Foreign. Hey, so welcome back to the show! I'm really excited about today's guest. Uh, you know I've been obsessed with helping you build a great business, serve more clients, make more money, but what am I also obsessed by I've been obsessed if you're paying attention to my content and I know you are with you buying more real estate, saving more money, lowering your taxes. So today I've asked a great friend to come and talk to us about specifically what you can do.

Whether you're an entrepreneur, a team leader, an individual agent, you're a broker owner, you're a startup company, it's all the same. he is a Tax Advisor and most importantly, like myself, he is also an active investor. So I've got Toby Mathis with us from Anderson advisors. He is a tax attorney, so it's always good to get advice from an attorney.

and most importantly, he knows this space really well because we have sent him a lot of clients and they serve a lot of people in the real estate industry because tragically, I'm not saying you watching right now or listening, but tragically, a lot of people have figured out how to make a lot of money, but they're not really paying attention to the key issues of tax, savings, tax advantages. You know why buying real estate all the things that you know We hope that you know. but today we're going to unpack. so Toby Thank you so much man! I Know you're as crazy busy as I am.

Thanks so much for joining me today on the show! Thanks for having me! Tom It's always fun to get to hang out with you I Appreciate that man. Are you still in? Vegas Still in? Vegas Yes Yes Hanging out today and the beautiful sunshine? It's uh, it's a great day here. Outstanding man. Outstanding! So so Toby I Want to talk about I got I wrote down one, two, three four things that I think could be very meaningful for The Listener today.

So so I'll just go through the four and then let's just unpack each one of them. So for my listener, check it out! We want to talk about how should you be lowering your taxes and saving more money just across the board. What do they need to do? Number two: I Want to talk about what are the best Real Estate Investors Doing now because a lot of my clients still be there. Whether they're buying into syndications or they're fixing and flipping properties, you know they're They're doing deals for themselves also.

So how do they lower their taxes? How do they protect their assets? Let's let's get into some of that. number three. I Want to talk about like I Can always say this to you What are the really rich people doing right now, right? That's my favorite question for all my friends. Like what you're worth a lot of money? What are you doing that I don't know about And then the last thing I wrote down is, you know what are you investing in if you're willing to share? So those four things can we Can We jam on that? We can jam on that.

Absolutely. So let's go. let's go right to the top. Like what? What should my listener be doing to lower their taxes and save more money? Give me give and I'm taking notes.

So let's go. Well, let's let's do the quick step back because there's three types of incomes that are out there. and there's the: there's the 10 000 foot view. There's active income, there's portfolio income, and there's passive income.

People always conflate them together. Here's the easiest way to think about that: I don't know if you went to Catholic School Tom but I did. And if you misbehaved, you got a little a little whack right? Maybe maybe it was an eraser, maybe it was a ruler, but you learned pretty quick that you didn't like the wax. Well, the tax code's no different.

The tax code is giving you a whack every time you make an earned dollar. If you just let it hit you, it's literally going to hit you the number one tax revenue. Source In the United States When you actually break it down, you go look at the IRS data. You can see how our treasury makes money.

Number one, this last year was just barely income taxes. Number two and sometimes is number one is employment taxes and we always forget about old age death and survivors or disability and survivors and Medicare and that absolutely will devastate you if you don't put the brakes on it. And so there's a little bit of a of an issue. I Always get where people are saying hey, you know the poor don't pay their fair share in taxes.

they're not paying income taxes I worked at McDonald's I was making four dollars and fifteen cents an hour and I was getting hit with employment tax on every dollar. Yeah, if you do not put an end to that, it will absolutely tear you apart. It's 15.3 percent, There's a phase out on a portion of it, and then there's an ad back on a portion of it. So I don't care who you are, there's a way to minimize that and just recognizing that that is the whack of the income like you're getting.

You're getting a hit. And then you look at the other types of income sources. There's portfolio, which is capital gains and dividends. Um, you know you're looking at interest.

You're looking at royalties and it is not subject to. none of those are subject to the that little whack. None of those are subject to the employment taxes. And then there's the passive income.

and the one that stands out is real estate. rental. Real estate is considered a passive activity. The reason this is important is because it is treated like no other investment activity.

If I go and I buy a bunch of Microsoft a bunch of shares in Microsoft and I buy ten thousand dollars worth of shares in Microsoft I get no deduction I don't get to write any of that off I don't get to pay. You know what your Microsoft's going to be decreasing value over time in real estate I do in real estate I could spend ten thousand dollars and probably generate if I leverage it I could generate a ten thousand dollar deduction and people are like what? Yeah, yeah, they're literally giving you tax free money if you want to take it and it's just recognizing it that that's how our tax code is. And once you once you do, I'll tell you that the wealthiest clients we have they're always saying, how do I minimize How do I minimize How do I minimize? It's not what do I owe, it's how do I minimize it. How do I minimize the hit and the easy for your real estate agents? Here's what you do: You do not operate as an individual.

You do not operate as a sole proprietor. You operate as an S corp or an LLC tax as an S corp depending on your state, depending on your real estate board and if your real estate board doesn't recognize it and says no, you can't Yes, you can, there's a way to do it from a tax standpoint. Even if your real estate board says you can't and that is real simple. there's actually case law on it.

Uh, is you make sure that you are letting your broker be aware that even though they're paying you as an individual, you're under the complete control of an S corp or an LLC taxes and S Corp and you deposit those funds in there. You make sure that they're aware you get an employment agreement with that organization that you set up. It's between yourself and yourself as between your S Corp and you and you make sure those funds go in there and it will minimize those employment taxes. And if all we did if all we did is we looked at somebody's making 100 Grand a year and if all we did was get that money from you individually to you as an organization, it's gonna.

it's gonna cut It's Gonna Save You Nine ten thousand bucks a year? Boom Immediately. Is there? Is there any downside of not having the employment tax? We're not. We're not talking about like my future retirement at 62, 65, 70. that stuff.

So this is a misnomer. The way that Social Security works is it's front end loaded. So it's just are you participating in the system and we're not saying do not participate in it. We're saying minimize it and legally the way to do it like if you have an S Corp is you're going to pay a salary to yourself.

You're going to pay employment taxes, but you're going to pay about a third of what you normally would, right? And that third of what you normally would is going to qualify you for the benefits and pretty much Max you out anyway, right? The rest of it is just a tip. You're just leaving a tip to the government. You're saying, hey, here's some free money. There's no reason for you to do it.

And I know there's accountants out there I know that there's people that have heard this. They're going to say the S Corp is more difficult. No, it's not. It's the same rules books and Records whether you're a sole proprietor or not.

What I can tell you though is that sole Proprietors get audited about 800 percent more than an S corp. it was 0.2 percent For someone making 100 Grand As an S corp, it's it's what. 1.6 percent if you're a sole proprietor according to last year's data and they lose their audits a ridiculous amount of the time. it's actually about 94 of the time the the the sole Proprietors lose their audit because they do not get the same preferential tax treatment as businesses do as an organized business as a corporation under the tax code.

if somebody wants to go to Loggerheads with me, I Welcome it any day because facts are facts. They don't care about my feelings, your feelings, or anybody's feelings. They are what they are. You get audited more.

You lose about 70 of the businesses out there are still operating as sole. Proprietors. The IRS knows it. They target.

They win. It's easy. They go after a corporation, different animal. You got accountable plans.

You can just show any business use on a on a deduction. You get to write the whole thing off like your cell phone, your administrative office in your house. You don't. You don't have depreciation.

recapture all these nasty things you always hear about you. You get so many more benefits just by simply saying hey, you know what? I'm gonna make myself into a business so the IRS knows what I am. Everybody else knows what I am. If I am a business and it says Inc at the end of my name or LLC at the end of my name, everybody knows what they're dealing with when they're dealing with you, when you don't then the IRS never really knows whether you're individually acting or as a business and you have to prove that you're acting as a business and that's where everybody falls short.

Give me the stat one more time on. So people that don't have an LLC or an S corp or C Corp which we both would say they shouldn't have unless they were going public or something. So what percentage of them get audited versus the corporations? Yeah, this is crazy So you could actually go look up the rule. It the last year the IRS published the the minutia data.

it was it was. Table 17b a publication 55.. it's the IRS data book that they put out every year. they didn't have it for for 2020 for the tax year 2021.

Since we're in tax year 2022 right now, hopefully they bring it back. but when you look at an individual with an S with a Schedule C which is the sole proprietorship if they're making right around the hundred thousand dollar Mark I think it was 1.4 A little bit about that was 1.6 percent. When you look at all of the S Corps out there, it was point two percent. That's the audit rate.

In other words, the audit. Seldomly do they audit the S Corp and we know why they audit escort. Almost all the audits for S Corps are because you're taking distributions and not paying a small salary. So all we do is we say hey, you know what, You never want to get audited.

don't look like that. Yeah yeah. Have an S Corp have an LLC pay yourself a salary, pay some taxes, which it's so funny. like Manny Who you know has been my guy for my goodness, 25 years.

That was the first thing. Okay New Business: S Corp plus an LLC You're gonna pay yourself a salary I'm like I'm not even making any money yet. He's like you got to pay yourself something, right? That's how you just so so automatically by doing this, they're going to save a percentage of that 15.3 So if they just if they were just saying I don't know if I you know it's it's complicated I Gotta find somebody and get an LLC and I Heard that costs money The money that they're going to save automatically. Whether it went from 15 to 10, right? It's five grand in savings.

Just like that in the tax. That's how I'm hearing it. if I put a Schedule C which is what you'd file as a sole proprietor and you'd attach that to your 10, your 1040. and I put it side by side with an 1120s, which is the tax form you file for a corporation.

I've done this over and over again. Most people think the schedule C is more difficult. Yeah, but it's not. It's not apples and oranges.

They're pretty much identical. You're reporting your income and your expenses in a balance sheet. Yes, and it's really easy. It's in, by the way, the IRS doesn't distinguish between them for books and Records they say the formalities are the exact same because that's another one.

I Hear all the time. Well, my accountant said the formalities in a corporation are hires like no, it's not. It's identical. it's books.

and Records you have to maintain your income and your expenses. And if you're doing that, it doesn't matter whether you're a partnership, an S corp, a C Corp a non-profit a sole proprietorship or whatever, you have to keep track of those things. Period. It doesn't matter.

It doesn't say here's the standard if it's an S corp. and here's the standard if it's not. Yeah, Now, from a tax standpoint: once you're an S corp, you just have to take a reasonable salary and the profit is no longer subject to self-employment tax. If you are a sole proprietor, you cannot take a salary in 100 of your profits are subject to self-employment tax.

That's the distinction I take a small salary I eliminate what ends up being 15.3 percent on whatever amount I made. It's extra money, and it's a sizable amount of money on an annual basis for somebody who's running a midsize business, a reasonable agent. and I don't know what the average agent in your group is, but I know what the average is. Uh, Nationwide it's going to save the average age.

Yeah, we're like 4 14 times higher than that. We our ads say 10. We just think 14 is just going to have people go. What? right? But you know you pay.

We we track a measure. So I Toby I got to stop for a second for my friend listing right now I'm thinking you might want to save this wherever you are and the next time you're calling your Uncle Larry who does your taxes you're gonna send Toby's interview with me to your Uncle Larry and say listen to this or whoever the guy or Gower professional person you work with and just say hey I just want to make sure I'm doing everything that this guy's talking about. That's like when I go sit with the wealthiest I'm so blessed right? Like I've curated over you know, three decades, some some pretty remarkable people that are willing to share with me and literally I'm like this is how this is how most of our meetings go. Hey so what have you learned since I spoke with you last and what do you recommend I'm taking notes and then I just sent it right to Manny Manny Toby says we should do this Are we doing this I So for my friend listening, listen, take notes.

He talks fast. He's got a lot of information. We only got a short amount of time in this show, but just think who am I going to send this to to say please cross check that we're doing everything. Does that make sense 100 minimize the tax, maximize your retirement benefits because hey, if I have to take a salary, I may as well get a tax deduction for it, exam it all into a 401k, or if you're making 10 times what the normal agent makes, you're going to be doing a defined benefit plan and you probably scratch your head going.

What the hell is that? Talk about it. Yeah, this is it. Most of the time for the for for regular feet people they say here's how much you can contribute. Hey I'm going to do an IRA you can contribute 6 500 if you've got some gray hairs, you can do 7 500 or if you're doing a 401k, here's how much you can put in a year.

That's great for the regular folks, but if you're a high earner, you need to turn it on its head and say I am making 200 000 a year Three hundred thousand dollars a year. How do I make that when I retire and they let you reverse engineer your numbers so that you contribute enough money so that you can take that out of your retirement plan. And if you think that's crazy, it is right around. 300 000 is the max benefit.

which means I need to save four or five million bucks I'm going to need to save that. and how many years do I have I might have 10 years to do it. Okay now you're starting to see I got 10 years to save 5 million I'm going to be putting in a half million dollars a year. It's not quite that clean, you get an actuary to actually run the numbers, but it's pretty darn close and you're going to be putting a lot of money tax deferred.

You'll pay tax on it eventually, but many, many years from now after. it's continued to grow. And if you're smart and you're in real estate, you're investing that in real estate. A lot of you guys say you can't do that.

you could you have to put it in a mutual fund. No, that's that's if you have said the guy trying to sell you mutual funds. hey if I am a brokerage house and I say hey you can open up a a wonderful Ira with us. I'm going to tell you what you can invest in and it's going to be something I'm selling.

Yeah, if you've set up your own, you can decide to invest in whatever you want. Yeah, you could absolutely do real estate projects in it. Everybody's like yeah, maybe I do, maybe I don't But whatever the case, it's deferred income and it's going to grow tax-free And if you just give yourself an extra 10 20 years to let something cook, you'll be shocked at how much more money you have because everything grows exponentially if it's not taxed. So I've I'll just like Point Counterpoint I Talk to a lot of friends that you know we in the early days of our lives right when our like I've got a 24 and 22 year old like I was told you need to get a 529b plan in order to put them into college.

you know tax deferred or tax free savings to put your kids in college and I'm like I just said okay and then I've got other friends that say yeah I got that same pitch you know I did I bought them a duplex in Costa Mesa California the day after they were born and for you know 300 000 it's now worth a million seven and it spits off this much cash flow. Is there a right or wrong way? I mean could real estate just be for some the solution towards retirement and and versus trying to think about the market and all these other you know ways to save and tax-free Etc I I Tend to be a stock market guy and a real estate guy. like if you look at it the top 10 percent on ninety percent of the value in the stock market. That's what rich people invest in.

but it's the same thing with real estate. Yeah right. So I tend to look at real estate. The stock market's neat but if you want the tax benefits it's not even close.

Real estate gets you. It kicks you right in the honey because you can have the income. So let's talk about your your situation. Somebody's putting away after tax dollars into a 529 plan.

It's growing. They're going to use it for for to cover for school. Congratulations Slow Clap! What's the tax benefit you got? It's the growth. You didn't have to pay a lot of tax on it.

Congratulations now your friend in Costa Mesa Buys the 300 000 units now worth 1.2 You borrow the money you pay for college. You're getting a deduction every day because you have depreciation every time you put a new roof on it. You're redepreciating it if you want to. You take that duplex that's now worth 1.2 and you sell it and you exchange it under a 1031 exchange into five other properties which then grow and then all you have to do Tom is this magic thing called you have to Die and eventually you die and the basis steps up of that properties.

Now you have five properties that are worth God knows how much. Let's say they're worth a couple million and your beneficiaries get to re-depreciate it. They get to write it off all over again and you never had to pay tax in any of the loans. That's what the rich do.

They call it. buy borrow die and you see it. People throw it out there with the stain. That's what the rich do they buy.

They buy real estate and they borrow against it. They buy stock and they borrow against it too. The whole trick is if you never want to pay capital gains on something, you never want to pay tax on it, don't sell it right. You know? I've never seen somebody say buy borrow and die with a smile on their face as a as a strategy for creating wealth.

It's that last one that kind of throws people, but that is I mean I Think about, um, one day one day you have to meet my stepmom pool I refer to him as as my mom. you know she's with me since I was six years old. Um, she's never had a job. Uh, all she does is buy real estate.

She is 70. she's going to be pissed and I'm saying this, she's 78 years old and literally I don't know how many hundreds of doors and units and everything else that she owns, but it's a lot And she says Thomas if you want to to make a lot of money and you want to like become wealthy, the only answer is buy more real estate now I'm with you I'm a little more Diversified in my Approach But like all she does is real estate and she says and I think for the most part I don't really ever pay taxes because I don't really have any money. The the rule in the counting is if you're paying taxes, it's because you don't own enough real estate. If you're a real estate investor like everybody that works with you is a real estate professional.

Yes, they're spending more than 750 hours more than 50. 50 of their time in the real estate world as an agent, as a broker or whatnot, right? So maybe they're doing construction development. Uh, the the mortgage votes don't count, but everybody else. which means there's no such thing as passive losses from Real Estate So if you want to eliminate taxes, what you do is you go buy a piece of real estate.

You do something called a cost seg on it. Which means you accelerate the depreciation on the real estate, the little box that's on the land, you write off about a third of it in the first year and it wipes out all your income and you don't pay any tax and then your accountant says but that's positive and you're gonna say no. Actually, there's a little exception. It's called 469 C7 if you want to get technical I Love code Provisions but you actually can point to them, this is right Here It says Real Estate Professional that rental activity is now ordinary and do I maturely participate in my real estate.

Yes, I'm managing my own properties or I'm involved in them. Yay! I get to write it off as an ordinary loss so you don't pay tax. So when I see Realtors and I see people involved in real estate and they're not buying their product, they're selling I'm like you are. You are voluntarily paying a lot of tax my friend You voluntarily because you you know you could lever the real estate.

You see the good deals. why aren't you buy more of it And just you know. And then again, if I want to sell it I certainly can as long as I buy more real estate I don't pay tax right? And even if I did pay real, even if I did pay tax, we call it a poor man's 1031 exchange, What you do is you sell it. You have capital gains and then, but you can actually buy more real estate, create more depreciation.

It offsets the capital gain. It's like even if you're passive, it works that way. You actually have something called passive capital gains that 99 of the accountants are unaware exists and all you have to do is create more passive law. So even if you're not a real estate professional, even if you're just an investor like me, I'm just I'm a lawyer.

so I don't get to qualify as a real estate professional I got 400 separate pieces of property, everything from apartment complexes to single families and everything else. And if I sell a bunch because I get a little Burr in my katush and I'm like hey, let's just sell some of these properties like a million dollars a game. Oh crap I immediately go out and say I can cost seg that property and take that loss and wipe that out. Bingo! So do you not automatically like we? So my partners and I bought about 700 units in the last 12 months and then you know my wife and I have you know we do our own separate stuff and and every one of the units that we buy it's the first, it's it's hey, let's can we put solar on this and essentially you know, give the you know, give them 20 down and leverage the balance of the 80 of the cost of the solar to get a 25 write off automatically on that money and then the next moves to Costa every time.

Cost Segregation Study: If you're wondering what we're saying, Cost Segregation study, don't you just do that automatically every time you made it sound like you don't always do that? You don't always do it unless you're real estate professional. and then you don't always do it if it's going to create too much loss. So for example: yeah, for me, I just don't want to pay tax in any of my rental income. Yeah, it's still passive to me.

Yeah so so if I have too much loss, I just carry it forward and it wipes Out Future Revenue it's not really doing anything for me. So sometimes I do like this year we we sold some real estate because the market was so flipping stinking hot. So we we, you know I don't generally sell but I was like let's just sell some but I also knew we had apartment buildings you know 140 unit I was like I know it's going to give me a million dollars a loss, but it was 1.7 when we did the cost sake 1.7 million dollars of passive loss I'm not paying tax on any of that anyway. so I just kind of do it when I feel like it.

But if you were a real estate professional, you can literally eliminate your tax like you could be making half a million dollars as a real estate agent and not pay any tax on it Just because you bought real estate and cost sagging is what you're supposed to do. The impermissible method is to write it off over 27.5 years or 39 years. If it's non-residential it's just crazy. This is.

this is something. So my partner uh Eric Icock. Big shout out to Eric He has been helping people invest in real estate. He's been a real estate broker young guy like you know, sub like 37 like young guy but owns 1200 units.

All he does is say look, you've got to buy one property a year if you do it and you cost sag it, you're either going to eliminate the taxes you have from your residential real estate business income, so you're You're saying the same thing that a lot of my listeners have heard a few times. sometimes Toby we need to hear it Nine times before we go, he's talking to me so hopefully my friend. you're getting this. So so I feel like you answered kind of going into the second question which is like what are the Real Estate Investors doing costs eggs and all of this.

Let let's go to that question which I Love Like what are the what are the wealthiest people doing right now to save more money? What are they doing to eliminate taxes? They're They're taking advantage of the opportunities right now. We're about 700 or 7 million units behind in the country and they just raised a bunch of interest rates to make it even less affordable for people and the builders stop building and I just want to just kind of give you guys an idea. They thought when I say they The Economist thought we needed to build 1.2 million units every year to keep up with population growth and and units going at a commission. you know, old houses falling down right? It was 1.7 million.

They were half a million off per year for the last five years. Yeah, so I Just saw that time study I Just saw that study. Yeah, it's Bonkers when you like the Harvard uh Joint Center for housing does a really good uh report every year where they're breaking down like wires. Why is it so unaffordable, right? Well supply and demand.

Yeah, so there's a ton of there's a ton of demand. there's not enough Supply And guess what? Interest rates just went up. You know who's having a field day right now? People with cash. Yeah, people that don't have to borrow money, they're like this is the greatest thing ever.

I'm not. There's no competitors. So what are the rich doing right now? They are buying up multi-family They're stealing them. If they can, they're buying single families.

They're doing uh right now. I think that Self Storage is huge I Think that manufactured housing is huge I Just did a a park where we had 29 units. The cost of the land and the unit was less than a hundred thousand dollars a piece. People need a place to live.

Those are the little cash machines. Every one of those is just a little cash machine and those will rent for 1500 bucks a month. Easy. It's just so I got a bunch of sort of backup questions on that.

The first question I Know my listener is probably saying okay, well how do I find these deals Like how do you? How do you like? how do you do work with a bunch of Brokers all over the country? you know, are they all in Vegas like I buy a lot in Texas but I got you know, properties kind of a little scattered around California Texas Etc how did they find these deals? Well, we actually Source them. So uh, we have something called Infinity Investing our little a little side project if you want to learn how to invest. that's I built that years ago I wrote a book about it and all that fun stuff because I just don't believe that most the people out there talking about investing actually make money investing. I think they make money selling of course.

Yeah I think they're I do their taxes and I think they're Liars A lot of them like a lot of the gurus. I appreciate you saying that because I've seen the same thing and then I've you know proudly I'm on the other side of that camp. but you know we know we know some people that yeah they're good at selling courses so so so sourcing deals like So for my listener, I'll give you an example. So um, the 700 units we bought down in Houston Houston area proper.

Um we start building relationships with Brokers right? Like that's where it all starts. Like how many commercial real estate brokers and like if you go to like CBRE as an example most Jll they all have a division of specific Brokers that work specific types of units. Like here's the here's the gal who crushes the 10 to 20 unit space. Here's the gal that crushes the 50 to 100 if you get it above 100 until you see the same thing 200 250, 300.

Now you're talking about funds right that are coming in. and like conglomerates that are buying this stuff, you're going to be a syndication. well in in the big big ones. but I found like kind of 150 I Mean we have one that's 191 units.

but like you know, 200 and below is almost more like regular mom and pop investors, right? And yes, some syndications, right? no doubt. But like our strategy is meat brokers, do one deal with them, prove that we can get the deal done and that we're You know we're good, solid buyers. and then it just feels like referrals. referrals, referrals, referrals.

And then we've also found that the companies that we have that are managing the properties for us right? Because we take care of them and they take care of us. We're like, hey, who else do you guys know that you know, like, are there any other buildings they're like. Oh, as a matter of fact, so every one of our deals has been off Market Yep, what other tactics do you recommend? Well, what you just said is exactly what you should be doing. You're not gonna if it's listed.

chances are it's not the greatest deal yet. You want to get it before kids. So what we do is we're if you ever got one of those annoying texts that says hey, I saw you have a that's probably maybe us at least, but we said yeah. We do everything from phone calls, emails like we're looking for people that are thinking of maybe selling and then we'll work with anybody.

We will do SUB twos, We'll do tax liens, we'll do tax deeds, We'll do whatever we can define properties. Uh, and it's just very seldom do you find a great deal directly off the MLS I Just I Agree, You know for for an investor. Now that said, if you want a turnkey property and you're just, you just want something that's not going to be a lot of fuss, or you're going to do an Airbnb or you're going to do something where it needs to be a little bit nicer. Then by all means you should be working with an agent because they're going to find you the deals once.

Once you say here's the numbers, I'm looking for uh, or shared housing. Hey, find me something with six units you know or six rooms I Don't need it to be a duplex or a Triplex or whatever. I can actually just just find me a big house and uh, you might be shocked at how much revenue you can actually generate off of anything from a recovery housing a residential Assisted Living to just doing shared housing just knock them down and you using like a pad split. you might be shocked at how much you can actually generate off of a single property.

I Agree I Think the the big key for my friend listening right now is is maybe just a couple questions, one talking directly to my listener. how much time do you spend looking at for example, the MLS hitting the button remind that gives you the ability to data mine or whatever solution your MLS has to say show me every blacks every Triplex every fourplex, every aplex in my area and hey, who are the owners because it would you know Toby it'll It'll aggregate that list for you and now you have a new potential pool of opportunities to prospect to the other one I always look for is show me how many people and sometimes it's not people. it's an LLC Or you know, some some corporate entity that owns more than three doors in my area, more than three under ten. And now what you find is the mom and pop investors.

and then when you do a little research on them, you realize huh, they've owned those seven properties. and you know Ding Dingville wherever. and they've owned them for 42 years. There are opportunities everywhere, but it does require that that focus and concentration and search.

And whether it's for you my listener or you're doing it with an investor and you take your five or six or three or whatever your percent commission and say I'll find the deal but I want to roll it in. There's all kinds of ways we can do this. So what what else should they be doing on source? and then I want to know besides having cash and buy more real estate, what are the wealthiest people doing? Yeah, so I mean I just I'll answer that for the the first thing. What you just described is exactly what you have to be doing.

Here's the deal. An investor like me is not going to do any of that. I'm going to have other people do it. Yep, uh, investor like you is probably the same thing.

you're probably not sitting there every now and again. I'll go you know, in search of and I'll go doing some digging. but it's not the best use of my time. so I tend to look at I use wholesalers.

you know, your agents I'm happy to find a bird dog if they're going around talking to people. Yeah, and some of the deals. What you just described is finding somebody who's got a bunch of the properties. I've bought probably 200 properties in the last five years from people that you just described.

yeah. and what we'll do is a lot of times they don't want to sell because they're afraid of the tax. so we'll do an installment sale with it with a guaranteed yield. In other words, we'll say hey, I'll buy it from you at six percent and we won't That, you know, and you get yield service.

You get the interest whether we pay it off early or not, right? so that there's no incentive. It's the prepayment penalty, essentially. But you're stretching it out and you might say hey, I'll pay you over 10 years. So if they have an income stream because a lot of times what they're looking at is they got a bunch of properties.

they're long in the tooth. They don't want to dump a bunch of money into them. They like the cash flow and if you can figure out that number and go to them and say I'll buy your 20 properties, here's the amount here. I'll give you this income and they feel comfortable.

They'll do it. Uh, quite often. they're just looking at going into. you know they're 70 80 years old.

they're just they just want to enjoy life. It's so interesting. So so I know from my friend listening there was a lot to unpack in there. The one thing I want to point out is it.

it always comes down to relationships. It always comes down to relationships I was thinking about the a nine Plex my white bot she got to know the seller off Market Deal right? Bird Dog found it for us. Big shout out to Janelle Thank you right? Kathy goes to meet with the guy and he's like you know I like you and that was it. We got it for a lesser price with great terms.

We have one tenant that you know maybe in a traditional deal we wouldn't have taken but it was like his guy who also takes care of the building. so we're like okay and it was only because of their connection and bond and now his callings and saying I have some other doors. Do you guys want those two right? Like just because we were, we were good. We were nice to like we were just being us right? Like relationships matter.

Whether it's the broker, the bird dog, it doesn't matter. Always relationships first. All right. So 100 and I think everybody who is in this space that actually spends decades in it and accumulates property is going to say the exact same thing.

You either find people who are awesome people and you treat them like gold like I've paid a wholesaler on one property 70 grand before People are like oh you know, start with if they hit my numbers and I give them a shopping list I'll tell you what real life So in Winston-Salem which I've been investing there for um, close to a decade and it's just been Bonkers right that that's just a great rental market. So I worked I Love working with non-profits I love working with people that do transitional housing except kind of that the one-off they'll go out and they'll say Toby I need 20 units and I'll be like okay what kind of folks it needs to like? Maybe they might be hey they're they're sick like let's say they have their their age positive or something like that they might need a one bedroom one bath. Nobody's selling one bedroom one bath right? Yeah, well guess what when if you're going out and you're looking at as an order form and you're saying can you find me 21 bedroom one bath units you'd be shocked at what somebody can find out there for you and they bring them to you and you're like how long can I do a five-year lease with the organization Yeah, we just need that. We you know the Department of Corrections need this or United Way needs this or whatever whatever their order is, this is, where they want to put people and some people are already thinking like oh that's not big enough for me.

you know those aren't the there is such a huge need for that type of Housing and you can go out and just you're basically taking an order and you're filling up your houses by taking orders. and I have clients that do that all over the country you mentioned Texas I have a bunch of uh Houston properties that we bought. uh I know it's just going on five years. uh that that market gone? uh Oklahoma we do a lot in North Carolina we do a lot in Indianapolis still um we love those marketplaces.

uh Idaho's every now and again it's it's that's an interesting Market too I agree I Just love I just love buying real estate. We had a bunch in Vegas Vegas that was after the uh, the crash. you know the Great Recession you could. yeah you could buy great deals all over the place.

It was like it was raining deals. the and I was flipping houses I thought I was a genius and it was the stupidest thing I ever did was to sell those properties because now they're worth three times as much and generating all this cash flow. but I still have a few but uh, you just you got to walk into a few polls and and bang your head a couple times before it sinks in and you're like, you know what if I do it the easy way. It's so much better if I buy things with the intent to hold on to them for a long period of time and I'm not trying to make a quick buck and I'm going to have long-term relationships and I see somebody and I say this person could they could Source 100 homes for me I'm going to treat them like gold.

Yeah, buy borrow die I might get that tattooed on my arm. All right. So I think you answered the question, what are you investing in but I'm gonna I'm gonna just throw one last question at you. this has been super valuable Toby By the way, if somebody wants to reach out to you guys, you know you I've referred you I don't know I hope a couple hundred clients because I'm always saying you know to people that I meet they're like, uh, this was a classic you gotta you got a reason that went like this: uh I haven't paid my taxes since 2021 and I'm like, what? what like Call these guys right? Like, do not have that happen right under any circumstances I I'm not I'm not laughing at the situation, but like I don't like hearing that from a friend of mine or a client of mine, right? So so if they want to reach out, what's the best way for them to to reach you guys? I'm sure that we have a link.

The other thing is just to go just type in Toby Mathis and go to the YouTube Yes, but I but we like to know it's from Utah because we know your clientele and we know the people that work with you. They're awesome folks and immediately we say gosh, we know exactly who this is I'm certain that we'll give you a link that somebody can go through will know exactly where they came from. Awesome Awesome! So uh, thinking about my last question, the the reason so for my friend watching right now are listening what prompted this was I'm on YouTube and I'm typing in like Financial this and I'm I'm trying to find out like you know, like d dollarization of the uh, you know, I'm I'm looking for that stuff and whose ad do I keep seeing over and over again your ad. So just from a marketing standpoint from my friend listening, how are your YouTube ads performing what got you prompted to do it and would you recommend it for a real estate professional? Yeah, Absolutely.

So the the answer is we do it, We do. Most of our advertising is is YouTube yeah and we just find it's the biggest bang for your buck. and you get the right type of people because you can get granular and people raise their hands. you know they're saying hey I actually like this uh we have a really good subscriber base so most of it's unpaid.

It's actually pretty fun. We still throw the the ads out there, but uh, what I would say to any agent is uh, there's a this old term that niches make riches right. Niches make riches I guess doesn't really work. So you gotta say niches make riches.

You got to find what you're good at and then give away the information. And it seems counterproductive because everybody wants to get paid. It's reaping and sewing my friend and you plant the seeds and it might be two or three seasons before it actually starts to to sprout. You just have to be patient.

and in all things investing time is your friend and uh, you know, right now we're in a crazy stock market, right? And you add like what do people invest I still have a lot of clients that love the market I do myself I buy dividend stocks and I treat it like real estate. Yeah, I wouldn't buy a rental property and leave it vacant and I wouldn't buy a stock and leave it uncovered with a covered call I just always put it and I want to make sure that I'm generating Revenue off it. Uh, but it's like all things. it's not necessarily timing the market.

it's time in the market. So if you can just get yourself and say Here's how much I use 70 30 rule I live off a 70 and invest 30 pay off debt. do your giving everything out of that 30. but if all you're doing is putting that into Investments you're going to be successful over a long period of time and just be patient.

Yeah I agree. Well said. Well said. I Think of all the all the wealthiest men and women I've ever met.

They all say play the long game Play the long game. Play the long game. Tell me this is super valuable I do want to ask you one more question even though I do have a minute. Are you okay I know our schedules are nuts all right so I'll probably be late for my session.

but I'm gonna ask anyway. the ad that I saw was about asset protection. mm-hmm talk to me. what are the two or three things they need to be thinking about? like the the commercial literally had me like hey Manny like am I doing everything right like if I ever get sued or something goes wrong like are they gonna come after all my you know what I mean like like that was the the fear that I got from the ad is actually what prompted me to like I gotta reach out to my team and just make sure I'm covered.

What did you mean by asset protection and what's one or two things that my my listeners should be thinking about? Yeah right now you should be scared whenever we go into a recession or whenever we have a crazy Market People look for someone that they can take things from. You see an uptick in discrimination, lawsuits or employment lawsuits. You see tenants suing their landlords. more.

You see all that. What you want to do is. Here's an easy adage: It's not what you make, it's what you keep from a tax standpoint. It's really easy because you can see dollars and cents and if and you have to face it once a year.

But it's also true in asset Protection and an asset Protection. What you're trying to do is remove the large Target on your back. If somebody can see that you own 10 houses, they're coming after you and I'll give you a real life situation. that'll that'll trip you out.

but I'll just leave it at this. If you can obscure your ownership and make it to where people can't see what you own, the chances of you getting sued go down dramatically if you leave yourself completely exposed. You're the deep pocket that they tend to go after And so I'll give you real life. California Massive lawsuit.

I Won't give you too close to the facts because you'd be able to go look it up. but there was two owners, son, father son was our client. Was not worth what the you know was. Uh, actually he was worth more than the dad.

but the dad was still very successful. Dad did things old school with his CPA which means he didn't even like those things called llc's Right I Remember 25 years ago arguing with an accountant about a commercial building and they said uh, you don't need to put in an LLC just get Umbrella insurance and I said fantastic, Put that in writing please and say that you'll pay for the excess exposure if somebody sues I'd love to see you put your your signature on that when he was like whoa, I'm not going to be liable for and I was like then why are you giving that advice Put an LLC around it so that the liability on a commercial property doesn't follow you around for the rest of your life. So in this particular case it was two people were severely injured on a piece of property. not because of the landlords, not because of the property owners.

They had leased it but they had used the the people they leased to. hired a third party vendor that did uh, ballet service and there was a massive. There was a serious injury so they go to sue everybody. Valet doesn't have money, they sue the the landowners which is this this? This father and the son the son worked with us.

they could not see anything he owed 25 000 settlement. Boom Dad gets drugged through for five years. Going through this multi-million dollar suit ends up out of pockets strong. Seven figures.

He was okay because he had substantial assets, but the whole time he's like, why aren't they doing it against my kid And the punchline was that the kid had more money. Now they were in a position where they could, they could cover it, but there was unlimited exposure and they were going to say, what about the insurance? The insurance found a way out because it was a third party vendor that was hired and they and a lot of times they'll just tend to lower limits and leave you to to defend yourself. It's the attorney's fees, it's the cost. It's the constant drag, but it's easy to fix.

And in real estate, there's no reason to have your name associated with the property. I can take anybody whether it's your personal residence or whether it's commercial and get your name off it because people don't need to know that Tom Ferry has this many properties, period. And that's usually what generates the lawsuit because a lawyer is going to look at it and say Here's the claim. Here's what it's worth.

What are my chances of collecting? If the chances of collecting are 100 percent, it's way more valuable a lawsuit and they'll Shake You Down If they don't see anything, or if they see a series of llc's where there's minimal, there's minimal asset base, then they're going to be like up. That's not the one we want to roll the dice on. Settle that one up. Smart smart.

This was so valuable And of course now you know what I'm thinking. Oh, God do I have a property in my name so I can tell you it's my primary residence in my name I'm like, all right. switch Edit: All of this call Manny Quick. Get it done all right.

Toby As always man, this was so valuable. There's so many insights here for my friend listening. Uh, remember, you can just forward this to someone and say hey, make sure I'm doing this right if you need help. Toby and his team are amazing as you heard me say.

I preferred them. A lot of clients that just are like you. they're just high-powered and maybe just didn't have the Insight didn't have the knowledge needed an advisor and I jokingly like I had a t-shirt made for a while right? that literally said stop hiring Uncle Larry to do your taxes right just because you know, because he was good with a calculator like don't don't do that like hire a Prof like I get Hector over here dying laughing, right? So Hector Don't hire Uncle Larry to do your taxes. Ever hire a pro? All right Uncle Larry does a little bit too much of this.

Yeah, it's not good, not good with your taxes. We shouldn't be laughing and talking taxes. But yes, all right. So Toby thank you so much I Appreciate you always.

Uh, hopefully I'll see you at the Summit, you know, or somebody from your team So and tell them my friend all the best peace to you All The best for my friend that's listening I'd Love a comment I Love a you know a share. Get this information into the hands of everybody. Everybody that you know inside your office needs to hear this ASAP Thank you guys so much! Take care foreign.