applied a turbo-charging effect to your ultimate retirement. Everything doesn’t have to been the same; it doesn’t have to be real estate. What you want you to keep in mind is that when you’re using multiple strategies and maybe even different kinds of assets — some not real estate — is that you want to do this on purpose, with an end goal in mind that is easily describable and understandable and that you know exactly what you’re setting out to do. When you’re doing this with real estate and you’re paying off loans, sometimes your other streams of income can be used this way to not only make it happen faster but allow you to make moves earlier than you had anticipated. This is Jeff Brown the “BawldGuy”, thanks for joining me and we’ll catch you next time.
Have you ever thought of ways to combine short and long term real estate investment strategies?
Transcript: Hi I’m Jeff Brown the “BawldGuy”. Today we’re going to talk about synergistic strategies and we’re going to be specific. Today, I talked to a bunch of flippers who do very well, some of them just got started, they might be doing one or two a year and they want to get started in a long-term investing. They may already have more than one long-term hold property. What I try to tell them is, you can do both. As a matter of fact, you can take those two strategies — total different ends of the spectrum — and you’ve got short-term, long-term… What you do is, you’re doing say, one a quarter: take the after tax profits and apply them to the pay down of the loan or loans of your existing long-term investments. Now if you’re doing a lot of profits in a quarter, it might make sense for you to not to pay down your holdings that are long-term and just quickly save up a down payment for the next one. But let’s just talk today about using the short-term profits, after tax, synergistically to pay down those loans on the long-term properties without affecting your ability to keep your short-term flipping profits rolling. So what happens is, you’ve got the guy that bought a couple of small properties; they’re income properties — he’s going to hold them for retirement — he may own them for five years, he may own them for thirty-five, but the bottom line is, he knows that the faster he gets them paid off the more options appear on his menu. So here’s the deal: have him take his profits periodically, that are after-tax from flipping, pay off those loans as fast as you can. As soon as he pays off those loans, and if he can do it predictably, chronologically, he can use other strategies — for instance, what we have talked about earlier, say cost segregation depreciation — which allows him to then treat the sale, not the exchange of his long-term holds such that no capital gains taxes are owed, no depreciation recapture tax is owed, and by the way, in case you didn’t know: the depreciation recapture tax is much higher than the capital gains tax. A lot of people are really shock by that, when it’s far too late to get prepared for it. Now, as we go along, the flipper gets better at flipping — that’s what happens — they either start making more profits on the same number of flips over any period of time; they make more flips in that same period of time; they end up making either more money for down payments or they pay off their long-term holds faster. The faster they’re paid off, the more they acquire, the faster they get to retirement and the sooner they can stop flipping and start enjoying their retirement. This is Jeff Brown the “BawldGuy”. Thanks for joining me today, we’ll hit something else next time. See you later.
Have you ever wondered why Wall Streeters tell ya not to worry about income taxes in retirement, cuz you’ll be in a lower bracket? Let’s take a look at that.
Transcript: Hi Jeff Brown, you probably know me as the “BawldGuy”. Today were going to be talking about retirement and tax brackets. If I read it once I read it a thousand times and I know you have to, when we reach retirement our tax rates going be lower, so don’t worry about it! If there’s anything that is garbage, that’s it and let me explain why — never let me say those things so concretely without explaining. You’re going enter retirement with your kids gone, no more tax reductions for kids, AARP is failed every time it’s tried for the grandchild deduction. You’re going to have paid off your house. Everything else you have that would have given you almost any kind of tax deduction is gone. Bottom line is every April 15th you realize that you’re naked standing in front of the IRS with your checkbook. Now, if you’re making any kind of money in retirement, why would your tax rate be low? Let me tell, your tax rate, for most people in retirement, is lower because they failed in their tax planning. They failed in their retirement income planning. You get taxed lower at a lower rate only because you’re making less money. Duh! So when they tell you that when you retire your tax rate’s going to be lower, it’s only because you didn’t do well and attain the lofty goals for retirement income. Now, let’s look at the bright side: you’re still going to arrive with your children grown, you’re going to have a free and clear house, at least that’s the plan, and you have very few deductions. The idea though is to grow enough income over the years, hopefully you have at least fifteen or twenty years many people have thirty or more, but the idea is that you’re investing and investing and doing things on purpose; slowly but surely with strategies like, different kinds of depreciation, working together with the tax plan with EIULs, taking discounted notes, which we’ll talk about in the future — all those things combined puts you in a tax bracket that’s going to maybe be, not only equal on what you’re used to now, heck it might even be more. Oh, how sad is that, you’re making so much money in retirement you’re at a higher tax bracket. We’ll talk later on how to deal with that, but just understand, if your tax bracket at retirement is lower than it is now it’s because you failed. Sorry to end that bad note, but the idea is not to fail; to be endowed with the tremendous retirement income at retirement. Thanks, this is Jeff Brown the “BawldGuy” saying I’ll see you next time.
What answers can’t you find in this incredible information age? Think about it — it’s a trick question.
Transcript: Hi! I’m Jeff Brown the “BawldGuy”. Today where gonna talk about what’s gets us in the end. It’s not the answers to your questions. It’s the answers to the questions you never knew to ask and never will. I’m gonna use baseball, hitting specifically, to explain what I mean. When my son is playing baseball, from the time he was 8 right into high school, I coached hitting and pitching. We’re gonna talk about hitting and how it relates to real estate investing for retirement. What people don’t understand about hitting is that the order of what you do physically matters a great deal. Everybody talks about see the ball, hit the ball, keep your eye on the ball… blah, blah, blah! Here’s what matters: if you can’t get your bat in the hitting zone, you can’t hit the ball — captain obvious alert a little tardy. Same thing with real estate investment. We can get answers to anything, but you can never get the answer to a question that you simply don’t know to ask and that, in investment real estate, can be a killer in the end. It can mean the difference in retiring with $5,000 a month or $15,000 a month — and I’m not exaggerating. Understanding that there are answers out there to questions you don’t know to ask will have the same effect to the guy that keeps on going up to the plate and striking out. Get the answers, but first you have to know the questions. For example, if the investor doesn’t know that they can get more than four loans in this post bubble world, they’ll never do it. They might have enough to get six properties, but they only buy four, using higher down payments with their available capital because, you know, their broker, “Century 21 Larry”, said that he learned that you can only do four. I’m here to tell you, you can do ten. Add that to the fact that you now own 50% more properties and you can use — another thing you didn’t know about to ask, which is cost segregation — you can take those extra two properties, turn them into a half-million bucks in five or six years and make a moves that you will never, ever imagine are possible. This is Jeff Brown, I’m the “BawldGuy”. Thanks for joining me today. I look forward to talking with you next time.
How should tax deferred exchanges (Section 1031 of the IRC) be viewed by real estate investors? Here’s what I’ve learned.
Transcript: Hi, Jeff Brown the “BawldGuy” here today. In this video we’re going to talk about what tax deferred exchanges really are, what they’re really not and why they’re not the end-all-be-all to real estate. Avoiding taxes is what everybody… it’s a holy grail, everybody wants to do it. What I’m telling you is, yeah, I’m right with you, but you want to do it in a way that moves your plan forward and does it on purpose without too much baggage that you’re going to be carrying forward. Now, here’s what I mean by baggage: you buy a piece of property in year one, you own it for awhile; it might have gone up in value, it’s eight years down the road; ten years down the road and here’s the problem. You’ve got eight or ten years of depreciation. That lowers what’s called basis. Let me just tell you the bottom line to basis: the lower the basis, the higher the taxes on your capital gains because they’re going to tell you have a bigger gain than you think in your mind because you think, you buy piece of property for two dollars, you sell it for three dollars you make a buck. What they did was, yeah you bought it for two bucks, but you took fifty cents in depreciation so now they’re going to say you bought it for a buck-fifty and you sold it for three so you doubled your money — get your checkbook ready. So what you want to try to do, is you want to try to make it so, if it’s possible, you never have to do a tax deferred exchange. Now look it: I don’t know how many tax exchanges I’ve done. I just know I stopped counting at a couple hundred and one day my Dad made fun of me and said who cares? So I said okay, I stopped counting. But here’s one thing I’ve learned: most of the time, the people who get themselves in a situation later in life when they’ve done very well with their portfolio, they’ve boxed themselves into a corner because they’ve got A, a boatload of equity, B, a double boatload of cash flow and C, no place to change any of that position without becoming a partner with Uncle Sam against their will. So here’s what I’m trying to tell you: 1031 is nothing but a tool. A hammer is a great tool; you don’t use a hammer to take a bolt off, use a hammer to pound the nail. Stop looking at that hammer as if everything in the world is a nail, it’s not. 1031 is a tool, use it to advance yourself if have no other choice, because look it, sometimes it is good to use a 1031, just understand that there’s baggage and deferring taxes isn’t always the best thing. Sometimes paying the tax is better overall in the long run and we’ll talk about that in another video. This is Jeff brown the “BawldGuy”, thanks for joining me, we’ll see you next time.