Ep. 89 | Why Real Estate Investing is So Popular

06/25/24 • 42 min

About the Guest:

Bill Allen is a retired Navy pilot turned real estate investment mogul. With a background as a Navy test pilot, Bill transitioned into real estate, starting with hands-on house flipping and later expanding into large-scale apartment syndications and passive investing. He is the founder of Flip Hacking Live and has a notable presence in the real estate community through teaching and mentoring. Bill’s accomplishments include scaling his real estate operations to hundreds of transactions annually and dedicating efforts to educate the next generation through initiatives like Teenage Tycoon.

Episode Summary:

In this episode of the Teaching Tax Flow podcast, we discuss the synergy between real estate investing and tax benefits. This episode features special guest Bill Allen, a former Navy pilot who transitioned into a successful career in real estate investing. Bill shares his journey from military service to becoming a prominent figure in real estate, revealing the strategic advantages and personal transformations that come with real estate investments.

Real estate investing offers numerous tax advantages and Bill Allen emphasizes the importance of understanding both active and passive investing strategies. Key topics include how these strategies help in legally minimizing taxes, overcoming common hurdles for new investors, and the significant influence of mentorship. Additionally, Bill talks about his innovative program, Teenage Tycoon, which aims to instill financial literacy and entrepreneurial skills in children, advocating for early education in real estate and investment for long-term benefits.

Key Takeaways:

Active vs. Passive Real Estate Investing: Understanding the difference between these two approaches helps investors choose paths aligned with their financial goals and lifestyle.
Tax Advantages: Real estate investments offer various tax benefits, including deductions and depreciation, which can help reduce taxable income significantly over time.
Importance of Mindset and Mentorship: Successful investing requires the right mindset and often the guidance of experienced mentors to navigate the complexities and mitigate risks.
Generational Wealth Building: Programs like Teenage Tycoon focus on equipping younger generations with financial and investment acumen early on, paving the way for future success.
Practical First Steps: New investors often face challenges like financing and market research, but proper education and realistic expectations can make the journey smoother and more rewarding.

Notable Quotes:

"The tax code is written for business owners and real estate investors. You can use real estate to not pay taxes legally and ethically." – Bill Allen
"In real estate, there are different paths: active and passive. Choose the one that aligns with your life and goals." – Bill Allen
"Kids don't know what they can't do. They dive in and learn by doing, which is why they’re so receptive to financial education." – Bill Allen
"Real estate does not discriminate; your background does not matter. With the right knowledge and effort, anyone can succeed." – Bill Allen
"Understanding how to leverage real estate investments can fundamentally change your financial trajectory." – Bill Allen

Resources:

Investment Portal: 7 Figure Multifamily

Episode Sponsor
Sunsets & Dinks
www.teachingtaxflow.com/pickleball
CODE: TTF15

(00:04) - Why Real Estate Investing Is Popular in the Tax World
(04:24) - From Navy Pilot to Real Estate Mogul
(11:18) - Risk Tolerance and Decision-Making in High-Risk Professions
(12:58) - Teaching Financial Literacy to Kids and Changing Family Futures
(17:16) - Empowering Kids and Parents Through Financial Literacy and Mentorship
(23:13) - Active vs. Passive Paths in Real Estate Investing
(25:42) - Tax Advantages of Active and Passive Real Estate Investing
(28:14) - The Benefits and Risks of Investing in Apartment Syndications
(29:54) - The Benefits of Passive Income Through Apartment Investing
(31:03) - Benefits and Strategies of Active and Passive Real Estate Investing
(32:35) - Investing in Real Estate Syndications for Passive Income
(34:32) - Fun Facts, Favorite Cereals, and Dream Dinner Guests
(39:45) - Real Estate Investing: Breaking Barriers and Finding Success

About the Guest:

Episode Summary:

Key Takeaways:

Active vs. Passive Real Estate Investing: Understanding the difference between these two approaches helps investors choose paths aligned with their financial goals and lifestyle.
Tax Advantages: Real estate investments offer various tax benefits, including deductions and depreciation, which can help reduce taxable income significantly over time.
Importance of Mindset and Mentorship: Successful investing requires the right mindset and often the guidance of experienced mentors to navigate the complexities and mitigate risks.
Generational Wealth Building: Programs like Teenage Tycoon focus on equipping younger generations with financial and investment acumen early on, paving the way for future success.
Practical First Steps: New investors often face challenges like financing and market research, but proper education and realistic expectations can make the journey smoother and more rewarding.

Notable Quotes:

"The tax code is written for business owners and real estate investors. You can use real estate to not pay taxes legally and ethically." – Bill Allen
"In real estate, there are different paths: active and passive. Choose the one that aligns with your life and goals." – Bill Allen
"Kids don't know what they can't do. They dive in and learn by doing, which is why they’re so receptive to financial education." – Bill Allen
"Real estate does not discriminate; your background does not matter. With the right knowledge and effort, anyone can succeed." – Bill Allen
"Understanding how to leverage real estate investments can fundamentally change your financial trajectory." – Bill Allen

Resources:

Investment Portal: 7 Figure Multifamily

Episode Sponsor
Sunsets & Dinks
www.teachingtaxflow.com/pickleball
CODE: TTF15

(00:04) - Why Real Estate Investing Is Popular in the Tax World
(04:24) - From Navy Pilot to Real Estate Mogul
(11:18) - Risk Tolerance and Decision-Making in High-Risk Professions
(12:58) - Teaching Financial Literacy to Kids and Changing Family Futures
(17:16) - Empowering Kids and Parents Through Financial Literacy and Mentorship
(23:13) - Active vs. Passive Paths in Real Estate Investing
(25:42) - Tax Advantages of Active and Passive Real Estate Investing
(28:14) - The Benefits and Risks of Investing in Apartment Syndications
(29:54) - The Benefits of Passive Income Through Apartment Investing
(31:03) - Benefits and Strategies of Active and Passive Real Estate Investing
(32:35) - Investing in Real Estate Syndications for Passive Income
(34:32) - Fun Facts, Favorite Cereals, and Dream Dinner Guests
(39:45) - Real Estate Investing: Breaking Barriers and Finding Success

Previous Episode

Ep. 88 | Mortgage vs. Savings: The Ultimate Debate

In the intriguing episode of the Teaching Tax Flow podcast, John and Chris delve headfirst into an important financial debate: "Should you use your savings to pay down or pay off your mortgage?". This episode navigates through various financial strategies, tax considerations, and personal factors that can influence this decision, aiming to provide clarity to listeners who find themselves pondering this financial dilemma.

The discussion kicks off with an analysis of current interest rate trends and their impact on mortgage payments. Chris outlines four primary financial considerations when deciding whether to pay off a mortgage: comparing interest rates, opportunity cost, liquidity, and the psychological comfort of being debt-free. Tax implications come next, focusing on the mortgage interest deduction and its influence on net effective mortgage rates. The duo also explores the pitfalls of neglecting these considerations, such as unexpected tax liabilities and future lending limitations. Chris emphasizes the necessity of maintaining a liquid cash reserve and consulting with financial professionals before making such decisions.

Key Takeaways:

Interest Rate Comparison: Evaluate the interest rate on your mortgage versus the rate of return on your savings or investments.
Opportunity Cost: Consider what other financial opportunities you may forgo by using savings to pay off the mortgage.
Liquidity Concerns: Maintain sufficient liquid reserves to cover at least three to six months of living expenses.
Tax Considerations: Understand the effects of mortgage interest deductions and potential tax implications from capital gains or pre-tax withdrawals.
Psychological Factors: The peace of mind from being debt-free can be a significant factor for many individuals.

Notable Quotes:

"No decision is a decision." - Chris Picciurro
"If I've got a mortgage with a balance of $200,000 and $250,000 sitting in my bank account, should I use that cash to pay off the mortgage?" - Chris Picciurro
"It's not just about the numbers; it's also about how being debt-free makes you feel." - Chris Picciurro
"You must consult a financial advisor before making a comprehensive decision like this." - Chris Picciurro
"Tax flow and cash flow are not the same things; always consider the after-tax implications of your decisions." - Chris Picciurro

Episode Sponsor:
Strategic Associates, LLC
Roger Roundywww.linkedin.com/in/roger-roundy-86887b23

(00:04) - Should You Use Savings to Pay Down Your Mortgage
(02:43) - Podcast Origins, Travel Stories, and Financial Strategies
(04:43) - Financial and Tax Considerations of Paying Off Your Mortgage
(09:17) - No Decision Is Still a Decision in Everyday Choices
(10:10) - Financial Considerations for Paying Off a Mortgage
(15:26) - Tax Implications of Using Savings to Pay Off Mortgages
(18:25) - Factors to Consider Before Paying Off Your Mortgage
(22:38) - Teaching Tax Law and Building Your Board of Directors

Next Episode

Ep. 90 | The History of Taxes

In this enlightening episode of the Teaching Tax Flow podcast, hosts John and Chris delve into the history of U.S. taxes, providing a timely reflection given the Independence Day holiday. Episode 90 offers a fascinating journey through the evolution of the U.S. tax system, from its early introduction during the Civil War era to the complexities of the current Tax Cuts and Jobs Act (TCJA) of 2017. The conversation also touches upon the future of tax policies with looming elections, making it a must-listen for anyone keen on understanding how past and present tax laws impact future strategies.

The hosts begin by setting the historical stage, explaining how the U.S. Constitution granted Congress the power to levy taxes and highlighting the Revenue Act of 1861, which introduced the first federal income tax to finance the Civil War. They discuss the evolution of the tax system through significant events such as the Revenue Act of 1913, which established a graduated income tax, and the high tax rates during World War I. Key legislative acts under Presidents Reagan, Obama, and Trump are explored, emphasizing how each administration's tax policies reflected their broader economic philosophies.

Key Takeaways:

First Federal Income Tax: Introduced by the Revenue Act of 1861 to finance the Civil War, with a 3% tax rate on income over $800.
Evolution to Graduated Tax System: The Revenue Act of 1913 marked a shift to a graduated income tax system, introducing tax rates from 1% to 7%.
Significant Tax Reforms: Major tax reforms under Presidents Reagan (1986), Obama, and Trump (2017) significantly altered tax rates and structures, reflecting their economic visions.
Modern Tax Environment: The TCJA of 2017 reduced corporate tax rates from 35% to 21%, simplified personal taxes, and introduced the Qualified Business Income Deduction.
Future Tax Planning: With the TCJA set to sunset in 2026 and upcoming elections, understanding current tax laws and planning accordingly is crucial.

Notable Quotes:

"Taxes are on sale right now under the Tax Cuts and Jobs Act of 2017." – Chris Picciurro
"The U.S. tax system is very complicated; many people from foreign countries look at our tax system and just shake their heads." – Chris Picciurro
"We have to understand that tax agencies are your involuntary business partner." – Chris Picciurro
"By the way, if anybody knows their CPA, some of them are very, very cut and dry. Chris is not. He's very modern." – John Tripolsky
"We are truly at a crossroads with the tail end of the TCJA and the upcoming presidential election." – Chris Piccurrio

Episode Sponsor:
Integrated Investment Group

www.integratedig.com

(00:04) - The History and Purpose of US Taxes
(01:55) - A Lighthearted Discussion on History, Hot Dogs, and Independence Day
(05:20) - The Evolution and Impact of US Tax Laws
(09:04) - The Evolution of Federal Income Tax Rates in the United States
(12:30) - Tax Laws, Consumer Behavior, and Al Capone's Infamous Tax Evasion
(14:34) - The Evolution of Tax Policies from Bush to Biden
(18:56) - The Evolution of the US Federal Tax Code from 1913 to 2010
(20:43) - Understanding Tax Rates and Strategies for Legal Tax Reduction
(23:10) - Humorous and Bizarre Tax Facts from Various States
(26:06) - Educational Insights on Tax, Investment, and Legal Advice

Teaching Tax Flow: The Podcast - Ep. 89 | Why Real Estate Investing is So Popular

Transcript

Intro00:00:04.160

Welcome to the Teaching Tax Flow podcast, where the goal is to empower and educate you to legally and ethically minimize taxes paid over your lifetime.

John Tripolsky00:00:17.390

Hey, everyone, and welcome back to the podcast episode 89 today. We are gonna dive head first into why real estate investing is so popular in the tax world. But before you do that and meet our amazing guest on this topic, let's take a brief mo