Real Estate Talk Podcast with Jesus Castanon | RETalkPodcast
The Ultimate Real Estate Unveiling! Raw, Real & Revealing insights from industry experts
Dive headfirst into real estate's most electrifying depths with industry legends - Jesus Castanon, Josh Cadillac, and Richard L. Barbara. Why legends? With billion-dollar deals, groundbreaking innovations, and wisdom that's transformed the landscape, they've not just witnessed the game; they've been the game-changers. And if that's not enough, they're joined by a parade of industry-expert guests, spilling secrets and dishing advice that you won't hear anywhere else.
Expect RAW, REAL strategies that shook the market, REVEALING insights, and timely takes on today's market, coupled with actionable advice.
This isn't your typical real estate chitchat. This is RETalkPodcast - where the titans and top minds of the industry unite. Dive in, and prepare to have your real estate perceptions rocked!
Real Estate Talk Podcast with Jesus Castanon | RETalkPodcast
Episode 35: Exploring Tax Benefits in Real Estate Investing with an accountant
Master the art of wealth creation and real estate management! Our special co-host Richard Barbara, a real estate attorney and vice chairman appointed by Governor Desantis to the Florida Real Estate Commission, brings his vast knowledge and expertise to the table. We delve into the importance of real estate in wealth building, the licensing process in Florida, and strategies of high net worth individuals.
We challenge the status quo, debating the value of education versus networking, and the shortcomings of the current education system in preparing individuals to handle money and business. We also discuss the challenges professional athletes face in wealth management. Additionally, we explore the practical aspects of financial management and legal education, from managing sudden wealth to understanding the lack of financial education in schools.
Lastly, we venture into the world of tax benefits with a very special guest, a CPA and self made millionaire, Steven Colon, discussing the pros of incorporating as a PA when investing in real estate, and the potential tax savings of setting up an S corporation. Steven brings a unique perspective to our discussion on the challenges of being self-employed, and the important lessons learned from partnerships and business deals. Listen in to gain insightful knowledge, practical advice, and an in-depth understanding of the fascinating world of real estate, wealth creation, and tax benefits.
Real Estate Talk Podcast with Jesus Castanon - @retalkpodcast: The Ultimate Real Estate Unveiling! Raw, Real & Revealing insights from industry experts
Dive headfirst into real estate's most electrifying depths with industry legends - Jesus Castanon, Josh Cadillac, and Richard L. Barbara. Why legends? With billion-dollar deals, groundbreaking innovations, and wisdom that's transformed the landscape, they've not just witnessed the game; they've been the game-changers. And if that's not enough, they're joined by a parade of industry-expert guests, spilling secrets and dishing advice that you won't hear anywhere else.
Expect RAW, REAL strategies that shook the market, REVEALING insights, and timely takes on today's market, coupled with actionable advice.
This isn't your typical real estate chitchat. This is RETalkPodcast - where the titans and top minds of the industry unite. Dive in, and prepare to have your real estate perceptions rocked!
Meet The Legends:
Jesus Castanon: Visionary CEO of Real Estate EMPIRE Group, transforming property transactions into success stories.
Josh Cadillac: Renowned real estate coach, national speaker, and author; revolutionizing the art of 'closing for life.'
Richard L. Barbara, Esq.: Florida's legal luminary, pioneering change and setting the gold standard in real estate advocacy.
I think you had touchspot. It too is like contracts too. It's like a deal is not a deal until you get to the closing table.
Speaker 2:Yeah.
Speaker 1:Because anything is off. You know it's like, it's like they. It's a different mindset. I think here in Florida, where contracts and deals are a little more fluid.
Speaker 3:Yeah, we're over there.
Speaker 1:It's like it's like you know you, you know you have like not to get to. They get the George Lord's like really you know making sure they got their cover and all that, yeah, as opposed
Speaker 3:to other Other.
Speaker 4:I don't know who you're insulting.
Speaker 3:Maybe both Well done.
Speaker 5:He's managed to insult you. Call it excites, I'm out.
Speaker 4:So listen, the Jews are too terrible. No one can be offended.
Speaker 2:All right, episode 30,. This has to be 35. 35. I got it right. There we go 35. So we got a guest today. First, let me introduce you. What should I do first? Introduce him. What's the what's like the correct way to do it? Introduce him first or introduce ourselves first, because he doesn't really know who you guys are.
Speaker 4:You already ruined it, I already ruined it, so I would just go ahead and introduce the guest, all right. So fix it in post no for now.
Speaker 2:So Richard Richard Barbara, richard Barbara attorney. He is a real estate attorney and he's a. Are you a chairman, yet A freck or vice chairman? Vice chairman appointed by Desantis, to our great governor, to to the Florida real estate commission, which I don't know. It's a big deal in our world. I don't know. In the CPA, what's your? What's the version of freck For you guys?
Speaker 1:I mean, I guess, the Florida Institute of Certified Public Accountants.
Speaker 4:Right For you guys? I guess no. But who's your license on the phone? Who could take your license?
Speaker 1:Oh, it's going to be the, the board of accountancy. You know the department.
Speaker 3:Yeah, that's right, he's a that's who you are.
Speaker 4:Yeah, that's who you are. That's who you are. Yeah, yeah, yeah.
Speaker 2:He's.
Speaker 4:I mean not that guy, but something like it.
Speaker 2:Yeah, yeah, he's also never been wrong, which is really really something that I'm sure you never met. Anybody's never been wrong before, that's an interesting, it's just infrequent.
Speaker 2:Josh Cadillac, published author. I've known Richard almost almost 18 years, cadillac published author and the smartest guy I know. So he teaches, he teaches for the National Association of Realtors all across the country and stuff. So and tell us a little bit about yourself. So I know you're. All I know is I'm purpose. By the way, I'm trying to like, I want the introduction to happen here. I want to. I want you know, just to get to know you here instead of on the phone or anything like that.
Speaker 1:So so a little bit about yourself. So I'm Steve Cologne. I'm a CPA here in the state of Florida for the better part of two decades Now. I've been a CPA for about three decades. I started my career in New York with the international firm of a key you had to get, you had to re get your license over here. I did All right. Yeah, it was a pin and a yes.
Speaker 2:Yeah, yeah, yeah, yeah. You have to do it in Spanish over here, or something, right?
Speaker 1:Something like that. Yeah, so I'm on the West Coast, I'm in Sarasota, so I got two office locations over there. You know basically deal with a lot of real estate agents, a lot of real estate investors. You know it's basically high net worth individuals, A lot of small businesses. Would you say your specialty is real estate. Probably, I'd say at least 50% of my practice probably is involved with the real estate. I mean, you know, typically that's where the wealth is. You know, most millionaires are made through real estate.
Speaker 2:Is that a fact? Yeah, I heard it was stocks.
Speaker 1:No, it's through real estate.
Speaker 2:Actually, every time I look it up it's a different. It gives you like a different stat, I don't know. So it's real estate, it's real estate.
Speaker 1:It's definitely real estate and that's what I see in my practice, because I don't see a lot of people that are W2H owners and then, you know, over time you develop these like massive investment portfolios, unless you're like you know, you're playing in MLB in Wall Street. Well, those guys, usually those are the winners.
Speaker 2:Right, but what percentage of those guys keep their wealth? You know those guys are heavy earners in their late 20s, early 30s, heavy consumers, you know.
Speaker 1:Yeah.
Speaker 2:Because I have that. I have that. It's definitely an argument. I like to argue, so I find whenever I find an argument.
Speaker 3:I just get it and I fucking run with it.
Speaker 2:So there's the argument of a lot of these dads that because you know, since my son Russell's, they're like, oh, but there's no professional outlet for it. I'm like that's actually what I like about it, because you don't spend your whole fucking entire life, you know, thinking, all right, I'm going to make it to the MLB, I'm going to make it to the NFL, you're, you're like, all right, let's see how many people I can meet, how many connections you know best. Education, best most. And education, richard and I argue about that all the time, not that I wave it off, but I think it's more who you're surrounding yourself by. Yeah, right, if you go to these Ivy League schools and everything you're meeting the next you know X, y and Z and stuff like that. So, so yeah, it's, it's. I don't know we could go on down that education rabbit hole for, for, for a while.
Speaker 1:I mean, I think it's good you know if you get, if you can fund your college through the sport. Yeah, and a lot of these guys I guess they get into like MMA and stuff like that too, right.
Speaker 2:But but here's the thing. So then a lot of these football guys, basketball guys, etc. They make, you know you know, millions of dollars. They don't. You know it comes easy, usually goes easy, right, they don't. They don't know how to manage it. I tell you I didn't, even though I got into business really early. I don't think I became a businessman until I got my ass kicked Right and and and had to rebuild it again and and really, oh, I get it. I never forget the first time I heard the word overhead Right, it was from some some real cheap, some client that I had that was doing really, really well, but he was a cheap bastard and he asked me like what's your overhead Interesting?
Speaker 4:You're like I don't know, what does that mean?
Speaker 2:I'm learning as I go. I mean, I'm just, you know, hiring is what I need, as many you know it wasn't really like I'm learning, learning as you go. You know what I mean. So so that's where we're. Definitely, you know, some level of education would have helped me, for sure you know. But but yeah, back to the baseball guys. You know. So I wonder, you know how that works. My wife, no matter how many times I tell her we're on a podcast, um, so I wonder how many of those guys actually keep their, their, their, their wealth? You know what I mean. I wonder if there's a, you're sure there's a stat out there.
Speaker 2:There has to be a stat. It kind of like usually knows every stat. So I was looking at him when I was a.
Speaker 1:I don't know why we wonder there's a stat. I think there's something about that. Guys like an NFL, like a certain percentage of them by this time, like I think within five years, a lot of them go like go broke. Yeah, because they just don't. You know they're funding all of these purchases, getting. You know giving loans to all their friends. You know that's like one of the biggest things you know investing like in all these. Everybody brings them like a business opportunity.
Speaker 5:It's like they are horrendous investing in this swap plan here and then you know, just throwing money out and anybody that's seen ballers knows yeah, yeah, yeah, that's, but I know there there was a staggering stat about that I.
Speaker 1:I don't know the exact number, but there yeah.
Speaker 5:The larger. I think Jesus's example actually is a really good one, because this is how anybody learns about business, because if you go to college, they're not going to teach you about how money works and how business works. I mean, I always come back to that scene from the movie Back to School with Rodney Dain when he goes into the business class and the guy is talking about how they're going to make widgets and he's like he's exactly going to work, you know who's going to pick up the trash.
Speaker 5:You know, like you got to take a, you got to pay off the the.
Speaker 3:You know and so we're going to pay off, right yeah.
Speaker 5:There's all of this, this, these moving pieces, and so the education system entirely and adequately prepares people to handle money and to know how money works. I mean, unless you're taking specific degrees in one of those fields, you're just not prepared. Yeah, and so now these kids come out and they immediately make millions with a very short life cycle, I mean. I think what it is three years in the NFL is is three and a half years is the average.
Speaker 2:The average, something like that, yeah.
Speaker 5:So I mean, by the time you figure out what overhead is, you're out of a job. Yeah, and so there's really just it's inadequate preparation, based upon what we in society have largely dedicated to mainstream education, which is, hey, take my kids and make them ready for the real world. So, then the argument.
Speaker 4:I think it's. There's a. There's another factor, though the thing with pro athletes or or any, any individual who's in a profession where they make insane money overnight. It's that immediate change, sure.
Speaker 2:So if like for most, Well, there's no other than athletes, though. Right For yeah actors.
Speaker 4:Okay, yeah, one day you know, yeah, all right. So so you know, I think what happens is for most of us, you start making more money gradually. So just from a finance management standpoint, you know, it's like you. Maybe your next car is a little nicer than your prior car and your next house is a little nicer in your prior house. But in professional athletes specifically, there's a lot of people that go from absolute, like poverty, right to extreme, like the epitome of wealth. Yeah, you know, overnight.
Speaker 2:That has to be a major shock to me.
Speaker 4:I don't care what you know, I mean it's just very difficult, you know you could have gone to, like everyone's you know, the best accountancy and finance management classes in the world, and just that shock is going to make it harder yeah.
Speaker 2:That one girl shows up, says she wants to go to the Maldives and all of a sudden you're flying yeah.
Speaker 4:And no, and you can, and you can actually go to the Maldives. I mean I can't. I can't. How many of us raise your hand? You want to go to the Maldives? Fuck.
Speaker 2:First we got to find out where it is. I got to find out where it is and then you call it.
Speaker 4:But if you have that kind of money, though you don't have to know where it is.
Speaker 3:That's right, you know you're going to pay the guy that knows where it is.
Speaker 1:So I mean, let's face it, even going to high school, there's no financial literacy at all. They don't teach you how to budget. They don't teach you that you have to pay. You know, put your this live within your means, how to save, how to invest. Man, there is such a great Twitter exchange on that.
Speaker 4:I know it's not Twitter anymore, but it's like Joe Robbie Stadium Okay.
Speaker 5:It's always going to be Twitter.
Speaker 4:So you know, it's like the guy. The first tweet is you know, I wish? And it's always around tax time that it comes out, you know? And it says, oh, I wish, you know, I wish high school would have taught me how to do my taxes. And then the reply is first of all, the mitochondria is the powerhouse of the cell. Ha, ha, ha, ha, ha ha. Exactly.
Speaker 3:But listen.
Speaker 4:I'll tell you what. In law school they don't teach you how to be a lawyer either. I mean, that's reality. You know we joke about that. You get out of school and somebody tells you to like, hey, can you set this for hearing? And you're like what, what do you mean? Set this for hearing? So you know, there's like the staff.
Speaker 2:Is that the same as CPA or?
Speaker 1:It was the worst experience ever and I started editing True story and this conference table. It rebinds because I remember going out to a client it was freezing cold going in there sitting down waiting for the partner and the manager to come in, and then they're like, okay, grab all the files. And then back then we had the Redwells, everything was okay.
Speaker 1:We just were barely having like laptops, no cell phones, there was no Google, there's no nothing. And basically they're like oh, here's the work papers from the year prior. It's like you're all set, you're good. He introduced me to everybody. Here's the controller, this is the lady in the air, this is everybody. He said, okay, you're good, you can eat anything Leaves. And it was like literally like trying to put like a like a 50,000 jigsaw piece puzzle together with no instructions, and I'm like looking through and like and just feeling like a complete idiot. So they don't put same thing, they don't prepare you for no, I mean, yeah, it's like I had a conversation about this with a colleague of mine. It's like 85% of what I learned in my profession was in the job.
Speaker 1:And then like you said you know like you get slammed down. And I didn't really learn business until I owned my own business, had my own employees, was making contracts was going out there trying to sell our services Cause I had a mobile x-ray company in the state of Florida for about seven years and that was like a Harvard education.
Speaker 4:Yeah, but you know what it's also. It's like think about it, how long would you have to be in school for them to teach you the subject matter? And then like how to do it in general, Because I mean, listen, it's at least in law school. It's a completely different language.
Speaker 5:My question is this, and I'm just thinking out, like I know I've run into this they don't necessarily know whatever law school that you go to where you're going to practice, and so I think we think those things very, very much depending on what state you intend to practice in. So I mean, maybe there's that cause, like I know for me, when I teach a contract class in Florida four hours, no problem, plenty of subject I mean we can, I live in that neighborhood, right. But when I go to a different state maybe it's two hours and it's just general concepts of hey, look out for this, look out for it Generally, because you know your state, you guys decide, I don't know, you keep the snowshoes in the attic for some strange reason, like I don't know why you do what you do. So you think there's a component of that, maybe with law school.
Speaker 4:I mean, look, there is. But so most every state is pretty similar in terms of general concepts of law, okay, concepts of you know what we call tort right, which is like you know, accidents, negligence, people falling down, contract okay, obviously constitutional law is the same Sure and a lot of criminal procedure. In when you're in law school there's two kinds of criminal law type classes generally. The first is criminal law, okay, which you take as a requirement, okay, and that's you know the intent, you know they teach you about intent, crimes and mens rea and things like that right. And then there's a criminal procedure which is largely constitutional.
Speaker 4:Comes, like the Supreme Court has typically decided a lot of this, like the state governments will codify or not, but so in most states it's the same. Like the rules for a traffic stop, like don't really vary from state to state, so most states are similar in the way they do things. And then what you'll have is like particular creatures of statute. California, yeah, like good example is Florida, in Florida's like I think still might be the only and I knew this better when I practiced in this area, but Florida's the only state that treats vehicles as what we call a dangerous instrumentality. So what happens is if you loan your car to someone in Florida.
Speaker 2:You're like lending him a gun.
Speaker 4:And they crash, you are going to be liable and it's their fault. Right, you're going to be liable for under like this vicarious liability theory called the dangerous instrumentality doctrine. Okay, so your insurance will be implicated and then the driver will also be implicated. You know typical negligence, you know you made the mistake. So I often tell people it's bad news to buy cars like in your individual name. Okay, especially if you don't have like a lot of insurance. Like, of course, you're required to carry insurance, but if you purchase the car you're only required to have like a 10 and 30, what?
Speaker 4:we call a 10 and 30, 10,000 and 30,000. Nobody goes to the car insurance guy and they're like can you sell me more insurance?
Speaker 4:In fact, you're trying to figure out how to keep the payment down. And they ask you shit. And people are so stupid about insurance that when you decline certain coverages, they make you sign forms acknowledging that you declined the coverage Cause later on when you crash. A great example is GAP okay or underinsured. You know a UM underinsured or no insured okay.
Speaker 4:So you go there and you're buying insurance and the guy's like do you want the GAP coverage? And you're like what's the GAP coverage? And they're like, oh, it's just. You know how much does it cost? It's like $8 more a month. They're like, fuck that, I'd rather pay $72 a month for car insurance than 80. But the gap is that your car is financed, your car gets totaled. Insurance company says, oh, you owe 25 grand, we're gonna give you 18 grand for the car. And then people call me and they're like, oh, I still owe $7,000, I don't have a car. And I'm like, yeah, did you get GAP? And they're like GAP, they don't even remember being asked. So you email the agent. The agent replies he doesn't even answer. He replies with the denial, the rejection. Here you are rejecting the $8 GAP coverage and that's what GAP is for that's why they call it GAP it bridges the gap
Speaker 5:between what the?
Speaker 4:carrier's gonna pay you and what you owe the bank.
Speaker 5:Yeah, you gotta look at what the coverage you need when you lease is because they are very much concerned with making sure their liability is clear.
Speaker 4:Well, on a lease obviously. That's why on a lease they make you carry more. It's $100 and $300, and especially in Florida. So I mean again, we've digressed. But if you're gonna buy cars out there guys, buy open a company just for your cars. First of all it makes it an expense.
Speaker 2:The turro, the turro. Well, I was actually gonna go into that, so let's talk about that.
Speaker 1:That's a good question because, yeah, because. I typically a lot of people ask me hey, I got this car. You know you're always gonna buy it in your personal name because you're gonna get the financing. They're gonna pull your credit social security. And then they ask me oh, should I put it in the business name after? Does that matter? Like, have you titled it with a DMV in the business?
Speaker 4:No, I mean so. First, you can avoid the financing hiccup by you're always gonna guarantee so at the right. You know what I mean. So, yeah, so you're gonna guarantee it. There are a lot of banks that won't finance, like, for example, there are some banks particularly for, like, high-end luxury vehicles that do those loans and they'll only do it in your individual name. Okay, and those banks are usually in California where they don't understand this dangerous instrumentality concept. But here I mean my recommendation is you open an LLC. You know you call it. You know Cadillacs Cars right LLC Didn't see that camera. And then right.
Speaker 4:Well, it was low hanging fruit, of course.
Speaker 5:I mean, I don't be grudging to that, I'm just saying that.
Speaker 4:And you know you buy the car in the LLC, okay, the bank's gonna make you personally guarantee it, but that's no problem, like that. You're not the owner, you're a guarantor of the loan. Now, the owner is the company, okay, and so you loan the car out and they crash. You know, usually the exposure is gonna be limited to the assets of that company, right, which obviously you're gonna have insurance as your first layer. But then what else does the company have? Nothing. It's got a bunch of cars and they're all fucking financed Right. So like there's no assets. Now, if you're driving the car, right, we can never avoid our own negligence. So if you're driving the car, your personal assets are also gonna be exposed but it just covers at least the loaning cars.
Speaker 4:You know like people that loan cars and don't know about this. They're fucking crazy.
Speaker 5:So the general people need to definitely be aware of this and be making sure to have their cars, so Lease, lease.
Speaker 1:I thank you for that. Yeah, my pleasure.
Speaker 2:Tax wise. Lease versus Purchase. What are we looking at? What's better If we're gonna go and incorporate? Because again these realtors usually and I'll turn themselves into a PA which basically incorporates yourself and everything like that same as an LLC, pretty much what you call it right. So what's better? Tax wise.
Speaker 1:Lease or Purchase. It all depends on business usage of the car, the percentage that you're using it for. Is it a newer car, is it older? So?
Speaker 2:every deal that's gonna. I call it a new car and I use it to drive to work every day.
Speaker 1:So we just for your business, yeah, so basically you could probably substantiate a high percentage use of business or that. So I would. In most cases, I like the fact to do the purchase on it because you could take the bonus depreciation and the section 179, in some cases if it's over 6,000 pounds, but if it's not, then you could take the bonus depreciation on it and then deduct it.
Speaker 2:Is it true that our friend Biden dropped that to 80% and then next year is 60% and then the year after that it's gonna?
Speaker 1:sunset.
Speaker 2:Unfortunately.
Speaker 1:Right, that's gonna disappear, Huge yeah, it was a huge bad effect.
Speaker 4:So who says that Biden did that Just out of curiosity? Who says that Biden did that? Yeah, because, do you know, it's under his administration. I mean.
Speaker 3:But I mean a change to the tax. I don't know Trump did it, I'm asking.
Speaker 2:I'm asking we're actually gonna have that? Trump did it.
Speaker 3:I'm asking about how the change.
Speaker 2:I don't know the answer.
Speaker 4:I'm asking about how the change to the tax code came about. I don't think it was by executive order.
Speaker 2:Well, we could pretty much say that Biden isn't doing anything right now. He could barely walk. Okay, I'm okay with that. Did he walk up to the IRS and say, hey, I need you to do this? I doubt it. Is it his administration that plays that game?
Speaker 4:Then let's just don't know that. That's how the rule changed. I'm just saying he said he said it was gonna sunset. Do you know what that means?
Speaker 2:Yes, Okay, so I literally spelled it out before he said.
Speaker 4:So what that means is that when the rule was enacted, it probably had the sunset provision in it. In other words, no one has to do anything for those things to occur. That's why they're called sunset provisions. They happen without any additional action.
Speaker 2:After the original enactment of the law. So I know that last year or the year before it would get 100% deducted. It would any vehicle, and now it's 80. Next year it's 60.
Speaker 4:And then it's gonna sunset, and if the statute has a sunset provision in it, what that means is that it was set to do that from the minute it was enacted. In other words, no new president came in, not Trump, not Biden. No one came in and said, hey, this year it's 100, next year it's 80, and the following is 60. Because the law has a sunset provision, which means it happens automatically.
Speaker 2:Understood.
Speaker 4:Now, I don't think you do?
Speaker 1:No, I think I do, and that's what you need to look at. We'll have to go back and say the statute itself how did it initiate?
Speaker 2:How did it so?
Speaker 1:It could have been part of the package of the of who who passed it, the Tax of Jobs Act of it could have been. We'd have to look in there.
Speaker 4:Yeah, I'm pretty sure that's what it was 2000 plus Right, the one with the condition there Right. And when did that statute come into law?
Speaker 5:That was the big Trump tax cuts. Right which had the business tax cuts, I believe were permanent and the personal ones were.
Speaker 1:Right, that's right. So let's look at which one was it, In other words the law was written for this to occur, irrespective of who's president.
Speaker 4:Do you understand what I mean now? Yes, okay, so let's go back to how our discussion started, which is is it fair to say, is it true that Biden this and the answer is no, it's not true.
Speaker 2:The answer is the law when enacted, so it's absolutely a coincidence. Was set to do that Right, so it's an absolute coincidence. Yeah, this is why it was decided that the lawsuit for Congress Right. Fair to say, my entire adult life, cars were vehicles were depreciated 100%.
Speaker 1:Well, sexual, you're talking about sexual 179. West.
Speaker 4:He has no idea.
Speaker 1:The 6000. Well, that's bonus depreciation. I can't ever remember when it came to this existence. That's not the yeah, that's like a SUVs. Right, I don't know how old it is, but I wouldn't say it's not as old as we've been around. I don't take bonus depreciation.
Speaker 3:That was like kind of you know like a stimulus type of thing, yeah, so that's in one of the tax packages.
Speaker 2:We know every new administration comes in and they right now, all this stuff in there that would include boats, that would include planes.
Speaker 1:That would include section 179. Yeah, you know, 6000, 6000 pounds and heavier. And then, yeah, obviously, planes, right, heavy heavy equipment, things of that nature.
Speaker 4:But to answer the question you were going to ask, yes, it's a coincidence, it is an absolute coincidence. I mean, it just happens to be that this provision, this particular statute, has a sunset provision and, by the way, that's put in when the statute is passed and when it's created that's correct and there's been no impotence or leverage applied to do anything to extend it 100%, I would say that would maybe be the fair middle ground in this statement, right.
Speaker 5:Yeah, it's not a priority to take and do this and you know you could maybe understand that with what's going on with inflation, wanting to take and reduce spending, because consumer spending is one of the things that largely have said has driven this. But I think there's other things baked in the cake that are going to put the damper on that. That's a different topic for a different time.
Speaker 2:So you're looking at all right. So let's can we talk a little bit about when incorporating yourself and what are the tax benefits on that, like you know, becoming a PA, or you know, not owning what Richard mentioned, not owning real estate under your own name, not owning and I know that that's more of a legal part, you know as far as liability is concerned, but as far as taxes are concerned, incorporating yourself, turning what every realtor is told to do, which is turn yourself into a PA, basically, what are the tax benefits, yeah.
Speaker 1:So I mean, I don't know if you have training for your agents and you guys maybe talk about this stuff. I remember many years ago.
Speaker 2:I don't, but I would like to.
Speaker 1:I had to go to a large real estate brokerage similar to your company here in Sarasota and just teach the agents on getting not only becoming a PLLC because they were licensed in the state of Florida, but also converting that to an escort and how to do that and why to do that Right, because I was getting even in my office.
Speaker 1:I was getting real estate agents that were just putting everything on their schedule, see if they're 1040 and paying the 15.3 percent self-employment tax. And then, even worse, was one lady. She came in like a 2009, she had her taxes done by somebody else and she winded up getting audited because she produced a loss. Nobody was buying houses in 2009 because the market had crashed.
Speaker 5:True story I was there, yeah, yeah, so you guys know. You said 2001,.
Speaker 1:You started, so you know exactly what I'm talking about. But she her husband made a lot of money. He was a doctor and he was making I don't know $400,000 plus and she had like a $35,000 loss. She was paying her desk fee, paying her lease, she was doing everything still marketing, still getting her CE credits, all that stuff and everything was substantiated. She had all the receipts and they still audit at her because she had put everything on her schedule to see and offset everything against her husband's wages. So they got produced a refund and they got tagged and she came to our office. She's like you know, I got all these.
Speaker 1:Can you help me with this audit? So I said let's fight it. And this guy was being he was being a dick.
Speaker 5:IRS agent was being.
Speaker 1:He was yeah, exactly, but this guy looked like something he looked like something out of a, out of a, like a character, out of like a movie or something, and the guy could hardly see. He had a huge magnifying glass. Look, he had to put every receipt underneath and look at it and he was like it was taking forever. She got so frustrated with it, she just wanted to pay and said forget it. So then you know, after that I told all my real estate agents to make sure that their S corps on there, just you know, because you're going to save significantly and also you're going to what is.
Speaker 2:Can you be a little more detail in that? So so, if I'm talking to a real turn, I'm like I'm trying to explain to them, hey, why it's important to turn yourself into a PA, basically incorporate yourself. How does, how does that, how does the dynamic work? Like what, what, what is it? What am I explaining exactly?
Speaker 1:Well, you're also there's two divisions in the IRS. So you have two for for examination or audits. So one only pertains to businesses, which would be S corps, maybe partnerships and C corps, and they don't touch 1040s, and then the other one is just all 1040s. So if you're putting all of your business activity on the schedule C, then you're given the IRS and that auditor guy jurisdiction over your business. So I don't like that personally. So I'd rather have it come in through and I K one and then they'll just match the K one that's filed on the transcript with the IRS. So I mean that would be one of the besides the tax savings that would be. The other thing was to, you know, divide the two, two entities and then put your S corporation activity into a pool of other entities that are much greater than yours. I mean because this versus Evan, just you know everything on your 1040.
Speaker 5:Yeah.
Speaker 4:But I think the main talking point, that is, when you're talking to agents, is what he was saying the tax savings side.
Speaker 2:Right, I mean, and that's really, but that's, that's what it's?
Speaker 5:because you're going to write off gas and write off right.
Speaker 4:Expenses. I mean, you shouldn't list expenses.
Speaker 1:Well, either way, if you're going to put it on your 1040, you could still. You're still going to take the same deductions. The other, the major thing is if you put your activity for your real estate commissions and your expenses on a 1120 S that's the form for the S corp You're still they're still going to be a profit loss statement, right. But you're taking a portion of that ordinary income and you're construing it as W two wages to yourself, yep, and then you're paying it on that. So let's say you make a hundred thousand dollar profit, take 50,000, pay the self employment tax on the S corp through there, so you're only paying 7,500 bucks versus you're going to get whacked for 15,300 on your 1040 if you don't do that Right.
Speaker 5:So basically, 100% of your taxes, your wages, are taxable because it's shown as ordinary income that you're paying. You're getting correct. You're just dividing it, correct. So now you're just taking the profit portion, what's left over and saying I'm going to pay employment taxes that 15 plus percent or your wage doesn't even have to be profit, just whatever you earmark for yourself.
Speaker 4:I know yeah.
Speaker 5:Because that's exactly how I do it and you can see how little I pay myself.
Speaker 4:Honestly, I'm going to have to go to HR about it or something, and it's not good. No, we don't want to. It's not good.
Speaker 2:Yeah.
Speaker 3:And that's, and that's the way away from memorializing.
Speaker 1:I don't know, Do you train your guys. Nowadays, like everybody, is kind of like pretty much a standard thing that you would.
Speaker 2:I don't give training everybody. I don't give training on that and I should not now talking to you. That's something we should definitely maybe you should not why.
Speaker 4:Oh, because my attorney went like legal advice that you're probably not licensed to give or not, I'm not going to bring somebody in.
Speaker 3:Oh yeah, I don't super. Yeah, that's what I meant. No, no, no, absolutely.
Speaker 2:I'm absolutely not doing. I'm saying like bring, bring somebody in, and you know, kind of especially like on camera. Yeah right, no, I'm definitely for the rap. How do you?
Speaker 4:plead to the unlicensed practice Not guilty.
Speaker 3:It's like judge and it's like play.
Speaker 1:This is why you legally want to do this shit.
Speaker 4:You know, on the big screen yeah, I know, but now it is, you get the defense. That's AI. That's not me, that's AI you know.
Speaker 2:Going back, yeah, I don't know if you guys have read the book the millionaire next door.
Speaker 1:Yes, I remember that one, yeah.
Speaker 2:That's an interesting one. Yeah, basically you know it. Through these tax return, irs studies and everything, they kind of figure out what, like most you know, multi-millionaires drive right. That's the one that really impacted me, like what, what card do you guys think that most millionaires?
Speaker 4:I read the book so we're in fucking Miami so you know it's not a good indication that no, we're. We're in the new money capital of the world.
Speaker 2:Yeah, so you hear Tesla right, yeah, right. Here you think you know it's it. The culture is completely different, right? So everywhere else in the United States, the most popular car is a Ford F 150 pickup truck. That's the most for millionaires, yes, for millionaires. Not one car driven by millionaires, wow, yeah.
Speaker 5:Yeah, I mean it's. This is the thing, right, and you hit on it earlier the idea of not living within your means but living below your means. One of the reasons why I get away with paying myself so little is that I actually live on very little, right, I live in a. I still live in a condo. I still live in a three bedroom condo. I'm not nothing crazy or anything like that.
Speaker 5:All of my, whatever I bring in, I invest as much as I can, right, and so the idea that's the idea that, to me, is the one that's missing from school. It's not about you know your checkbook and how, no, it's the idea that you need to consume less than what you make and allocate as much as you can to invest, because the only way long term to get ahead is to allocate as much of your capital to investment as you possibly can. The investor class has outperformed every way, maybe with the exception of the actors and movie stars and athletes, they've outperformed every way during class in this country. Hands down, no, it's just no fun. It's no fun today. It's no fun today, but then, when you're done doing the thing that you do, you can tell everybody to get lost, because you can actually take and live the way you want to live.
Speaker 4:Yeah, I'm going to work till I'm dead, so I'm going to die at my desk.
Speaker 2:I'm going to the week after you're dead, right my financial.
Speaker 4:Air and see knows no bounds.
Speaker 5:They're running in there on a on a on a hand cart a week after you're dead, but you, you really.
Speaker 2:I mean we live in a place where the culture is you show your money, I mean, and my people are the worst at that. I mean they'll be living, you know, in an efficiency with concrete backyard.
Speaker 4:I saw it.
Speaker 3:I saw it.
Speaker 2:I saw the other day somebody's getting interviewed on in a. You know what we call an efficiency here. I don't know what you call that in New York. Is it an efficiency? Same thing Like a studio studio, studio.
Speaker 3:Is it really a studio? I mean not even a feature.
Speaker 4:Yes, I feature right here, but but, um, that's code for one little room with the toilet and the kitchen in view, everything in view. Right, so you can watch the dishes. So this guy?
Speaker 2:so this guy's getting interviewed in an efficiency right and a studio, wherever the hell you're at right and I straightly I wonder what it's called. But the uh, and he has, dude, I'm talking about a lot of gold on him, a lot of gold right, like. So that's the culture, right, so that's the culture. And you know, listen, richard and Catalan know that my fascination actually just recently found that, I tell you, I found that I'm actually Jewish.
Speaker 3:No.
Speaker 2:So I'm doing my riches, yeah, right.
Speaker 4:But I don't have my boots on. And the bullshit is getting thick.
Speaker 2:Well, well, I go to get, um, I'm in the process of getting my Spanish citizenship, spain, right, it's whatever it's, it's long story, but, um, and so there's a. There's a, there's a website you go to and your your last name, the list of last names, and that means you're like a Sephardic, or Sephardic to my Jewish, enough to know yet. But uh, but uh but yeah, if you're on that.
Speaker 2:If you're on that list, you know your, your, your family, at some point was in Spain and had to leave for religious, for religious, for sure. But whatever, back to the back to the. The culture of, of, of the, of the, of the Jews is usually, you know, uh, frugal. I mean, you're, you're, you're, you're basically bred into consuming as little as you possibly can and investing as much as you can.
Speaker 2:The Chinese very similar right. The Chinese are the same thing. They have the highest level of of of self-employment. You know what's the last time you saw a Chinese working for anybody that's not Chinese.
Speaker 5:I'll give you one better man. I mean and I I read this someplace, I'd have to take it and check the source but the second wealthiest people you were telling the line there.
Speaker 4:We're going to get a lot of commentary on some of this. Jesus got into Jewish culture and when we're is the last time the Chinese worked for a non-Chinese Can you imagine.
Speaker 5:Which is true though.
Speaker 3:Hey, I don't give a fuck.
Speaker 5:I'm at the fact let's let's toss, one let's toss one more in there in the fire, I suppose which is this that the second wealthiest people group in the United States by country of origin is actually the Vietnamese. Both people the Vietnamese.
Speaker 5:Vietnamese? What people? The people that escaped Vietnam to escape the, the, the, all, the all that went on there. And so, um, really, yeah, and so once, once again, a group of people that don't, you know, look like the, the main, you know, the, they're. They're not the majority in the country, they're a obviously a minority. Um, you know, we could kid that they own every nail salon between here and Tibet but they don't own that I think that was.
Speaker 3:I think that was racist.
Speaker 5:Oh, absolutely.
Speaker 2:But, here's the crazy thing. There's the crazy thing. There he fucked up. I was okay. Here's the crazy thing, man, they own the nail salon.
Speaker 5:You're getting deeper.
Speaker 2:You're getting deeper and they own.
Speaker 5:they own the shopping center as well. They live three generations under one roof. Um, they have a culture that is built and set up to encourage underconsumption and allocation, especially really a huge real estate investor, Can you imagine?
Speaker 4:three generations living three generations under one roof. I mean I don't want to live with my grandmother, bro. No, I just want you to know that. Yeah, so listen, like everything else, like everything else there's extremes.
Speaker 2:right, there's extremes, but my point is that that, um and I'm only going to focus on my own culture, because that's the one way to you don't get in trouble is just shitting on your own, on your own people, um, but you know, thank you for that.
Speaker 4:Yeah, I appreciate it, the Cubans are you can shit on Cadillacs people.
Speaker 2:Oh yeah, why, people is true. Oh, I'll shit it. Why don't we all know who we can't shit on? So, so um the Cubans. The Cubans tell us.
Speaker 5:Wait, I don't know, can you enlighten me, illuminate.
Speaker 2:Illucidate. So the Cubans are. The culture is, you know, spend and, and, and it's very show offy and and, and you know that type of stuff which which, um, man, it's hard to get out of If you're in it every day and you, you're, you're, you're, you're in it. It's hard to teach your kids you know to live, you know different than what they see every single day. Cause, and especially with social media and stuff nowadays, man, it's like you know everything is Ferraris and Lamborghinis and everything like that. What they don't know, and that's the argument I had with um, there's a couple of buddies that I argue this this you know, uh, my kid has to be a pro. Are they all in on the kid being a pro athlete? They're all in? Oh, it has to be a pro.
Speaker 2:I'm like, because that's the way to make money, Right, I mean, and these guys come from the culture of these, these guys are from the hood and and, and that's what you hear there and that's what you understand there, Right? Um, and I'm like, man, that you don't what you don't understand, that there's a little Jewish guy somewhere, right, that owns every damn shopping center that you drive, that you see on your drive to work every single day, right, that makes way more money than any of those guys, Right, Um, and forever, not for three and a half years, not for six years, not for anything like that. So, if you compare, If you, if we're talking about all, right, um, what we wished our parents would have done for us, right, Kind of like, got a lot. Got a lot of that, though. Got a lot of that self-employment talk from his old man, but his old man was an old man.
Speaker 2:You know he fucking went through it he was what?
Speaker 5:80? No, he passed away at 72 man, I was only like 20 years old right, so you got.
Speaker 2:You got a 50 year old guy giving you.
Speaker 3:Advice. I mean, I was getting it too. My old man wasn't.
Speaker 4:I mean, listen, god bless him. He was successful in his own way, but God fuck yeah.
Speaker 3:The right was the wrong detonated like eight times.
Speaker 2:Yeah, he set a record for it. Yeah, yeah, yeah so, but but you know if, if you're, if you're, if you're raising somebody and again what we wished is like all right. So you know how do you consume as little as you possibly can. You know how much, how much do you invest? You know. You know, listen, being self-employed is not for everybody, but at the end of the day, you know most.
Speaker 5:Most millionaires, billionaires, yeah, our self-employed and somewhere another.
Speaker 2:So you know that, that, that that type of culture, you know how do we?
Speaker 4:it's a good thing that most people aren't like. Don't think about being self-employed though, because then Nobody to work. Self-employed, I mean most people want to have a defined it's not for everybody List of tasks that they have to accomplish. Then they want to know hey, I'm getting a check for as most people can't administer themselves right but they just well not just that, but the anxiety Sucks, sure?
Speaker 4:no, they can't tell you what, as you know it's funny when you're a lawyer or like a doctor. You know it's like. You know people think you're a kid and you're growing up. You know it's like what do you want to be at? Like career day and kids come in and like invariably they're like I want to be a lawyer, I want to be a doctor doctor.
Speaker 3:CPA another way to be an accountant. Yeah, I want to be a baseball player right.
Speaker 4:I want to be a firefighter, I want to be policeman. Nobody walks in to school.
Speaker 2:You just went down. I think it's considerably there, you know no, and nobody walks into school.
Speaker 4:I know, but that's what, those are the careers that people think of. They don't walk into school and they're like, oh, I want to be the regional manager of the office depot and control six office depots, okay, and that guy's probably doing pretty well, you know. But but then went with these, like these what I call license professions, right, or what they call. What are they called? Like advanced degrees or whatever? You know, when you think about being a lawyer, you don't think about the business side of being a lawyer.
Speaker 4:So, like when I came out of school, I went to work at a big firm and I'll never forget that. You know, we'd get a file, okay, and you could see that the the plaintiff we did insurance defense, okay, and you see that the plaintiff had gotten into like a car accident, and you know, and he went and saw the doctor and you'd see Lee. You know you'd ask him a question what's the doctor you saw in an interrogatory and the guy replied you know, dr Valdez, whatever it is, and without even thinking about it, I would turn and say subpoena dr Valdez's office for the records. And since it was a big firm, my assistant was like, yeah, okay, subpoena the office and you don't wish is my command.
Speaker 4:You don't even think about the cost of the subpoena. So then, when we were leaving, when my Former partners and I went to the managing partner to tell him we were leaving I'll never forget that he looked at me and he said you know the?
Speaker 2:no idea is we were three.
Speaker 4:We were three Cuban lawyers. Okay, yeah, or Cuban, you know, heritage lawyers, whatever.
Speaker 2:I'm happy to see you admitting your killing.
Speaker 4:Yeah, yeah, happy for you, begrudgingly yeah and so he looks at us and he says you know, you guys, you all have this yeah yeah, no, no. Mr Cole, you know you don't say anything. He'll be mr Cole forever and he says no, you know, he goes, you're, you're all very entrepreneurial. You have this entrepreneurial streak and like saying your people or yeah, the Cubans, oh yeah, and so, absolutely, and.
Speaker 4:And and he was like so it doesn't surprise me. And then he looked at me and he says the thing for you is that you didn't spend enough time in the classroom and I didn't had no idea what it meant.
Speaker 4:Okay, and then the classroom was actually there, right right and so when, when we go out to you know to open the firm and we're like working, then I realized, like two years later what he meant. Because you know, when you're a young lawyer and you, you think you're gonna do the smart thing and open your own firm, you're, you got to realize how much time you're gonna spend being a businessman and not honing your craft. And what do I mean by being a businessman? You got to negotiate the fucking lease for the space, you know. Oh, guess what? You know what we need. We need copiers.
Speaker 4:Okay, when you look, you know you Google a copier. Okay, it's 80,000 bucks. So you're like I can't spend. I said, no shit will lease it to you. Okay, so get ready to sign the personal guarantee. And how many? How much are you paying for prints and how much you paying for color? And how much are you paying for copies? And are you gonna build that back to the client? You got to set up email phones. I used to joke that my former partner and it wasn't true, but I just like to tease him you think you're gonna go to Best Buy and buy a phone and fucking plug it into the wall and Loughurn.
Speaker 4:It's like you need a fucking phone system. It was called a PBX. Now you got voice over IP phones and then your staff wants fucking insurance. You're like what the hell is that? A Email is down. Email is down is a panic, so you can wake up and spend your entire fucking.
Speaker 2:Well, and his partner haven't practiced one second of all. Here's the funny thing that Richard partner I'm a former partner, former partner was very he hated when you call him aloof, but I could call him whatever the fuck I want. He was aloof, right. So an issue would happen and then Richard was the only one stressing out about it. Listen, so the phone would actually go down, and it was Richard.
Speaker 4:All bull shit aside, we had our things. My former partner is a great guy he's, but he loves being a lawyer. Like he literally wakes up in the morning and he's like Another day of being a lawyer. I'm like Emails down the phone the line of credit a overdrawn, you know? I mean it's like I haven't dealt with one of my client's problems yet. It's like one o'clock in the afternoon, Fires all day.
Speaker 4:So you know you have to and you don't, you don't get the time to hone your craft, and it's, it's that. So now, many years later, like it's funny, I see things that I did, let's say, 15 years ago. Like I wrote a contract for somebody as a buddy of mine. He's a wedding photographer. Okay, I talked to him the other day and he was like well, look what I found. And he emailed me the first document that I prepared for him. Listen, bro.
Speaker 2:That's all the contracts I got.
Speaker 4:I wanted practicing with me. I wanted to.
Speaker 2:That's what. That's why he could say whatever he wants, but he was practicing that's why, of course, that's why we call it the practice, the practice of medicine.
Speaker 4:No, I looked at it, I opened it and I was like delete a mine.
Speaker 3:And then I was like can you do that on your end? Oh my god. So I would call the office your price. I would call the office sometimes.
Speaker 2:So when they started, when they just started getting a little bit bigger the firm, they started getting a little bit bigger and I wouldn't be able to get to them as fast as I could. I would get super fucking pissed off and you know that I would call the front desk and I'd be like they're like who is it? I'm like who is it? I'm like, how about it's client 001, fucking client of the firm? How about it's that?
Speaker 3:How about you pass me on right now?
Speaker 4:By the way, but tell him where 001 comes from, because my partner, my former partner in his Incredible efforts to like make people feel good and appease a guy like no, no, all your files start with. We call them base numbers. You know, you have like a base number you assigned to a client and then if the guys got 10 matters, that you know.
Speaker 2:There's a zero one dash zero.
Speaker 4:One, dash zero two, you know like Jesus's base number was zero zero one. He comes zero zero one. But there's a great Lawyer businessman story. There's this guy, he's a lawyer, is in his office and a client walks in.
Speaker 3:Oh, there's a story story.
Speaker 4:No, no the client walks in, well, I guess back in the days when you would walk into a lawyer's office, you know, and you know that the the clients looking at the lawyer, he sees them in the desk and the guy, when he sees him, he picks up the phone the lawyer and he's like yes, yes, no problem, no, we're gonna file that motion. Yeah, no, I'm gonna object to it. Yeah, okay, good, see you, we'll talk later. And when he hangs up, he looks up, he's like how can I help you? And the guy's like I'm here to connect your phone. It's. I'm telling you, it's hard out there, bro. Your fucking email goes down, phone goes down.
Speaker 2:It was a disaster when you were at your dad's office. It was really funny too, because it was like you work
Speaker 1:in somebody else's office and that's You're what's called the managing partner you do what all the funny is?
Speaker 3:I wasn't. That's why, jesus, that's what the joke was my, my.
Speaker 4:My former partner was five years my senior. He was actually my, my immediate supervisor at the first firm that I worked at. So you know, when we left out of deference and all that and because it would look weird for, like, the one-year lawyer to be the managing partner, so you know, he was the managing partner, but I'm the one that had to deal with things like that, so that it was doubly agitating.
Speaker 5:So I mean so when you have when your partnerships I've dealt with this before there's almost like a stare down as to who's gonna take and have to like how long are you comfortable with the emails being down? No, no, no who's?
Speaker 3:gonna take the granade rolls in.
Speaker 4:And you look at the other side and you're like I'm not gonna jump on it. Are you gonna jump on it?
Speaker 5:So yeah, you lost that game of chicken with your. I would.
Speaker 4:I would fucking just jump on it because the stress was less I know. I know, it's a disaster, because then Coincidentally, have a guy like Jesus calling you on the cell. Oh yeah, bro, yeah, I can't get through your office phones down bro. You didn't pay the bill, so you know now the blood pressure is like this I Don't want to get that call.
Speaker 2:Yeah.
Speaker 5:I mean, like the one thing like that nobody talks about budgeting for, is the Tums Associated with? You know the ant-ass. It's horrific. And especially you know a business where you don't if you don't kill, you don't eat you know, customers in nothing happens. It's hard man.
Speaker 2:It's a tough thing, but I think I want to trade it for the world, though I wouldn't.
Speaker 3:Oh no, I know.
Speaker 2:Richard. Always, from the beginning, he fucking hated every second of being being self-employed like I. It's probably because I don't think I'm employable either. Like where am I gonna? Enormous problem with authority, like you know, doesn't follow directions. I mean, like where am I gonna go? You know there, this is, this is this is it.
Speaker 5:This is your lack of options has fueled your contentment.
Speaker 2:Yeah, people listen, in 2008, everybody was come. I think something like 80 something percent of real estate companies closed down. I Couldn't close down, yeah, yeah, what am I gonna do?
Speaker 4:That like contraction and things went Multiple offices with fucking airplanes flying around to the offices to, like you know, one office I Would.
Speaker 3:I would go, I would go to like.
Speaker 4:Orlando or St Pete. I'd go back to my law school for some reason and I, wherever I was, I'd see like a realty company sign and I'd take a photo of it and I'd send it to this guy. Be like look bro, keller Williams, location number 3064, crushing it like you know, you know. Yeah, why don't you know? Oh, you're about to go with the time I told you to close your business.
Speaker 2:Well, which time? Well the. And then I started getting, when I started getting letters from, from Keller Williams and and these bigger companies, the first fucking idiot that I would send it to. Look who wants to look who wants to do business.
Speaker 4:Look who wants to turn into a fucking killer. That was coming from their DEI department. You didn't know. They were like let's get ourselves a little Mexican.
Speaker 3:I.
Speaker 2:Think that one right there you're gonna get into before so let me ask you a question.
Speaker 1:I and you can answer this too, because you're, you know, self-employed. But was there ever a time when you had to pay everybody? Yes, you went, you, you went home with no money Of course, yeah was there ever, that that's okay. Well, that's what got me all the like he's talking about this you know, being in business is not for everybody, so I ate up.
Speaker 2:I ate up into all my reserves, which basically almost bankrupt me. You know, because I was paying everybody, I was like, oh well, 2008 crash, how long can it last? 30 months, four months, five months, let me just continue to pay everybody, not pay me, and just yeah, so everybody with the office. So I changed my the way I do business to everybody. Everybody in my office is very little salary, high bonus. If I'm doing bad, you're doing bad those days of me sitting here, right, that's why I did it, because I remember sitting here and I'm like, bro, my world is ending, yeah, yep, and everybody everybody out there.
Speaker 2:Yeah, thinking you're living high on the right and what it, what it didn't create was a sense of urgency for my entire team. Right, I was the only one with my head on fire. Right, I was the only one super stressed out. And no, now you know what, dude, if this company does bad, everybody's doing bad.
Speaker 5:That's the biggest thing that I took when I read Charlie Munger's book. That was the biggest thing, oh really so Charlie, charlie Munger is yeah yeah, so Charlie Munger said they do some of it.
Speaker 5:As it turns out, they delegate everything that they do except one thing compensation. They always make sure that they're very careful with how they compensate, that there are people to make sure that their best interest Right and the person they're paying's best interest are aligned. So like if we, like you said, if they do well, then the person does well, if they're not doing well, they're gonna be plenty of incentive there. Yeah.
Speaker 2:Compensation. I think the y'all need to be on the same team, you know. So, um, how'd you get into the CPA thing Like you just is that you woke up one day and said or you were you guided into it by a family member, cuz you know, I was wondering how people pick CPA, because that's.
Speaker 1:Self-loathing. I knew it out of the business track, you know cuz he had, you know like marketing and you know finance. I knew accounting was the one that I wanted to take because it was the most versatile. But, um, my parents were business owners too, okay, when I was growing up. So I saw that and I used to see the account and come in so it was what career would help me be self-employed?
Speaker 1:The most, I guess, or would be more she was doing well, and then I got my first. My first job was was the worst job. I used to count money in a bank vault in New York.
Speaker 2:That's pretty cool. Yeah, this is pretty cool.
Speaker 1:Like one day you see the vault open in school. Yeah, the problem was I was claustrophobic, there was no windows and then I would get locked in. That it's like small. It was like smaller than this office here and we count all the money, all the deposits from like a has and UPS and all that stuff. It was terrible.
Speaker 1:But then I got promoted from there and then I started to work with the auditors in the lending division because they used to look at some that the loans right and I kind of like I was getting some reimbursement from the bank to take more Banking and accounting classes, so that's kind of, you know, naturally gravitated to that yeah and like the regret, like Richard, sometimes, like I should.
Speaker 2:I don't know I did, I did like, whatever stage.
Speaker 1:I first I, when I first I, when I was working for KPMG, kpmg I was miserable, right, cuz everybody was a prototype, everybody talked the same way and you know, you know it was a great polishing school and learning how to write memos and you know kind of conduct myself in a professional setting. But I hated it and and it's very rare.
Speaker 2:You know how like. So it guys right. It guys are usually weird sons of bitches and and very risk averse and everything like that. Cpas are not usually weird, but they're very risk averse because they're. That's what they're trying to do Right that's what I'm saying, so it's very rare that you get a, an entrepreneur, right. See, you know I mean like you're usually born with one side of the brain. You give you could count really good. You're not really risk averse, you get. You know what I mean. So it's or you are risk.
Speaker 3:You're risk averse yeah so, yeah, it's.
Speaker 2:So it's one of those, it's one of those things that usually you know, so it's it's rare to see. It's definitely rare to see that. So, um, what, what's the best advice we can give these realtors right now? Is there anything that stands out that you, that you've seen mistakes made or or, or anything, or anything like that, or just, maybe not even realtors, just businessmen, like, is there some mistake that you see over and over again that they kind of uh, you know we could, we could help them avoid?
Speaker 1:Yeah, like, if you can't do your own accounting, don't try to do it.
Speaker 3:Right.
Speaker 1:Pay the money to get it done. Yeah, you can get somebody fairly cheap. There's a lot of easy software programs to link your bank account to. I get a lot of messes at the end of the year and it's going to cost a lot of time and energy on our part. We don't like to deal with it, so just pay somebody to do it. Um, and you know, keep you organized. It's going to help you take advantage of getting all the deductions that you need to not missing things Right. A lot of times you'll you're going to miss a time.
Speaker 2:So what gets people in trouble, right? So? So, like, how bad of an asshole do you got to be to to, you know, go to jail for, for tax evasion? I mean how, how blatant do you have to be? I mean, cause it's, it's, it's, you know, trying to find that file yeah. Line of how much I want to see how far you go.
Speaker 1:No, there's the number one thing.
Speaker 1:It's like that, ladies, the number one thing is putting your real estate activity on a schedule seat of your 1040 in and of itself, and if you're producing a loss is going to be a red flag, you know there's a high chance that you're going to get audited. That's typically the number one thing. The other thing is, I think, just not matching your 1099s. So if you're getting your commissions and you're not matching that top line for, for whatever reason, you miss one Right and maybe they're getting from multiple different brokers I don't, you know, I don't know what their situation is. So making sure that that that 1099 that you're getting from your broker for all your commissions are all included on that gross, because the IRS will match that out.
Speaker 2:Yeah, so I've gotten audited by the IRS and you know, obviously let's and let's anybody who gets audited by the IRS stressful. Yeah, You're, you're well, yeah, and you're always going to. Yeah, I'll take one, Please. You're always going to um, thank you sir. Nobody does everything perfect. So if they come, if they're coming for you, they're going to get you. Yeah, yeah, Jay.
Speaker 4:Edgar Hoover says no man can withstand a thorough investigation.
Speaker 5:Really, that's, that's true, that's a great quote. I never heard that. Yeah, yeah, yeah.
Speaker 2:Yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah yeah.
Speaker 4:Yeah, yeah, yeah, the federal judge say that. J Edgar Hoover said it.
Speaker 3:I didn't check right, because right now we got some comments that wasn't J Edgar.
Speaker 2:Whoa by the way, I'm very happy that the negative comments have come back a little bit Not as much as I would like, but we've had a little.
Speaker 4:Don't worry, you're going to get some today. We haven't gotten the clips out. You've done an able job of offending multiple.
Speaker 2:Today was lots of large swaths of the population that we offended several people so, but the whole we're talking about right now.
Speaker 1:I was in the middle of a question there's another one coming in that just came out actually early and you might know something about this. What do you guys know about the monetized installment sale? I don't know. Have you guys ever come across that with any?
Speaker 4:With the crypto stuff.
Speaker 1:No, the monetized installment sale is a there's like these promoters that are putting out there at section 453. And it's a. Basically they're using like a dealer of assets and a lot of real estate transactions to defer the capital gains for like 30 years. We're using the strategy and then the IRS put it on their dirty dozen, like last year. I think it was last year, the year before, and then now it's. They just did a proposed regulation this month and then next month. It's gonna be like.
Speaker 1:I guess, they do like public comment on it or something like that, but that's a huge one and I can imagine like a lot of I know a lot of people were doing deals for real estate deals in California using that, and then I would imagine here in Florida too, because there's a lot of yeah it's huge.
Speaker 5:I haven't either. So what was it?
Speaker 4:So monetized installment sale. It doesn't mean that I don't know, the Cadillacs never heard of it. No, I'm really like. I mean. I mean it must not be true.
Speaker 5:I know it's very likely true, but I mean I may just know it under another name.
Speaker 2:So we've got the 1030 one right. So the 1030 one. You guys To see if we pretended to know what we're talking about. Oh yeah, I heard about that.
Speaker 1:So this one there was a couple of, there's a couple of promoters of this. I think it was like two or three in the through the country that were handling these and they would use. It was like there's a lender party, there's a dealer of assets party, then there's the buyer and their seller and basically the seller would, through all of these trans, like documents that were it's simultaneously done in closing would transfer the property temporarily to the dealer of assets. That dealer of assets would To get them past the time to make sure that they met.
Speaker 5:They complied with the time period in the 1031.
Speaker 1:Yeah, it was the schematic that we're doing to like basically put it in where they were putting enough money into an escrow account to pay the interest payments over 30 years, to defer that gain, and then the seller would walk away with like 95% of their proceeds and then they could use that for any purpose that they wanted. And you could do it. Now you don't have to have real estate, you could sell a business doing that, or you could any capital asset Gotcha. So yeah, the IRS just and for real estate.
Speaker 5:They knocked that out.
Speaker 1:It was a big one for real estate. Yeah because sometimes the 1031 exchange doesn't always work. Yeah the time periods are Time periods. It's competitive market. You got, you know.
Speaker 5:And I put you a competitive disadvantage going in when you negotiate because now you have to disclose on the way in that. Hey look, I'm doing 1031 exchange. I got a gun to my head, I've got to close this in this time period and a lot of real estate assets I mean the due diligence periods- can be.
Speaker 1:I would have thought yeah.
Speaker 5:I wrote a class with this guy on commercial contracts and why due diligence periods are so long. Right, you have these very long due diligence periods. So I mean, if you're not ready to go with assets lined up when you're closing, the ability to potentially close in time or do the research necessary to close the asset well is really precluded. It's really really limited. So yeah, that's.
Speaker 1:Surprise, you haven't seen. Yeah, I mean, I know the appreciation of these, I know the Delaware the Delaware trust.
Speaker 5:things have become a big deal. Where they're there they're like a mutual fund. I'm just like I'll rete for 1031s. I've seen a lot of people doing that, but so I hadn't heard.
Speaker 2:that model Can you break down? So we've had this ongoing argument in our comments on whether and believe it or not. I know this is like whether the earth is flat or not, Whether the earth is flat or not, right, but the renting versus buying, what are the tax benefits on one versus the other? So there's people that continue to say that it's just better to rent unless there's some major tax benefit that I don't know of. I mean, what are the tax benefits for?
Speaker 5:5,000 a month to rent for, as opposed to a $10,000 mortgage payment. You remember that one.
Speaker 2:That's the theory yeah, genius yeah. So how do we explain the difference to people?
Speaker 1:I mean there's the theory that having your own primary residents as your biggest investment and using it as an investment vehicle is not the way to go. Like the wealthy, yeah.
Speaker 2:Yeah Well, I don't think it should be your only investment. But, it definitely should be part of your portfolio, so maybe I shouldn't guide you. Do you consider there to be a benefit to renting tax-wise than buying?
Speaker 1:Well, I'm renting now, but I'm waiting for the market right now I think the rates are up right now, but I think I'm waiting for maybe this time next year to go back in and buy something. I mean I just feel like I'm throwing my money away. It's just kind of an emotional thing for me.
Speaker 4:By renting.
Speaker 1:You mean by renting? Yeah, I don't even own this and I'm throwing all this money away every month. But you kind of feel I just straight up Tax points. That all depends, you know. And how much mortgage interest, what's your rate? You know what's your real estate taxes? Can you get that? Jack that up enough where you're gonna get? You know you're gonna fall outside of the standard deduction and I think right now it's like almost 80% of people right now, since they raised the standard deduction, are falling under the standard deduction, so the mortgage interest in the real estate taxes are not really benefiting them.
Speaker 1:So every deal is different with the house. I'm sorry, go ahead.
Speaker 4:No, no, no, no, I was gonna say, I mean I think we, but you especially get a lot of pushback on this concept because of your business, sure.
Speaker 4:You know it's like you're an oil company and you're telling people that electric cars are bad. You know. It's like, of course you're telling people that, so you know. So you get a lot of that and then a lot of the comments, and I get it. This is part of the bitterness that people are feeling in the country is like yeah, I know it's better asshole, but I can't afford to buy.
Speaker 2:Well, get the fucking work. You know, work harder I mean work harder, that whole thing. I don't understand that, right? I mean, we're in the United States of America, you could make as much money as you want, as little as money. So then say that, right, don't make an excuse out of it. Right, well, I can't because I don't make enough money. Are you working hard enough? Are you doing? Have you made the right decisions?
Speaker 4:We've discussed this once before bro People are not. My old man used to tell me that people are rarely big enough to like acknowledge, like their own shortcomings. It's much easier to be like it's better to rent now, because you know the reality is that fucking rates are too high for this and that, and it's like no man. It's not better to you know, tip, buy in large buy in large Unless it's this isolated incident Right are there scenarios in which it might be better, you know, but as a general rule, you know, it's probably not.
Speaker 4:And rates are high. Now we're used to low rates. But free money, you know, was not sustainable. I mean, I got in my drawer my old man's mortgage from the house that I grew up in and it was like 14% is the rate on it. Yeah, and it was like in 82 or whatever, when he bought it 80, 82.
Speaker 5:It's low for 82. Yeah, you know, and it was like 80 was 16.63, 82, we got a 21%. Really, yeah, 82 was a bad year you know it's like it's just these things.
Speaker 4:You know it's like people are used to historically low interest rates and they're still low by, you know, historical standards.
Speaker 1:I think it was like 14, 15%. Yeah, that's what I'm saying.
Speaker 4:Yeah, my old man's mortgage, I have it.
Speaker 5:you know the note, I have it, I want it as high as 18%, 18, and, and for sure.
Speaker 4:And there was still appreciation 21%.
Speaker 1:And this is conventional money and people are still buying houses too. People are still buying houses too. They were still buying.
Speaker 5:This is really the thing, because I think what people have this. There's two big problems here. One victimhood is everybody loves to be a victim. Right now, that big victimhood is what it's all about. Oh the market. Look, the reality of it is you only have one choice that leaves you in the autonomy To ask yourself what the hell you're gonna do about it when anything goes sideways. Oh the market, what are you gonna do about it? You can't afford. What are you gonna do about it? Back to Jesus's point.
Speaker 5:But I think that people look at it on a day to day. Well, what's the payment today versus the payment tomorrow? Here's the thing that I always look at when it comes to the primary residence. It's the only place I know of where you can make a $250,000 capital gain as an individual and your Uncle Sam are all of our favorite shared relatives and sitting there at the end of the day saying, hey, I see you made a little bit of money. Where's my taste? It's the only place where Uncle Sam doesn't come in and look he's like, oh, you made a quarter of a meal, go ahead, keep it, don't worry about it. And so I think the long-term look at it.
Speaker 4:Although, right, that was one of the things Biden was gonna change. I'll give you that one. Yeah, no absolutely. Go ahead now finish your point and we'll talk about that.
Speaker 5:So the idea that, on a day to day basis, what's gonna take and leave less money in my pocket. But, folks, if we think like an employee, that's how an employee thinks, paycheck to paycheck. If we're thinking like the person who's gonna be living our life future, us 30, like I intend to be living my life 30 years from now, it's still gonna be me. I'm gonna be stuck with whatever this guy does today. I'm gonna be stuck with the consequences of that. Well, I take a look at what I bought my property for and I take a look at what it's worth right now and I know that, Uncle Sam, not a nickel on all that money and, believe me, I will sell it. The second I get close to that half million.
Speaker 5:I say half million as a married couple, it's a half million right, I'm out and I'm gonna take and go into the next one, because why would I lose that benefit? So not roping in all the total benefits of the wealth building capacity, that's there. I said it before to you and you were careful to say don't use the Heal Lock money this way, but to take people taking and pulling money out other asset of their home to take and fund the starting of businesses and other asset acquisition.
Speaker 5:I know for me I couldn't afford after 2008,. I lost everything and I had a start from scratch. I mean I lost everything and I had a partner with people to get my first. I didn't buy my house first, I bought my first investment property first and I took and parlayed the income from that. I live way below my means.
Speaker 2:But if you want to, if you want more I know how many properties you own Am I gonna get your business out there, Unless it's in your book? Is it in your book or no? I don't know, I don't remember. Well, whatever, I'm not gonna get. Heal's a shitload of properties, the technical term.
Speaker 3:Right.
Speaker 2:So if you were to be, if you would have been raised in Miami, you would have just owned one big mansion.
Speaker 4:That would have all the With like an eight car garage.
Speaker 2:He would have lived in a $10 million dollar and yeah so it's a spectacular type.
Speaker 5:It's not even over consumption. It's called conspicuous consumption, like I need to consume in such a way that I show everybody, and this, I think, is one of the other issues with social media that exists is that everybody's life is on display, and so the jealousy that that generates is a real. Like you're sitting here saying I'm working my ass off, why are they going to the cancer that is social media man.
Speaker 4:It really is. God bless it so bad. It really is.
Speaker 5:It's got its benefits, but I mean, at the end of the day, we haven't learned as a society how to deal with it.
Speaker 2:What's new in?
Speaker 5:society.
Speaker 3:It is.
Speaker 5:How to deal with it psychologically in a healthy way, like how to look at something and say, oh well, that's probably not true, you know, like-.
Speaker 4:A few years ago. They had a new iPhone come out a few years ago and it looked just like the prior model, you know, and they had them side by side and it's like these phones look alike. How will anybody know I'm better than them? Exactly True, it's a thing, oh man.
Speaker 1:Well, you know, and to your point, talking about the phones too, it's like we're practically renting these phones too, Cause when you go in and you turn it in, they take the last time my daughter's needed a phone or whatever, like oh, your plan is up. You know, they're making you pay the least payment within there and we're going to a society where everything's being rented now. They're trying to get everybody in these little boxes and these high rises and you know, who's making the money off?
Speaker 4:of it. So it owns the building. I've never once turned in a prior iPhone. I literally have in my house a stack of old phones going back to like the original.
Speaker 2:I got them here because I don't want no, no, no, no, I don't want to be shit-.
Speaker 1:I'm not gonna be shit For like collecting old purposes or no, I do it because, listen bro, I just don't.
Speaker 4:You know, my phone is like my woman, don't touch it.
Speaker 2:Okay, well, I want somebody else putting his hands on her, I also don't believe that they can't get in and get all your information and stuff.
Speaker 4:Yeah yeah you know, it's like, yeah, it's a good point, we erased it. Yeah, sure you did, bro.
Speaker 3:Yeah.
Speaker 4:You know, so I, you know, I just I have them all.
Speaker 2:Yeah, so I mean anything else tax wise that you can think of man any cause you're going around podcasts and giving these tidbits, so I kind of want to see-.
Speaker 1:This is what I was thinking about on my way here to you guys and you might know a lot about this the blockchain and what it's gonna do to real estate, sure and intermediaries, and fractionalizing.
Speaker 2:Yeah, I stopped drinking that fucking Kool-Aid, to be honest.
Speaker 5:Smart contracts, the tokenization is still-.
Speaker 1:Tokenization of this stuff. What's your take on this here?
Speaker 5:I love the look. For me, the big issue really is for it to do what I think it's really capable of. It's gonna take it require the SEC to take and modify how arduous they make the process for diversified ownership. I mean, realistically, tokenization shines best as a reggae plus where you're taking and you're able to go to regular you know, non-accredited investors because what it does is lower the cost threshold to entry. So all of our folks that say, hey, I can't invest in real estate the regular guy, yeah, now, if I can lower that cost threshold.
Speaker 5:For me, in my mind, as I look at real estate, that's always been the biggest hurdle. The reason why I had to bring partners in to get started was the cost threshold, entry. If I could lower that. Well, it lets me hit on. One broaden the base of who's investing in real estate. Two, it allows me to do something that I'm super passionate about, which is exposing younger people to investing in real estate. So one of the things I do I've done it with hey Sue's before, as we'll volunteer and go speak at schools, talk about real estate and so what they do, and I don't have to remember this when I would talk, they'd give me a gift card for Target or for Starbucks or something like that, and say, hey, whichever kid is most engaged, give them this gift card. I'm saying so, wait a second, I'm gonna come up here and talk about underconsumption, about not wasting your money buying retail stuff, and you're gonna give me a way for them to take it.
Speaker 5:I said wouldn't it be amazing if I could give them, instead of a $10 gift card, I could give them $10 on an appreciating asset that's throwing off positive cash flow. What would kick this kid's life off as an investor better? Yeah?
Speaker 2:the concept is great. Listen, the concept is great and when you're saying it, it really is. Seems like the right instrument. It's just the dirtiness around it.
Speaker 3:Oh yeah.
Speaker 4:I mean right now, it's just as dirty as the integrity Crypto bros man.
Speaker 2:Yeah, they are really just the amount of fucking weirdos that got into that business.
Speaker 5:It's not even weird. They are morally free. Of integrity is, unfortunately, something I've seen a lot and weird and they dress weird and they eccentric. They could dress in fishnet stockings and I don't care.
Speaker 2:That's pretty much what it was. Sadly, I saw it in those crypto conventions.
Speaker 4:Honestly with the dough, I mean on certain people. There's nothing wrong with fishnet stockings.
Speaker 5:I would in fact I think that out there. I just wanna put that out there. It should almost be mandated, but not the crypto bros, not the crypto bros.
Speaker 2:Certain people, there were no crypto bros.
Speaker 1:You didn't have to say gender. I like that. I like where you went with that.
Speaker 2:Listen.
Speaker 4:It's a thing Self-awareness, baby.
Speaker 5:I think that the lack of one of the essential things to any business and to any country is the idea of a shared integrity, Like the idea that we know in this country that there's a reasonable expectation that if you sign a contract with somebody, that there's a good likelihood that not only will that person have to uphold it, they don't.
Speaker 5:The law's right there to give you a set set of rules that everybody kind of has to comply with. It's why this country functions as well as it does in developing world countries. That lack of integrity, that lack of this guy's gonna get a gun and be able to just take and make me do whatever he wants. We don't have that, and with the people that I dealt with in the crypto space, that was the big thing that was lacking is everybody was out individually for themselves, burning the bridge they didn't care about. You know it's shame on you. We pulled one over you, on you kind of thing, and there's really no meaningful way until those folks are out of the space or other people come in that do have some integrity to really look at it. But there are players in the space that are making this work and doing it successfully, so it's a matter of weeding through Kind of like what you have to do.
Speaker 2:It's gonna take a while. It's taking a big step back. What do you have to do with contractors?
Speaker 5:in Florida. Yeah, I know, but how many contractors do you have to go through to find a new one?
Speaker 2:It's taking a huge step back. So how and well will it recover? And when the thing is, it's like anything else.
Speaker 4:Anytime you're gonna tell, like the established order of things, to go and fuck themselves so brashly, it's gonna be a problem.
Speaker 3:And it's like you know, we have friends we have a chat.
Speaker 4:You know the crypto chat. That it's like you know some of this guys in there, and they're all great humans, but to tell you with a straight face that it can't be regulated. It's like it can't be regulated. It's like, listen, bro, your friends are all in jail. So I mean there's plenty of regulation. It's just, it's like you know, listen, the notion that fiat currency is gonna disappear, I just don't buy it. You know the banking system is gonna collapse. It's like guys.
Speaker 2:Those are the extremists, like anything else, extremists and everything. What was it that you got caught off a little while ago? You're gonna say oh, let's go back to something about Biden. That Biden did, oh, that there was.
Speaker 4:No, no, no no, no, he was again. It was something that the administration had proposed, which was attacks on unrealized gains.
Speaker 2:Oh, my God.
Speaker 4:Okay, and we even discussed now again. It was a. It's how all these regulations start. They're like no, it casts a very small net.
Speaker 5:Yeah, of course.
Speaker 4:So it was something like it had you know, and just the translation of oversimplification is that if your house, okay and I think it didn't it couldn't be your primary. But if you own a property and the property appreciates, let's say, by more than $100,000 in a given year, whatever the number is, you're taxed on the excess between, like I think it was 25 grand or 250 grand, and whatever the number is. So, just for round numbers, if your property increases $10 for the year, you don't sell it, okay, you get like a free $2.50. And then you're gonna get taxed on the remaining $7.50. Now, this didn't apply to every tax payer, it was again, and that's how it started.
Speaker 4:It was like no this is only for the super wealthy and these ridiculously wealthy properties. But that would be one of these moves that I would agree are part and parcel of the current administration's mindset of the demonization of wealth and kind of. You know, it's like if you have a lot of money you must be a bad person, you know. And we gotta take it all from you.
Speaker 5:You gotta pay you know all this money. That's a narrative that's out there and I mean it's troubling to me because people forget. I mean it's like talking about how the rental market was out of control, whatever. So I was like, okay, so people are putting guns to people's heads and say you must pay this rent. No, somebody's coming in and willfully offering this much rent.
Speaker 4:It's a bargain no, or willfully paying. They may not be offering, but they're agreeing to it.
Speaker 5:They're agreeing to pay at least. I mean not with, again, not with a gun being held by anybody's head, the idea that somehow now a third party, who doesn't really have a stake in this thing, is gonna take and make a better decision than the two parties that are involved. Look I mean people?
Speaker 4:How about during the pandemic, when you couldn't evict people? Uh-huh, right you couldn't evict people. Well, that just ended not too long ago.
Speaker 4:Well, and what's funny about it is that you hear and here's the problem Any opinion or position that is, let's say, beneficial to or sourced from the minority on any issue is more scrutinized. So it's like you have a lot of people out there that were renters and, admittedly they were struggling, and it was a weird time the government was shutting down restaurants. We have some restaurants, it's a painful business, and so these are people that they live paycheck to paycheck Like, by the way, like a lot of Americans do Absolutely and then when they shut down the business, your work, the government doesn't let you work. So, all of a sudden, the courts here, and the governor even, and others, they were like, well, we're gonna prevent evictions. And then what was happening is that there's like anything else, it's the pendulum. Initially, it's like, hey, I can't pay my rent because my job is shut down.
Speaker 4:And then it turns into how long can I get away without paying my rent, and what happens is that nobody thinks about the property owner. And the property owner that has like a mortgage to pay and these kinds of things, and it's like you don't even wanna think about it Because it's like the number of people that own the properties versus the number of people who rent property is radically different. So people are like everybody feels bad for the renter but nobody feels bad for the owner because they have money.
Speaker 5:Well, I mean it's going a little bit further because, okay, now that owner can't pay the debt service, the debt is held by a bank. The primary investor in that bank is your grandmother's pension fund. So grandma's pension fund is now underperforming because of all this trickle. It's one of the reasons why I love that book Basic Economics, the idea of the law of unintended consequences Thomas Sowell is always a big fan of that and nailing down the idea of, like all these great ideas like rent control, what could be better than the government controlling the rent? Okay, every place it's ever happened. What's happened? Rents have become incredibly more unaffordable. There's been more slums, more parking, more buildings torn down to make parking lots and more condo conversions. That's what happened every place.
Speaker 4:No, what's funny is that, you see and again, this is something Jesus and I argue about all the time, which is what I think is the concept of consistency. So we have a friend he'll remain nameless and the guys he thinks that he is a capitalist Republican. That's what the guy thinks, and yet he rents. And so a few months ago, the guy comes into my office beat red, incensed, and he really gets upset about everything and he's like my fucking landlord had the balls to raise my rent, blah, blah, blah. And he's like isn't there some rule now about?
Speaker 3:how much?
Speaker 4:you can raise the rent and how much notice. And, by the way, there is such a rule. So, as a function of the pandemic now in Florida, if you're gonna raise a tenant like you're only able to raise rent, I wanna say, don't quote me, but it's random percentage, it's up to 10%. So if you're going to raise the rent by 10%, you don't have to give any advanced notice. Basically, you could just say, hey, at renewal, your rent if it was 1,000, now it's 1,100. Now if you wanna raise the rent to 1,250, you have to provide I think it's like 90 days notice to the tenant and it's like 90 days notice to the tenant of itself. If you are aware of the law, right, if you have a lawyer that you talk to and so okay, you issue the notice, no problem. Like that's one step short of rent control. But what's funny is that my outraged thinking he's Republican friend. I'm like, oh wait a minute bro.
Speaker 3:So imagine, that you own the apartment, so now you, no, no.
Speaker 4:now you want the government, no fuck. I don't even use the protection line. I'm like you, a guy like you that aspires to own property, and you're gonna be a fucking millionaire and all this shit that you tell me every day. Now you're okay with the government telling you how much you can charge for your own place and when, and then you see his face kind of like turning.
Speaker 5:You see the dissonance.
Speaker 4:And it's like you know how and what's funny is it's like you don't actually think of that, like most people's positions are I had a law school.
Speaker 2:Was it the guy we were texting?
Speaker 4:with today. Yes, yes, and I had a law school constitutional law professor that would say that where you stand depends on where you sit. Yeah, okay, so you know, when the boot. You know and I tell Jesus this all the time we talk about that Listen, when the government's boot is on your neck, it doesn't matter if it's the left boot or the right boot, they all say Okay.
Speaker 4:And so the reality of the matter is that it's like these concepts like rent control, things like that, these are contrary. Like people here in the United States, they call you a communist. In Miami, that's the number one insult. You're a fucking communist. Meanwhile, your kids are in public school, okay. You use the fucking post office, okay, you, you know, you use in, like these government benefit programs, et cetera. And it's like guys, those things don't exist in Adam Smith's you know capitalism Nobody. And, by the way, adam Smith's the guy that wrote a book called the Wealth of Nations, right when he's like the father of capitalism. He's rolling over in his fucking grave, thomas Jefferson as well With the things that we have, you know.
Speaker 4:So it's like it's bullshit. You know that, like that, that's how people really think about things. People think about things when they're affected. So, oh, my rent got raised. Oh, my landlord's an asshole. It's like, yeah, well, fuck, the interest rates just went through the fucking roof, buddy. Yeah, so what I'm paying on my mortgage now went up. If I have an adjustable rate mortgage. So guess who you know. Guess everybody's gotta pay more.
Speaker 5:Or if he's on a term loan. He's got a refi now in 12 months and he's on a term loan and now he's looking at his debt service. But I mean, I honestly think that the way that they chose to do it was really splitting the rent control baby about as well as you could in keeping his free market. And you said 90, it might have been 60, I think it's 60 days, but maybe you're right, maybe it's 90. But just taking and saying, all right, fine, you know what, there is a spike in this. Let's give the tenants at least the ability to plan out.
Speaker 5:Right, great idea For this, it's really not a huge burden to the landlord. Hey, here's our intent and spell it out. I thought it was really well done, rather than sitting here saying you can't charge more than.
Speaker 3:X.
Speaker 5:And I mean, I think that's really like what, what the nuance needs to be of how do we take and keep everybody as empowered as we can without having to come in and intervene they don't physically have to intervene with that and let's the problem after the fact say well, wait a second, here's the statute.
Speaker 4:What did you do? And it's funny you mentioned earlier the law of unintended consequences on all these kinds of changes. I'll give you guys an example of a great one. So last week at the Frick meeting we had a workshop after about preparing the or taking comment, taking suggestions. Many stakeholders came in on the preparation of what's gonna be the promulgated affidavit for all Florida purchasers to sign regarding the Conveyances to Foreign Entities Act.
Speaker 4:So as of July one in Florida, if you are buying real property I don't care if you're, you know, corn fed Iowa farm boy you're buying property in Florida You're gonna sign an affidavit that says that you are not a foreign principal as defined under the statute Okay. And if you are a foreign principal and for some reason the statute doesn't apply to you, right, like, let's say, you're not buying farmland and you're not buying property that's within 10 miles of critical infrastructure, you are also going to sign the affidavit saying you know, and it's little boxes, okay, it's like I'm not a foreign principal. Statute doesn't apply, I am. But here's the exception I'm buying, you know, this property that doesn't qualify, right. So we're going through this form because the statute put it on the Florida real estate commission to come up with this affidavit, okay. So it was fascinating to watch because you know, all the major title insurance underwriters were there with their proposed form, okay, major law firms were there with their proposed forms and you know everybody comes with like their theories on it. And so one big one, one big push I literally just got an email on it today from a lawyer at a big underwriter is that cash buyers are pissed off that they have to sign this affidavit because cash buyers ordinarily only need to sign a closing statement. You can even do it like scanned copy will do, but now you're having to have a notary. Oh, wow, right, for the affidavit, you have to like have, you know, a document notarized. You got to arrange for a notary and there's this expense and the whole thing. And and some of these people were proposing that we adopt the ability to sign an attestation right, which is unsworn okay, so you don't need, you don't need the notary, okay, and so that's a lot of these people are pushing for this.
Speaker 4:But here's the law of unintended consequences is that this lady gets up and you could tell she was very well prepared. I mean, this lady came, she just looked to the nines. Okay, she comes up to the podium and she says you know, hi, my name is so-and-so and I'm from Carlisle in DC, you know, and they had come down from Washington DC and Carlisle's a big reed, like a big investment firm, and they were saying that, like the way, the affidavits, everyone's form of affidavit, would make it impossible for big investment firms and like funds basically to invest in Florida Because many of the limited partners in the funds could be these foreign principles okay, and the statute hinges on the amount of control that the foreign principle exercises over an LLC purchaser right or an entity purchaser. So a lot of people, especially in Miami, some agents again will not be identified, but they're like oh yeah, richard bro, I have an idea. Man, why don't we put it under a company Scarface bought for?
Speaker 3:me Can we buy it under a company?
Speaker 4:And I was like, pfft, you figured it out, my man.
Speaker 3:No, no, no, no, you did it.
Speaker 4:You sitting right here in my office today. You came up with the fucking solution, the workaround. None of the 300 lawyers that worked for the governor, no one in legislation, no one staffed, none of the people thought about that. You found the workaround and he was like, are you being sarcastic? And I was like, yeah, I'm being fucking sarcastic. So even if you don't fix the problem by buying under a company and the statute says it's like, by the way, if you buy under a company, if you have more than 5%, then you exercise control. 5%. Okay, so you exercise control. And so what happened was that there was a different part of the Florida statutes that was also implicated with these definitions of controlling interest, which was not defined in chapter 600, which was the Florida statute. And these people did the work like this REIT had done the work. The fund did the work of saying, hey, here's how you're gonna get there.
Speaker 2:They did a favor for a lot of other funds.
Speaker 4:No, no, no let me tell you something they did a favor to, in my view to the governor to the state because and I spoke up I was like we have to make this work.
Speaker 4:We're gonna have to fit this, because there's no way that the governor and the legislature's intent with this statute was to make it so that equity funds and hedge funds and this and that can invest in the state of Florida. There's no way. That was the plan. And everybody on the commission was like yeah, no, we agree, absolutely not the plan. And so we sat there with these people after drafting the lines this, our lawyer, the Frick lawyer, the lawyer for the Carlisle group I mean it was fascinating.
Speaker 4:And I went up to her after and I said man, thank you, you guys really, because I want you to know You're out of the fire yeah, by the way the opposition would have taken it, would have rammed it right up, right up the governor's by saying look, look what you did Like. You've prevented all this investment and that's absolutely not the plan. So luckily there was a solution and it's not gonna be an issue. But you gotta be careful, man, I mean you, you know.
Speaker 5:I mean, how many people missed that right For it to even get?
Speaker 4:that far.
Speaker 5:Everybody See that's the kind of thing that people missed, that's gonna scare the hell out of you because, like, when it's something that there's so much capital tied up in that so you have so many eyes on it, what when it's not something like that, when there's that many eyes on it? And there's all these rent control again being a great example of you know these great high ideals and what actually happened.
Speaker 4:Because there isn't really like a, you know, like a landlord lobby person.
Speaker 5:Yeah, it's not like that, you know, like it's not a cohesive industry. We don't meet us every second Thursday. Yeah, yeah, yeah.
Speaker 2:Yeah, yeah, Let me ask you a question. So you were, you were a CPA in New York for a bit and then came over here. Yeah, we were talking about it last week. How is it different to do business here in Miami versus versus New York? I mean what?
Speaker 1:what he's talking about Florida, you know the first, yeah, so I mean it's probably the same story.
Speaker 2:Oh well, yeah, he's up there. You know, it's not Miami.
Speaker 1:Yeah, you're right, you call somebody and say you're gonna meet him at nine o'clock, right, you know, tuesday I'll be there. And you know, in Florida it's like even contractors or whatever you know it's like, okay, it's 11 o'clock. You know, I told the guy I thought he was gonna be at nine o'clock. They didn't call yet they show up at 1230 like oh, we're here and I'm like you know, that was like that took a little while to get used to. Yeah, then you get, then you get used to it. But I think that you had touched upon it too is like contracts too. It's like a deal is not a deal until you get to the closing table.
Speaker 2:Yeah.
Speaker 1:Because anything is off. You know it's like, it's like they. It's a different mindset. I think here in Florida, where contracts and deals are a little different story than it is. Yeah, we're all like it's like it's like you know you have like not to get to. You get the George Lord's like really you know making sure they got their coming over yeah. Yeah.
Speaker 4:Covered up as opposed to all the other players who are not nearly as careful. So so I don't know who you're insulting, maybe both. Well done, he's managed to insult you. Call it an upside amount, so the Jews are too careful.
Speaker 3:No one can be offended.
Speaker 1:But even buying something I'm not even going to be listing it, just like a lot of you know a lot of the stuff that you know. It's just, it's different. It's just different, yeah. So I mean, I don't know, do you agree with that 100%?
Speaker 4:The level of sophistication, I mean listen every time, and I mean it even to big law here, even big law here in Miami, like I had some, and I do mean the pleasure of closing some deals for a bank client of mine in the past, in the past year, past 12 months, and these were very interesting deals, high value deals, sophisticated parties and man the big firm lawyers in other states Philadelphia, new York that I was dealing with. I mean what I learned just from dealing with those guys via email the quality of their documents. Like you know, you get the documents in Word and for us, the practice of law, incidentally, is the only business where they reward plagiarism. Ok, so it's like please don't reinvent the wheel.
Speaker 3:Yeah.
Speaker 4:OK, like if you walk into your lawyer's office and he's got like a blank screen and he's starting to type a document like run, yeah, ok, like it's been done before. Ok, you can modify, you can make improvements, but by and large, you know, I don't know who the first guy was the scribe that wrote like these forms that we use. But, man, the quality of the documents and their way, the professionalism, I mean it's just. I mean I'm sorry if you're a big firm lawyer in Miami, there are very good ones, there are many, many good lawyers in Miami. But, man, you know, it's just like it just by the way same thing with same thing with real estate agents.
Speaker 4:By the way, you go up to the middle estate and the people that come to see the quality of 100% yeah, and they're their level of devotion and commitment to the profession. Yeah, sure.
Speaker 5:It's just different.
Speaker 4:Yeah, I mean they're, yeah, they're professionals, you know, and so yeah, I mean I definitely would agree with that.
Speaker 2:I don't even want any questions. Wrapping up.
Speaker 5:I think maybe I'd ask the question, you know, is there, is there anything? Because I mean, as a business owner, this is one I always like to ask in my podcast is there anything you've learned in business? That was kind of like, as you look back, it's like that was a big one, like something that you want to share with the people that are listening and say you know, if you're in business, what would be some big takeaway for you?
Speaker 2:Or if you're one of your clients, that you've seen a mistake they've made, or anything like that.
Speaker 1:You know, I would say I had a business where I had a partner. Maybe you could don't get partners Not don't get a partner, but just make sure because it's like a marriage. That was one of the that was one of the worst things is untaggling. That situation was probably one of the worst things that I had to go through and you know it's like a divorce. You know many people could talk about that, so I think that was probably one of the one of the big things that take away that. I just remember that was a very nasty situation, yeah.
Speaker 5:So how to have the right go with the right people.
Speaker 1:You know I was telling people to come in. I'm like you know, and it's you know, they want to. Everything's all great and all okay. Do, are you going in?
Speaker 2:You know, I had a buddy of mine like last week, whatever just I'm not going to say the business, whatever, but he was, he was looking for a partner right In a particular business and you know, he didn't even know the part. He was in a partner with someone. He didn't even know the partner. Like never done any business with a partner. I'm like, are you fucking insane? Like dude, like you're going, it is a marriage. It's like that's like meeting somebody and then just just getting married and starting to live together. In the whole situation, I mean, if you're going to get a partner, I mean it better be somebody that I mean you've done business with. Things have gone right and things have gone wrong before. You know, I also people I mean like these, these, these two gentlemen here, I mean I met them in business, we became friends through business, not the other way around, and I think that's what happens a lot. I think people go the other way around. Well, they're a really good friend, so they're probably going to be good at business.
Speaker 5:I don't know, not necessarily good resume.
Speaker 2:That's where friendships get, get, get ruined. You know what I'm saying. Like, like, at the end of the day, we've gone through good, bad. I mean, you know every argument we could possibly have we've had, you know that type of stuff. So not, not, not as much Cadillac, but you know, I just marvel at your own.
Speaker 5:I have. I have been a fly on the wall for a few of those, and it's, it's breathtaking.
Speaker 2:But yeah, you, you know when, when picking a partner, if I'm going to give you know any, any advice and I've seen you know a lot of friends go in the wrong direction with that yeah, just make sure that you know you've gone through some stuff. There's ways to do business without going into business.
Speaker 4:Yeah, my, my old man, was not a fan of partnerships, right.
Speaker 2:But he was a tough person.
Speaker 4:Yeah, he would say that he has to be a guyless. Who bought you which? Translates to he's like I have to be the rooster of my yard yeah.
Speaker 2:He must have been a very difficult guy to be a partner there was one there was one crazy guy to do a business with him.
Speaker 1:Yeah, I just I just had a guy come in. He had a restaurant with his brother-in-law and now they don't even talk for like I don't know a few years now and they're having to deal with the employee retention credit. Yeah, so one of the guys got the checks, so now they're trying to figure out what to do with that and it's like several hundred thousand dollars and that's a mess.
Speaker 4:I hope they did it right, because the IRS is busting people's balls on that.
Speaker 1:They don't like that game. Yeah, because anytime there's free money well, they had all these these guys just calling you know, these just set up shop and they had, you know, telephone anybody that you can and you're telling them you're going to qualify for this and then most people don't even understand, like, oh, this is free money, you know. And then you have to go through the metrics to make sure that you qualify for that I just went.
Speaker 4:I just went through it the other day, where you know we get. I don't want to say we got a call, but it was sort of that way. And you know, this client of mine says to me he goes hey, you know, I want to do this, you know the government's giving away money and so you know I want to get, I want to be on the free money train. And I said, okay, sure, let's. I think it's a horrible idea, but let's go through it, and so so he, they connect me to the ERC people.
Speaker 4:and the lady starts, like you know, she starts with the sales pitch and immediately I was trying to make it clear. I'm like hey, like, I know the difference between what you're saying and the truth. So forget the sales pitch, let's talk about, like, what my client's going to have to show. And then she was like well, we offer two services. The first is where, if you can provide all of this shit, we'll prepare, like the package and we'll stand by it. Okay, like, well, what it means is that when the IRS comes calling, they'll be there to like advocate for you. Okay.
Speaker 4:And then it was like or there's the other package where you know, depending on the narrative that you're able to like generate, that you know we'll prepare the application for you, but we will not. Like you know, you're on your own after that. And so I ended up concluding that neither was acceptable, you know. And then, like, of course, the client gets pissed and he's like I don't understand you know what the position I go no, no, let's fucking go through it. You have to be able to show this.
Speaker 4:Do you have? Can you show this here's like and of course, this is a guy who's at this level and the operations people are at this level and when he talks to them, they're yes, people. They're like, oh yeah, absolutely this and that, and then so we bring these people in and then I have to do what makes people not like me. I engage in like the painfully simple questions you know, and then like when you oh, oh, oh, you know. And so it's like listen, how bad do you want the free money Lose, sleep bad, because I mean I don't want anything that bad you know. And so it's like everything else, man.
Speaker 2:Yeah, we went through the questions here and we don't qualify.
Speaker 4:Right, right, you had to have like a loss in income. Yeah, it's like man, we were crushing it, yeah.
Speaker 4:That was my one thing, it's like, hey, we had to show like a loss, we crushed it. And then he was like, yeah, but we could have crushed it more. I'm like, but that's not the way it works. Can you imagine, judge? He said he could have crushed it more. It's like like nobody likes that argument, dude, like the regular people there. They're like you hear this asshole? He could have crushed it more. It's like it's how much more could he have crushed it?
Speaker 5:Yeah, let's go ahead and quantify this.
Speaker 2:Man, it's crazy, All right guys, we got to wrap it up, your book, yeah, yeah.
Speaker 1:So I have a couple of ebooks out there. You just go to my Instagram page and hit the link tree there you could. Instagram pages is a seeing. Seeing beyond the numbers. Seeing beyond the numbers, yeah.
Speaker 2:Yeah, we'll put it on the description. And thanks, man, thanks, thanks for coming.
Speaker 4:Thanks for having me. That was great, hi, I had you find this guy Ariel found Ariel found him.
Speaker 1:We got to see him, got it. Man, I'm really impressed. I thought you guys knew each other.
Speaker 4:No, oh, that's why he's been busting my balls about not getting interviewees. I'm sorry, but I'm not good. I don't have someone to call, call for me, so is this something I know he? Did.
Speaker 3:I'll find the other. The other two. You did a bang up job, bro, so.
Speaker 4:Ariel found them and Ariel called them. Great job bro.
Speaker 2:No, no, yeah, you're knocking it out. I'm the interviewer. You fucking Listen. Well, have somebody.
Speaker 4:have somebody call somebody and get somebody in here, get your head out of your ass and let's get some interviewees. Delegation yeah, the delegate. Fine, you know what?
Speaker 2:Delegate, you get somebody yeah. So yeah, man cool. So you're going to have this on a continued basis on yeah, man, we've been pretty consistent, so we got a couple of interviews coming up that I lined up Pretty interesting.
Speaker 4:Then I lined up by delegation.
Speaker 2:No, no, these are these are not.
Speaker 4:Even these are non delegated ones.
Speaker 2:These are non delegated ones. So so yeah, we've done a couple of interwe, we did what we did one interview before. This will be our second to Right yeah, business wise, yeah, by the way.
Speaker 4:Our good friend, I just want to read this out loud. Okay, we get in on this. Our good friend just send us a text that says Breaking video leak Arrested child trafficker admits to boarding school used as a front for organ harvesting in Ukraine.
Speaker 3:Don't send the money. Yeah, yeah.
Speaker 4:That's your guy, bro, that's your guy.
Speaker 2:Oh my God, you started that All right, all right, guys, cool, thank you. So the book will put. It will put all his information up, thank you. Thank you for coming, Josh, josh's book, yeah, for sure. Yeah, yeah, josh, if you could hold your book like I can do the my Vanna.
Speaker 5:White.
Speaker 2:I study that a white privilege Vanna.
Speaker 5:White privilege Wait, I noticed that?
Speaker 4:Did you see who's in the forward? No, can we open it up?
Speaker 5:Wow, the ball busting begins.
Speaker 4:Yeah, no let's open it up, because I didn't do my job to promote the book, but but.
Speaker 3:I'm on right there, okay, fine.
Speaker 2:Fuck, well, fine, but, dude, we had to chase you around for three weeks. A powerful quote I had to listen, I had to. I had to chase you around for three weeks to be able to promote it. Yeah Well, that's it.
Speaker 4:Good things come to those who wait, All right guys, thank you.
Speaker 2:What camera am I looking into? I don't even know we're. It's only one right, all right, thank you.
