Loading summary
Transcript46 lines
- [00:22]
David Green
What's going on everyone? Welcome to Real Talk Real Estate. This is Mortgage Monday with the mortgage guys Christian Bashelder and David Green here here with an update on all things mortgage interest rate related and the greater overall understanding of wealth building through real estate. We've got a pretty cool show for you today. And why is that? Because bonus depreciation is back. That's right, folks. It's big, it's beautiful and it's a bill. And we have some new things to cover on how you can build wealth and most importantly, pay less taxes if you invest in real estate the right way, as well as some tips and tricks for improving your debt to income so that you can buy more real estate in the future. Christian, how are you today doing?
- [01:04]
Christian Bashelder
Good. You know, regardless of the your stance on Trump of the bill, this does have objectively beneficial things to real estate investors and that's mainly where we're going to focus today is how does it specifically impact the mortgage industry and in more general terms the real estate investor altogether. Right. And there are some very favorable positions provisions in this new bill that further incentivize investing in real estate as if it wasn't incentive based enough already with the tax benefits and everything that we already got prior to this bill. But this bill definitely drives it home a bit further.
- [01:37]
David Green
That's exactly right. You don't have to hate it, you don't have to love it, but you really should understand it and figure out what you can do to benefit yourself in these situations. Now we're going to be getting into what bonus depreciation is, what a cost segregation study is, how this works to shelter your taxes, all that complicated stuff that when CPAs talk about it they just confuse you more. But we won't be doing that today. And also if you guys don't mind, please leave a little bit of encouragement in the chat for Christian who has been on the phone all day long. His brain has to be frazzled. My brain's a little frazzled too, but it's different for me because I don't have any hair. I've already lost it all from the stress. And we don't want Christian to lose his. So say a little prayer for him and let him know in the chat how handsome he is. And we're going to be getting into this, Christian. So we've got an article that we can kind of work off here, although this is something that you pay attention to all the time, comes from stinson.com and it says the one big beautiful Bill explained on July 4, President Trump signed into law the Big Beautiful Bill act, which is approved by the Senate and the House earlier this week, 870 pages that covers nearly every sector of the American economy and extends many of the taxpayer friendly provisions of the Tax Cuts and Jobs act. Tcja not something I've heard people talk about, but I suppose when there's 170 pages, it's easy to miss something. Below is our summary of the changes that will affect businesses and individuals, which Christian and I will be covering today. So where would you like to start, Christian?
- [03:08]
Christian Bashelder
I'd say let's just skip right to the real estate portion, which is, if you scroll down a little bit, David, here right on the news section where it talks about the. Right there restoration of the bonus appreciation. And let me, let me just give kind of a objective summary here before we actually get into what the bill did. I think it's important to either refresh, if you already know or even introduce for those listeners that either haven't utilized it or haven't heard about it, what bonus depreciation is, how to benefit from it and what makes you qualified to utilize it. When you buy this is only for rental properties. So when you buy a strictly investment property, not your primary, not your second home, a strictly investment property, there is two provisions in which you can do this. The first one is kind of the more established one that's been around for longer that, that typically was more restrictive on who could use it and it required officializing yourself as a true, what's called rep in tax filing, a real estate professional. And what that means in layman's terms is the majority of your income and your active, your active income, I should say the majority of your active income comes from real estate or real estate related activities. What's a real estate related activity is typically the question that comes from that. Real estate agents, loan officers, insurance agents, what you do in your daily job in getting loans or representing sales or purchases from people is not real estate related activities, okay? That's, that's real estate sales. That's the tangent of real estate activities. Real estate related activities are your investments, okay? What you buy, what you underwrite, what you manage, what you sell. All of the time, effort, energy and resources that you put into that may or may not qualify you. But there's, there's restrictions. There's how much of your income has to come from those activities. There's how much time in the year that you have to do it. It's whether or not you or somebody else spends the majority of your time doing those real estate related activities. And I'm not going to get into the weeds of. Obviously if you guys are interested in how many hours I have to spend, what percentage of my income has to be, I recommend searching it. That's not the point of this video. Maybe we'll do a follow up one if we get enough videos in the comments to actually break down what the CPA talk of what that entails. But the the generic understanding of it is, does most of your money come as a real estate investor? Most people do not fit that requirement with one major exception.
- [05:38]
David Green
A real estate professional. I know what you meant. You said investor, but you mean a real estate professional.
- [05:42]
Christian Bashelder
A real estate professional. I'm sorry, that's exact. Exactly right. The tax definition of a rep. A real estate professional. Most people have a hard time, especially if you have a W2 job. It's hard to justify that. Most of your earnings come from real estate if you're employed and you make good money. Right?
- [05:57]
David Green
Right.
- [05:58]
Christian Bashelder
With one exception. And by far and away, most investors benefit from this from the classic single earner household. A doctor, a lawyer, an attorney, a contractor, somebody in the household who has good income. Husband, wife, doesn't matter. And then they have a spouse. That may not work. Right. They have a single income household. If you're in that position and you file taxes jointly, your spouse doesn't make money. So your spouse can qualify for this if they're involved in investing. Okay, so if you're buying houses together and the spouse spends some time managing, operating, underwriting, yada yada. And the nice thing is that the spouse's tax designation can carry over and count against your income. Now let's get to the core of this. Why is this even important? Why are Christian and David talking about what a real estate professional is? What's. What's the purpose? What does this actually get me? Typically, your taxes are broken up into two main sections. There's a section for your active income and there's a section for your passive income. What those are defined as is active income. Think about it. It's where you trade time for Money. That's your W2. That's your 1099. If you're a salesman, that's your small business. That's your, you know, whatever. You're trading your time in your everyday life to make money. That's active income. Okay? Passive income is things that work in the background. That's investments. Typically that's real estate ownership. That's capital gains. A lot of designations get put in the passive income bracket. And the reason why this matters is that if you're able to generate a loss in your passive income section, let's say, for instance, you have a hundred thousand dollar W2 and you can utilize these things that we're about to talk about, depreciation being one of them, to generate a hundred thousand dollar loss in your passive income. Normally common sense should say, oh, I made $0 this year on taxes, I have a hundred thousand dollar passive income loss and and I have $100,000 active income gain. And unfortunately that's not how it works. You still get taxed as if you made $100,000. That sucks. Okay? And the whole point of this game is to take your passive income losses and count it against your active income. Your active income, right? Where if you do have that scenario where you have a hundred thousand dollar taxable gain, $100,000 taxable loss, you should on taxes be taxed on $0. You made $0 on paper. Right? And that's what this tool allows you to do. What bonus depreciation allows for or what unlocks bonus depreciation is number one, qualifying as a full time real estate professional that converts your real estate passive income into an active source of income and allows it to count against that. But there's a second one as well, a second way to do this. And that's what most people call to call the short term rental loophole. And it's funny because it's a tax code that was actually built and maintained for hotels and the hospitality sector, which is if you have an average tenant stay of seven days or less, and there's other rules, you have to spend X hours a year actually managing. And there's requirements. Once again, we'll do a follow up video if people want to hear that content. But short term rentals kind of unlock this ability to. Instead of being a real estate professional, you can qualify as a short term rental operator. And that also pivots your passive losses into active losses. That's the whole point of this, the whole point of bonus appreciation cost seg. If you think somebody's talking about and trying to sound smart, just say, oh, you're trying to convert your passive losses to active losses. That's the whole strategy. That's all they're doing. So when Trump and Robert Kiyosaki, everybody else, I'm smart because I don't pay taxes. No, you just know how to convert passive income to active income. That's it. That's the secret right?
- [09:51]
David Green
Now, before this, you could still take Losses on the depreciation of your assets. So let's say you don't know what this word depreciation means. Many of you might hear it and think, doesn't that mean your property loses value? Not exactly. That's confusing. It's not the opposite of appreciation. Depreciation is an accounting term that refers to the fact that like whatever you buy slowly either gets worn down or becomes obsolete over time. So even software can be depreciated if you spend enough money on it in your business. Because software ages out, it doesn't keep working, it doesn't fall apart, but it becomes functionally obsolete. Well, real estate does fall apart. So what the government usually does is it lets you write off 127.1 27 and a half of the value of that property every single year. And if that comes out to be 10 grand, but your property made 12 grand, you would only have to pay taxes on the two grand difference. The problem is all the money that you made doing other things, selling houses as an agent, closing loans as a loan officer, flipping houses in as a flipper, wholesaling, real estate, consulting, whatever the case would be, you made all this money in real estate that is not sheltered by the depreciation of the asset. Only the income the asset itself made was sheltered. The way I like to look at the real estate professional consideration here is it sort of creates a bridge between what Christian called active income, which would be everything I just said that a real estate professional does, and passive income, which is what your property itself made. So if your property is expensive enough, you can take the depreciation that it makes and use that to shelter right off against the income you made actively. The bonus part or accelerated depreciation has to do with the fact that they don't make you stretch it out over 20 to 7 and a half years. They allow you if you want to take it all in the first year or the first couple years. Now you got to talk with the CPA about the right way to do this. But instead of spreading it out in straight line depreciation, which is standard, you say, hey, the electrical wears out this fast, the roof wears out this fast, the appliances wear out this fast. I'm going to pay money to have a study done that shows what wore out early. And I'm going to take that depreciation now as a way to write off against all the income that I just made actively working. And this is where real estate becomes a game changer. Because just because you couldn't get cash flow doesn't mean you can't make money. Because if you were going to pay 50k in taxes and now you don't have to because you're able to buy that real estate, even if the real estate breaks even, it saved you 50k. That's a lot of money that you used to give to the government that now you get to put into your own future.
- [12:33]
Christian Bashelder
That's exactly right. And when I, when I first had this explained to me, I didn't understand it. So if you're listening along, let me, let me. The best way that I had it explained to me is and there's cons to this which we're going to get into, but the best way that I explained is just like David said, depreciation does not mean your property went down in value. Depreciation is a paper expense. And all it's basically saying is stuff's getting older, right? My stud, therefore it's losing value. Now that is true with cars. I mean unless you have some classic car that increases in value or Lamborghini or something, right? But most cars decrease in value over time. So does electrical work, so does plumbing, so does roof, so do floorings. Right? You're able to write off the potential decrease of that value over time. And that, that makes sense, right? My stuff's getting older. I should be able to get some sort of tax incentive for that because that's basically an expense that I haven't paid yet. Right? And just like David said, bonus appreciation, why this bill changed it, we haven't even gotten to that yet is that bonus depreciation was being phased out. What was decided years back was it was going to be 100 and then I believe in 2022, 2023, I believe it went to 80 and then for the corresponding years it was going to go to 60, 40, 20, 0. And what that means is that if we got to that year, I believe next year in 2026 it was scheduled to go to zero. That means you would not be able to bonus depreciate anything extra than that one year on your tax returns. So that would have train wrecked a lot of investors. Let me explain what the benefit of this actually is because David and I have done a cost segment to share those numbers. When it went to zero, we would just be able to write off the year of that depreciation, no extra bonus. Let me share a number. Let's say you buy a million dollar house, you can't the punish without getting too complicated, you can't depreciate land because land doesn't get old and break down, right? But you can appreciate improvements, furniture, fixtures, walls, roofs, carpet, whatever. Typically the math lines up between about 25 to 30% of your purchase price is depreciable in nature. That's usually where the numbers. So a million dollar purchase should get you between a 250 to a $300,000 deduction. Okay, now that's not a tax credit. That's not the money you're saving, that's a deduction. So let me explain what that would actually lead to. You buy a million dollar house, you get, let's just say a $300,000 tax deduction. You depre, you take that and once again, it's not passive. So before, if you're not a full time real estate professional or you're not the short term rental loophole, that would only be able to net against $300,000, another passive income you would make. So if your Property rented for 100 grand that year, you had a short term rental, well you have 300 grand in write off. So technically you made minus 200,000 on that property. But that 200,000 couldn't go anywhere. There was no other income to write off against it. So you would just be stuck with nothing. There's carryovers where it can go to next year and you can get complicated with it. But let's assume that's not your situation. What this allows you to do is let's say you had a W2 income at 200,000 and you're paying your payroll taxes every, you know, bi weeks or monthly. Whenever you get paid, you get a deducted straight out of your bank account at the end of the year of your 200000 in income, you probably paid like 75 to 80,000 in taxes. Paid a lot of money in taxes, right. What this allows you to do is takes take that $250,000 deduction, net it directly against your active income and basically the IRS will look at you as you make $0. So when you go file your taxes at the end of the year, instead of owing something or getting like two or three grand back, I'll be getting $80,000 back because I paid all those taxes. Assuming that my tax basis was 250k or whatever in income and now it's zero. So I was over taxed throughout the year and I would get that tax refund. Now a lot of people get excited for the tax refund because they get five or ten grand. Imagine getting a hundred, 200, 300. If you're a Heavy earner. I mean, that's, you're getting half of your income, especially if you live in California, New York, these high state income tax states. Like you're getting 50% of your earnings back right now. David's right. That doesn't mean the property is debt servicing. That doesn't mean it's cash flowing. But imagine you're competing with an investor and you're looking for cash flow. And you're like, who's buying this property doesn't cash flow? The odds are it's not somebody looking for cash flow, it's somebody looking for $300,000 write off because that's saving them 150,000 in taxes.
- [17:01]
David Green
Right.
- [17:01]
Christian Bashelder
They don't need it to attack cash flow. That paid for the down payment right there in month one. Right. Now there is a con and everybody's gonna get in the comments. And every time we talk about appreciation, everybody slams the comments. Oh, what about recapture? What Then you don't get your depreciation throughout. Let me explain it. Like David said, usually it's split up between 15, 20, 27 years. It depends on the asset of time period where you can depreciate. Understandably, if you take it all in year one, that means you don't get the depreciation going forward. You get all of it up front. Okay, that's beneficial because it saves massive taxes. It gets you the down payment probably of that property back, but it's still a pretty massive loss in the future against that property. Right. The concept is you take that money that you got back in your taxes, you buy another one and you write off your income next year.
- [17:50]
David Green
Right.
- [17:51]
Christian Bashelder
And the people who truly utilize the strategy buy a property every year that shields their income with the proceeds that the previous property saved them in tax.
- [18:00]
David Green
That's exactly right.
- [18:01]
Christian Bashelder
And you get into the scaling now, last part there is if you sell the property before the depreciable time period is done, remember you took, let's just say 20 years. If your depreciation model was based on 20, all in year one, and let's say you sold it in year 10, well, you already received the write off as if you depreciated that property over 20 years. You only kept it for 10. So when you sell it, there will actually be a tax recapture. So that means on your, when you file your taxes, the state, the federal government will see, hey, we gave you a $300,000 tax deduction. You only used 150,000 of it. That's going to add back to your taxes. So you want to be careful because if you bonus depreciate properties, you typically at all costs you don't want to sell them unless you buy another one and use that to offset the depreciation.
- [18:51]
David Green
Yeah, I believe you can 1031 and you can avoid the depreciation recapture if.
- [18:55]
Christian Bashelder
You 1031 is a whole separate 100% and you can defer it. It doesn't get rid of it, it just defers it. Right. But yes, that, that's the real main con is that you lose some flexibility going forward. But if your plan is buy and hold and you're a long term investor and we're talking about the capability of wiping out your taxes every year, show me a stock investment that can do that. Like everybody who makes the pitch of like put your money in the 401k like your 401k is not wiping out your tax income.
- [19:29]
David Green
Like now we should clarify. We are not saying that you have to lose money doing this. We are giving you the worst case scenario where it could be losing cash flow every single month and saying even in those conditions it often makes sense for, for investors. Especially when you consider future rent increases so it doesn't stay that way forever. You consider principal reduction that you're being made with every single payment and the fact that it could be increasing in value. Let's say that you lose money for the first couple years, but you own it for 15. Long term this is very smart. But you also should be trying to buy something that does cash flow or at least breaks even. Just I know that people will hear our example and they will jump to the erroneous conclusion that we're saying buy something that doesn't cash flow because it saves in taxes. No, this is like, hey, if you can't find anything, you should do that. Now let's say that it's something that gets you a 2% return. It's not a great investment. Normally you wouldn't buy it and you were going to have to put 100 grand down. But 75k of that 100 grand would have went to taxes. And instead of paying taxes, you put it on this property. Now you only had to come out of pocket 25,000 instead of 100. That turns your 2% cash on cash return at 100% to an 8% cash on cash return at $25,000. And now that investment makes sense to you because good old Uncle Sam is contributing to your down payment.
- [20:46]
Christian Bashelder
Yeah. And then you even think about it. Would you rather pay $25,000 for a property or $75,000 of taxes like it. It's like at least you're getting something. Right. You're getting a physical, tangible asset that is likely to increase in value over the next 10, 20, 30 years. You can do value add to it. That shocker is also a write off. Right. If you increase the value of that property, you write off the repairs you did. Right. You get the potential cash flow from it, you get the principal pay down. You know, that's a much better use of if I'm for my money that's going to a property all day versus going to whatever the government's going to do with it, which is probably not going to be well used. Right?
- [21:23]
David Green
Yeah.
- [21:24]
Christian Bashelder
I'm not an anti tax guy. I think the government has a lot of responsibility there. I think it's unfortunately spent sometimes. But I'm a much better, you know, place to park my money in my eyes than sending in and hoping. Right. Like I want to be in control of my returns. I want to be in control of where my money goes and ultimately of my returns. So yeah, I think for people who this really impacts is, you know, higher earners, people who have income to shield. I get asked all the time like oh I want a cost seg and then they say I'm a business owner and I write off all my income. I'm like cost segging gives you a tax write off if you have nothing to write off against.
- [22:06]
David Green
Yeah.
- [22:06]
Christian Bashelder
What are you doing?
- [22:07]
David Green
Right, right.
- [22:08]
Christian Bashelder
So this is not something like if you're a rental property owner, like don't just cost seg and bonus appreciate to do it. You want to only do it if you receive a benefit which is netting out your income. Right. Otherwise just take your straight line depreciation and just write off against your income in the property every year. Yeah.
- [22:25]
David Green
This is one of the reasons why both Christian and I are strong advocates that you shouldn't be in a race to buy real estate and just stop working. Because so many things about real estate work better when you're earning an income. You're making money, you can shelter it with bonus depreciation. You need to buy new real estate in the future. You probably need income in order to be able to qualify for it. It works better. Real estate wealth building, that is when it is a part of a holistic plan to build wealth and it is not a one trick pony. When you fit in real estate ownership with business income and sound financial management, it can supercharge your wealth. When you say, hey, this is going to be my shortcut to getting out of the rat race, I'm going to buy a couple houses and quit. You do lose a lot of these benefits. Now, where I see most people doing this at a high level, well, is actually in the commercial real estate space because you have, like Christian said earlier, a lot more opportunity to value add. You can buy a commercial space and you can increase the rents. You can add units to it. You can take something that wasn't performing very well and you can replace the tenants or you can rehab the units, you can charge more rent. It's not like residential real estate that's much more static. It's more simple, but you have less kind of leeway when you're buying commercial real estate. It's easier to do the cost seg studies and it's easier to add value. And that's where the strategy really comes into play. Now, Christian and I covered transitioning from residential to commercial real estate in episode 69 of Mortgage Monday. So if you want to kind of get an idea of what we're talking about there, go listen to that episode after you listen to this one. But think about how you can put all these pieces together to plan for your financial future and build yourself some wealth as opposed to just taking one strategy at a time. Now, Christian, you're somebody who spends all day long pre approving people for mortgages. You see the people that are having an easy time with this. You see people that are running into roadblocks. What advice do you have for someone who's like, hey, I want to take all the real estate knowledge I have in my brain and combine it into an actual, a repeatable, somewhat simple strategy that I could just keep doing without running out of the ability to borrow money to buy real estate.
- [24:33]
Christian Bashelder
Yeah, I mean, first step is understand your financial position. First steps, kind of a cop out answer. But talk to me right before any plan takes place. Before you think you know the best loan product or best buying strategy or subject to, or house hack or seller finance or whatever, talk to somebody. Get, get an understanding of your financial position, right. Just to understand what is possible. Number two, make the first step. Right? So I always recommend people start, man, you can buy a triplex with 3 or 5% down. You can do that. So if you're, I just think of all the 26 year olds out there, right, who are okay, being uncomfortable. You're probably renting a one or two bedroom apartment anyways. In many markets in America, you can get a triplex with a 3 to 5% down payment where the other two or even a fourplex where the other three units pay the majority of your mortgage. May not, maybe not all of it, but if you have a five, six, $7,000 a month mortgage, you rent out two units for 2,500 bucks a piece. You're living for two grand, which is probably what you're paying in rent, right? So you get into a multifamily, be uncomfortable, share walls with your neighbors for a year. Who cares? Maybe do that two or three years in a row. Sorry, you guys are probably hearing the mortgage mud background here. We just went to the park. So he's very tired.
- [25:56]
David Green
Well, he's a fan of the strategy. He's giving his.
- [25:59]
Christian Bashelder
He's getting excited hearing about house hacking. That's right. But that's, that's the bar. None like unfailable method. If you're in a place in your life where you've developed some comfort and you don't want to go, share walls with your neighbor, you have your single family home, you don't want to deal with that uncomfort fine. There are markets in America where purchase prices are less than you expect. Start with something even if it's 150k purchase, right? Sure, you have to put 20% down, that's 30k. So that requires some savings. But if you start somewhere, see what the depreciation, the cost seg. The strategy that we discuss, see how they impact. You see the amount of money they save on your taxes. Just watch it happen. And then the money that, that saves, we're not lying, this is true. You'll see it on your tax return. You'll see that money come back to you when you get your tax refund at the end of the year, right? When you get that money back, set it aside, pretend like it doesn't exist, that's your next down payment. And imagine you do this enough to where, I mean you guys, any of you guys who are listening to this, checking in from California or New York or Colorado or Washington or Oregon, these like traditionally higher income tax states. Watch what your CPA does at the end of the year and tell me that number that you're paying on your tax returns. None of you are liking looking at that. If you're a W2, if you're a business owner or real estate investor and you do all this and you're going to get in the comments, say I paid zero. Good for you man, that's. I love that. But if you're a W2 employee and you see 60, 70, 150, 200,000 in taxes screw that, man. That's crazy. That's the government keeping your money that you make from January to the end of April. It's crazy. You worked for free for almost five months. I don't want to do that. You don't want to do that. Get something in return for that money and use the only investment strategy that's out there that can get you your taxes back. It's the only one. There's nothing else. There's no stock. There's no Amazon ipo. There's nothing that will get you your taxes that you've already paid back. It's the only one. And the people who pop off about never paying taxes, they're not geniuses. They don't pay their CPAs hundreds of thousands of dollars because they're using a trick that nobody knows about. They're depreciating real estate. That's all they're doing. That's the secret, right? And they're using that to churn and buy more real estate and eventually end with a 30, 40 unit apartment, or 30, 40, you know, unit portfolio that you basically just paid the amount that you would have paid in income tax anyways over 30 years. I mean, guys, take your income tax and multiply it by 30. That's what you would pay over your working life. And it's millions, right?
- [28:36]
David Green
What if I said to you, hey, can I get you to save an extra thousand dollars a month? And you were like, absolutely not. I don't like saving money. I like to spend it on fun things. And I said, okay, would you be willing to do it if I could get you to trade your income tax bill for a free property? Well, not free, but no down payment to you, no cash out of the bank. But the cost to you is you got to save more money than you used to save. You got to have a little bit more discipline here to have more money in reserves to cover the 500amonth that you may lose. So you were spending a thousand dollars on dumb stuff. You got to lock down. Maybe you got to work a little bit more overtime. Maybe you got to kick your business up to the next notch and earn a little bit more. But if someone said, do you want to pay taxes or do you want a house free to you? You just got to be able to make the mortgage payment on it. Would it not be in your best interest to say, I'll save a little more, I'll work a little more. I'll make a little more money to have something paid off in 30 years or less if you make extra payments to it, which now your retirement is taken care of by this property. And we don't all have to support your dusty butt on Social Security because you didn't save any money and you waited for the government to come bail you out. This is why that's in there. The government wants us buying properties, improving them, making the world a better place, giving tenants a better place to live, providing more housing for people that need it. They don't want to have to come in and provide housing themselves, because we've seen what that looks like in other countries that have adopted that communistic principle. And it's not fun.
- [30:05]
Christian Bashelder
And you just think about that, guys. There is a fully legal, not shady, not weird at all provision in the tax code where the federal government says in exchange for you buying an investment property, renovating, you know, doing whatever, offering housing to other people, we will wipe out your tax bill. Like that's in the tax code. It's there, clear as day. That's crazy, right? And to not utilize it is crazier. Right? And yes, down payments. I understand a lot of people are going to get in. How do I get a down payment? How do I do that? 100. I get it. It's harder now today ever to save money than it's been in my life. You know, I don't know how it was in the 40s, but it was probably hard then, too. But I would say objectively, it's harder now than ever to save money with the difference of the average wage versus just cost of goods. But whether it's partnering on your first deal, whether it's like David said, find a thousand bucks somewhere in your budget, whether it's working overtime, whether it's whatever, right? Just getting that first initial, whatever, 3%, 5% or 20% of a cheaper market. Right? Getting something that just allows you to get in, realize these benefits and start. Sorry. I know you guys are hearing the toy in the background.
- [31:26]
David Green
He's really excited about.
- [31:28]
Christian Bashelder
He's loving this.
- [31:28]
David Green
When I get mortgage, Mutt gets excited about things that the average dog does not.
- [31:33]
Christian Bashelder
That's right. He feeds off of me. Right? But just finishing with what my point is. It is just letting it start, Snowball. Because when you get to a point where we have so many clients where they're like, hey, Christian, I'm ready to buy this property. I don't have a down payment, but I pull up their portfolio and they own 15 properties. And I'm like, hey, bud, congratulations, you have a down payment. We're gonna go do A HELOC or a cash out on this property. Your, your real estate is going to buy you real estate. Like congratulations, you reached like the perpetual point right where you don't have to, you, you get away from that need to save because in time that it takes you to build the properties, you build enough equity where it's just there, you just go get it, you buy more and you just churn and it's, it's a crazy thing to see happen. And I have clients that I remember when we bought their first house that now we're buying their 30th. And it's cool because like they're people with normal jobs. I think of one who's literally a teacher, school teacher, just teaches. Not a crazy job, not making hundreds of thousands, but bought a cheap property, renovated it and those funds now have led to like a 15 unit portfolio.
- [32:38]
David Green
Wow. And it's like, I mean that's a great point, Christian. If you just think about how much money the average person spends on taxes every single year and you added that up over a five year period. Imagine how much money that people would have in the bank if they didn't have to pay income taxes if they could actually keep it. That a lot of people would be able to be buying real estate if they just didn't have to contribute so much of the money that they make in taxes.
- [33:01]
Christian Bashelder
100%. And that's, that's, that's the trick. And when you hear all these people who sound way smarter than they are saying I found a secret to avoid paying taxes. No they didn't. Well, there's no secret.
- [33:17]
David Green
If you don't like taxes real estate, and you do like real estate and you want to combine something you like with something you don't, I think this is a great way to go about doing it. And if you want to learn more about how you can get pre approved to buy real estate, what your options would be and how to go about this, I think you should talk to Christian. Christian, where can people get a hold of you to learn more?
- [33:36]
Christian Bashelder
Absolutely, yeah. If you're interested in any of this stuff, anything finance related. Remember guys, we do primary residence buyers too. A lot of people talk to people every day. I thought you only did investments. You're the investor guys. We'll help you buy your primary. Right. So don't forget that if you want to reach out to me, I'm on Instagram @the1 broker. Instagram's best way. If you just shoot me a dm. Otherwise if you want to find out more about our company in general. The1brokerage.com is kind of our hub and our hotspot to to get in contact as soon as possible.
- [34:03]
David Green
And if you want to get hold of me, just head to davidgreen24.com use the chat feature and be like, what's up Dave? I'm glad that you brought the mortgage but onto the show. It's the best part of my week. You can also look me up on Instagram, Facebook, x Snapchat if you want. I don't know what my name is on there, but I think at one point I had it David Green 24 and send me a DM and let me know what you thought about today's show and how much she loves seeing the mortgage mud. And because you guys are faithful listeners of the show, we are going to bring him in. Oh, look at him.
- [34:35]
Christian Bashelder
There he is with his little toy that you guys heard earlier.
- [34:39]
David Green
Christian, have you ever considered that he kind of looks a little like the luck dragon in Never Ending Story? Are you old enough to remember that movie?
- [34:46]
Christian Bashelder
I am not, but I believe you.
- [34:48]
David Green
Look it up when we're done. Let us know in the comments if you think that he looks like a brown luck dragon. And we will see you guys all next week. Stay fighting the good fight. We know it's tough out there. We love you. It's going to get better. We'll see you next week on Mortgage Monday.
- [35:19]
Christian Bashelder
Sam.