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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
- (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
Creators & Guests
What is Teaching Tax Flow: The Podcast?
Welcome to “Teaching Tax Flow: The Podcast”, the show that’s all about demystifying taxes and helping you keep more of your hard-earned income in your pocket.
Hosted by tax experts from the Teaching Tax Flow team, this unfiltered (but clean) podcast is designed to empower you with the knowledge and tools you need to confidently navigate the world of taxes. We’ll cover everything from understanding tax laws and regulations to maximizing deductions and credits.
In each episode, we’ll break down a specific tax-related topic in a clear and accessible way, providing practical tips and strategies you can use to optimize your tax situation. We’ll also answer listener questions, share the mic with amazing guests, and share real-world examples to help illustrate key concepts.
Whether you’re a freelancer, small business owner, real estate investor, or just looking to understand your taxes better, this podcast is for you. So tune in, take notes, and start building your confidence in taxes today.
Produced and hosted by Teaching Tax Flow.
www.TeachingTaxFlow.com
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 Tripolsky: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 moment and thank our episode sponsor.
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John Tripolsky:Hey, everybody, and welcome back to the Teaching Tax Flow podcast. So I know this is a topic that's come up a lot, and it's not us just saying that it comes up a lot for the sake of saying that it comes up a lot. It truly does. How in the world does real estate investing play a huge role in taxes? So, obviously, you know this guy that's gonna hop on with us, the the bald tax guy.
John Tripolsky:We say, he he has all the knowledge and no hair. Chris Pacuro, welcome back to your own show as always, buddy.
Chris Picciurro:John, you're always full of compliments. Thank you very much, and you look dapper as usual. You got your beard trimmed. You don't look like the unfrozen kid man lawyer, and I got your hair cut for our event in Michigan recently, so I'm impressed, man. It's good to be back.
John Tripolsky:We had a heat we had a heat wave coming up. I had to do something with my life. Right? So it's you know, it is. And and you know what?
John Tripolsky:Basically, I wish I could take my hair and invest it in something. So, you know, very fitting to this show. And Chris, I'll let you introduce our guest here in a moment. But again, this we hear this question so much. Even since we started this podcast.
John Tripolsky:Right? Literally almost a 100 episodes ago, I feel like this comes up at events. This comes up in random conversations. It comes up in coffee shop, chats, whatever we have. So many people are interested in this.
John Tripolsky:But, also, I'm not gonna call myself an expert by any stretch of the imagination. But I think there's a lot of, kind of mystery around this a little bit. Right? Sometimes people think it's a lot harder to get into than it is. And, again, I'll let you introduce our guest, and I know he's got a great story also.
John Tripolsky:He got
Chris Picciurro:into the world of of REI. Absolutely. I mean, real estate investing has a lot of tax advantages, but it also has a lot of financial gain. And and, and it's very favored in our tax code. Not many industries are favored in our tax code.
Chris Picciurro:And, yeah, I mean, I think that fear and not knowing how to get into it holds people back. So we don't we couldn't have a better guest. Bill Allen's joining us, a fellow Tennessean. Sorry, John. You're up in Michigan all this time of year.
Chris Picciurro:It's it's nice. But, Bill Allen is a friend, a person that I've known for quite a while, someone that I admire and look up to. And although he's extremely successful, he, in my opinion, has an amazing heart because he's willing to share his knowledge with not only adults, not only people getting started in real estate investing, not only with multimillion dollar real estate investors, but also kids and teens. And we're gonna touch on that as well. So, Bill, welcome to the Teaching Tax Flow Show.
Bill Allen:Chris, John, thanks for having me.
Chris Picciurro:Our pleasure. I mean so can you can you give us an idea of just a little bit of your history and how you got intrigued by real estate, how you got bit by that bug, and and, take us through that journey?
Bill Allen:Yeah. So I was a navy pilot. I retired. I was a a flight instructor. I flew helicopters in the fleet and then I went back as a flight instructor many times.
Bill Allen:I became a navy test pilot so I got to fly all different types of helicopters and airplanes. And, to be honest, like, along the way, I just got addicted to the TV shows. So the house filming TV shows. And when I look back at my life, it's like everything that I've just really enjoyed and and dove into really deep, I think has come from these TV shows. Like, I got into cooking when I was young.
Bill Allen:It was Emerald Live. I used to watch that show all the time. And then I just started, like, studying cooking and got, like, way better at cooking. Like, I mean, to the point where I was buying, like, cooking textbooks, like, French cookbooks, like, textbooks and studying them and wanting to go to culinary school. And then I started watching these flipping TV shows, like, I and I I had a house in Pensacola and I just took a sledgehammer to the spare bathroom in the hallway.
Bill Allen:I was still single so I didn't have, like, a wife to get upset with me that I just destroyed the bathroom. I didn't know how to put it back together. So I just it was like demo day and I, like, smashed the bathroom up in, like, 2 hours. And I was like, oh, crap. I actually I kept to figure out how to put this back together.
Bill Allen:And, and then, you know, just figured it out, watched YouTube, asked people, called my uncle who's a contractor in Maryland when I was living in Florida, and and just put it back together. Made it really pretty and I was like this is kind of fun. I'd like to do this, like, more. And so that house turned into a rental house. I went to England, got married.
Bill Allen:We got pregnant pretty quick after I got married when I got back to the US. And, just, you know, bought another rental property and then I ended up flipping a house. I made $43,000 on that flip. It was like half my salary for the year as a navy pilot. And that was like a game changer for me.
Bill Allen:So, you know, putting $43,000 into a newlyweds hands that, you know, and never made more than $100,000 a year was life changing. And so I just wanna do more of that. And so that got me into real estate. I started flipping houses, wholesaling houses. We went from doing 1 house a year to we did 67 houses the 1st year, a 135 the year after that, a 187 after that.
Bill Allen:We're doing, like, 200 houses a year for a while. And, Annette, like, the the first year I did 6 67 houses, we did almost $700,000 of revenue. I had a $150,000 tax bill. And that was the year before I met you, Chris. So $150,000 tax bill, I was like, this is insane.
Bill Allen:I I have to I I was like, I didn't have it. You know, I had to pay that money and, that's when I started learning in about multifamily, about apartments and and passive real estate investments. And, since then, I've I've been able to almost pay no taxes each year. We do have a year still, Chris, that that I got a bad k one that that got they still owe me money. I gotta figure out how to change that k one because they they they're holding about a $150,000 hostage of my money to IRS.
Bill Allen:So, that k one is messed up. It has to be changed. It will eventually be changed when I get, more time to figure out how to convince the other partner of mine to change it. And, but that that's been the game is just how do I use real estate to not pay taxes? And and legally.
Bill Allen:Like, legally, ethically not pay taxes because just like you said, the tax code is written for, business owners, real estate investors, those kind of folks. So that's kind of, I don't know, my story in a couple minutes.
Chris Picciurro:That is a and, you know, shameless plug, we do have an episode k one for dummies. No offense to anyone that listens because k ones can be confusing. That's a tax form that you receive if you're a member of an LLC, a member of a partnership or a partner of partnership, or you own a portion of an s corporation, or if you're a beneficiary of an estate, you would receive a k one. And, you know, those those can get pretty complicated, and sometimes they don't follow what was in the operating agreement, and that that gets challenging. But so you so when you flipped your first home in Pensacola, obviously, you were stationed there.
Chris Picciurro:Right? I I assume.
Bill Allen:Yeah. That so that first house was a rental property that I, like, smashed up the spare bathroom. I turned that into a rental house. And then I went to England. I came back, and I was stationed in Maryland.
Bill Allen:So the first house I ever flipped was in Southern Maryland. I bought another rental there first. I fixed that house up, rented it out. So we rent we fixed this house up. I bought a short sale.
Bill Allen:I I finished the basement. It was a 1,000 square foot basement, so I did that myself. And then I fixed up the house. I rented that out and we we while we were doing that, we rented a house in a cheaper area. So that house rented for, like, $27100 a month and we rented a house in the neighborhood for 2,000 a month.
Bill Allen:So that's what I when I lived there for a couple years, I I rented first. I found the area that everybody wanted to be. We didn't have older kids. We didn't care about the school district. We were willing to live in an area that was, like, nice but close to base, close to where I wanted to be, not have to deal with all the traffic, and all the people that had families wanted to live in this other community called Wildwood.
Bill Allen:So I bought a house there, fixed it up, I rented it out and I kept the difference. So that's kinda how, the way my brain works is very much like, you know, could Do I have to live there? Do I have I don't try to keep up with the Joneses. I tried to, you know, for 20 years I lived below my means. I saved massive amounts of money.
Bill Allen:I stacked it up in investments so that now I can live like other people can. Why why do you
Chris Picciurro:people on your team people on your team that coach and mentor people. A lot of them have military experience. My I don't know I never I don't know if I ever told you this, but my dad is a army veteran. He got drafted into Vietnam. And, yeah, and so he and when he came back, he was on the GI Bill and really was went to work at Chrysler.
Chris Picciurro:Like most of the people that grew up in Detroit, their parents were more, you know, blue collar, working working working for the big 3, although he got in eventually got into computers and stuff. But, why do you think so many people from with a military background are successful real estate investors?
Bill Allen:Well, number 1, you're kind of, like, forced into it. You have to figure it out. So we moved so much. Like, I moved 18 times in 20 years.
Chris Picciurro:Wow.
Bill Allen:So there's kinda, like, 2 sides. You either are just a renter forever or you're like, I'm gonna figure out how to use this VA loan, a lot of the tools and things that we have. I wanna buy a house. I wanna be a homeowner, but I still have to move all the time. So you're kind of, a lot of times, like, forced in as an absentee landlord in the beginning.
Bill Allen:But, what I think is I think I think I don't know that I think they're successful. You asked me why they're successful. I think they're successful because they understand problem solving and strategy in the military. And so we are and we've also been shot at. Like, we've risked our lives, most of us.
Bill Allen:And so, like, losing a little bit of money on a house, like, isn't that big of a deal when you've almost been killed a few times. So, like, the risk analysis of things, like, it's risk benefit equation all the time for the way my brain works. It's just like, what's the risk here and what's the outcome and benefit? And if I can if I can mitigate the risk and greatly, increase the benefit, then I'm gonna say yes. And so I think we just probably make decisions a little differently.
Bill Allen:And I think that goes for any anybody who's in a high risk profession. So that could be doctor, lawyer, police officer, nurse, firefighter, a military. Like, all of those people are in high risk professions from the way I look at. So they're used to doing scenario based training, simulations, things like that to try to figure out what to say yes to and no to and it's all about mitigating the risk. So a doctor obviously has somebody who's on the operating table that could die.
Bill Allen:A lawyer has somebody go to jail for the rest of their lives that they mess up. Firefighters, police officers, military nurses, pretty obvious. And so, you know, you have a computer system in your brain, I feel like, that's running in the background that helps you make decisions based on all your training from the past. So, I see a lot of, like, w two employees and folks that are just, you know, have worked a job their whole life. They're used to just kinda being, like, being in a and I'm not I don't wanna, like, label everyone, but they just the decision making is a little bit slower and their their risk tolerance is a little bit different versus somebody who is like I mean, I've had people try to crash me into the ground, fly me into the water at night, like, all kinds of stuff, you know, that has been really dangerous and scary.
Bill Allen:I've actually end up, like, crashing a helicopter in England when I was there. I wasn't flying that the other guy was flying, but I mean, it wasn't, like, horrible. We just, like, smashed the tail, broke it off. Unfortunately, he made a great landing and we walked away. But there's, you know, these are things that are you're thinking about all the time.
Bill Allen:Like, you have you lose friends and stuff. So so a decision about losing a little bit of money is not not the end of the world for me. And so but most people, it's like that house is like the biggest decision of their lives and they think, like, if they lose, you know, 50 or a $100,000, their lives over. You know? And it's not really the case.
John Tripolsky:And, Bill, that's actually a great point because I've talked So we I I know speaking personally for myself, we were at your event, in Orlando. Wow. It was last year. Already had Flip Hack live, which was awesome. And that was, to be honest, that was my first experience being in a large group setting with real estate investors and professionals just from all over the country.
John Tripolsky:And it seemed like there were so many stories on how people got into it. And then everybody it seemed like they all wanted something, you know, a little bit different out of it or how they all operate, which was great. But I can absolutely see what you're saying. Some people, you know, just thinking of some friends that we have up here in Michigan, they get so personally attached to a to a property that they almost wanna make it theirs so much that it, in a sense, cuts their legs off as far as for for utilizing it as an investment. So I'm I'm glad you brought that up too.
John Tripolsky:But one other thing too, I I know you mentioned a little bit earlier on, or Chris had brought it up. You know, talking about kids, and now you I know you have a couple events through one of your organizations really helping out the younger the younger adults and children getting into the space. And I'm super curious on this. So do you see it as, you know, kind of just coaching kids along and just kinda trying to get that mindset in a little bit earlier on is possible just with entrepreneurship and then investing. And then also a second part to that question is, how many times do you have to have a conversation with somebody that you're like, listen.
John Tripolsky:It's not as easy as you may think it is to get into real real estate investing, but it's also not as difficult over here. Right? And some people I don't think realize that it's not exactly like the TV shows. That things do not get done in 30 minutes, and, you know, you're not writing giant checks, you know, every, every 5 minutes out of that too. So kind of a 2 part, the kids and then also, also, you know, how you have to coach some of these adults around.
Bill Allen:Yeah. The TV shows are so I'll answer this real quick. TV shows are, like, staged. The numbers are totally off. Like, if you do the math, they're probably like they're probably making about 40% less than they say they're making on the show.
Bill Allen:Sometimes half of what they're making just because there's a lot of numbers that aren't baked in. But it makes for a good entertainment and gets people involved like me. As far as the kids go, we started this group called Teenage Tycoon. We just did our first, like, big kids event last week. We had 200 people there, a 100 kids and their parents.
Bill Allen:It was incredible. Like, to see what these kids are doing, the the reason why we did that and I'm so excited about is because most people come into our mastermind and coaching programs, adults in the real estate investing program called 7 Figure Flipping. They come in there because they want to change the future for their families. They want to build generational wealth, they wanna change the future for their kids, and they want their, you know, they want, like, their ceiling to be their kids' floor. That's like the the the thing that they talk about all the time.
Bill Allen:And I'm like, well why why don't we just help teach the families too? Like why are we waiting? Why do we have to wait for you to build your business for 10 years and your kids to be in their twenties to be able to, you know, give that to them. Why don't we just give it to them now? And because what I see is people in their forties, fifties that are, like, financially illiterate.
Bill Allen:Their their mindset is broken when it comes to money. They're they try to fit into the system and they didn't realize until maybe they're in their thirties, forties, or even now that they need a different type of educational model. They need to understand money. It's a like, money's not bad thing. It's just a tool.
Bill Allen:It's not good or bad, frankly. And so all of that stuff, I was like, what if we just do that young? What if we could pour into, like, you know, 6 year olds, 7 year olds, 10 year olds, 15 year olds, 20 year olds, like and do it earlier. And so we started just seeing if that there was a market for that, if they were interested in it. And last year, we did an event at my office for kids aged 5 to 18.
Bill Allen:It was just so cool to do that we wanted to start doing it at scale. And so, and and frankly, what I love is the kids, they have it. They don't like when you when you say you to do something, they just do it. They don't they don't ask questions. They don't they don't say, oh, I can't do that.
Bill Allen:Like, they don't know that they can't do stuff. So they're just like they're the best kids to coach. Like, you know, the adults are like, oh, I can't do that or I can't say that or, oh, no. Like, I tried that. It didn't work already.
Bill Allen:Or I've been thinking about doing that for years. Maybe eventually I'll do it. And the kids are just like, I bring somebody on, a speaker that talks about, like, making money on the Internet, buying stuff at yard sales, and selling it on eBay. And next thing you know, their eBay account's set up. That week, they've made, like, $300 on eBay and they're doing backflips in their living room.
Bill Allen:They're so excited. And the parent, if I told them to do it, like, a month later, they'd be like, oh, I'm still trying to figure out the perfect name for my eBay account. So I love that. Like, I really have really enjoyed, you know, teaching the kids. And it's not just the kids either.
Bill Allen:It's become like co viewing. They're doing it together. Thursday nights, they're on the couch together watching it on the big screen TV in the living room when we have these mentors come on. They're reading the books together. They're doing the book clubs together.
Bill Allen:They're watching the videos together. They're involved and engaged with their kids. And, I tell the parents, like, get the kids dressed and bring them to practice, and and then I'll take over from there. But they have a responsibility too. You can't just, like, drop your kid off.
Bill Allen:When they don't wanna come, they don't wanna go. You know what I'm talking about. You gotta get your kids dressed. You gotta get them out the door. There's plenty of time where my son doesn't wanna go to cub scouts, but when I get him to cub scouts, he does not wanna leave.
Bill Allen:He will not leave. I have to drag him out of there, and then he's crying because he has to leave his friends. And so my job is to get him dressed and get him there. And then his friends and the other kids and the other people and the coaches, mentors, they take it from there. And so there's times where as a as a parent, we just gotta get our kids dressed.
Bill Allen:We know what's best for them, and we gotta give it to them and then let the coach do their work. So that's kind of the I hope I answered your question, but they that what we're doing with the kids, what I'm really excited about, I mean, they're reading books that I didn't read until I was in my thirties. You know? And so they're reading books like Who Moved My Cheese, The Go Giver, The Millionaire Next Door, The Compound Effect. They're about to read Building a Story Brand.
Bill Allen:And so and then these authors I'm getting these authors to come in and talk to the kids afterwards. Like, Donald Miller is gonna come in and talk to the kids. Like, it's incredible. And, yeah, he won't come talk to me and my and he might now that we've become friends, but, like, you know, Russell Brunson came in and talked to the kids. He runs a $1,000,000,000 company.
Bill Allen:They do a $100,000,000 a year, and I've never been on a 1 hour Zoom call with Russell, You know? And he he did it for the kids because everybody wants to give back to these kids.
Chris Picciurro:I think that's all. I mean, you just triggered me on cub scouts. My dad wasn't into sports, but he was our pack pack leader. And, you know, I was it was probably a pain to get me ready for Cub Scouts, but I did that from from Tiger all the way to Weeblow to Arrow Light, and then I ended up going to the sports route in middle school. But some of my best memories with my dad because he really you know, like, that was more his thing, but it became my thing.
Chris Picciurro:And now I kinda feel bad that a lot of parents probably don't listen to this podcast, but if they did, you know, sorry if it was a pain in the butt to get ready. But I I I still have my cub scout uniform downstairs, and and I still remember a lot of those lessons.
Bill Allen:I'll tell you what. I I I was an Eagle Scout. My dad made me become an Eagle Scout before I turned 16, or I wasn't gonna get my driver's license until I became an Eagle scout. Because he knew when I got my driver's license, I was never gonna go. I was the I was tough.
Bill Allen:It was not easy to get me to go. It wasn't the cool or popular thing at all in school. My friends made fun of me, but he knew that one day I would look back and I'd I'd be happy that I did it. I'll tell you right now. I look back and I'm so happy that my dad did that.
Bill Allen:And I I don't even remember any of the times I went kicking and screaming. All I remember is the accomplishment that I had, what it looked like on my applications now that I could talk about it. When I go to the meetings, I'm a leader there and none none of the rest of them are Eagle Scouts. Like, they're just like, you know, it's it's really hard to get that and it's yeah. It was just you look back.
Bill Allen:Same thing with sports. The the challenge is my my kid is the coach's son. The coach's son, like, you can't be a prophet in your own town. It just doesn't work that way. So my kid is the only kid at the event last week who was like, I don't wanna go, dad.
Bill Allen:This is not cool. Like and and he's like, he doesn't wanna play the game. All the other kids are playing the game. They're loving it. And I'm like, oh my gosh.
Bill Allen:So the thing is we can teach our kids this stuff, but you need somebody else to to teach what you're teaching to give it that emphasis and that your your family and your kids are gonna listen to somebody else more than they're gonna listen to you. But they're gonna look back one day and say, thank you dad for putting me there. Thank you mom for putting me there. Thank you for bringing this person in my life. And drastically and dramatically change the direction of my future.
Bill Allen:And that's why I do what I do. Like, that's why I hope to be that person that can that can partner with the parents that want good values, want good financial literacy for their kids and themselves, frankly. Like, we're teaching the 40 year olds just as much as we're teaching the kids. And so that that's been fun.
Chris Picciurro:It's been really fun. I'm gonna steal profit in your own town because it's it's I like that one. That is
Bill Allen:true. I didn't I didn't make that up. I didn't make
John Tripolsky:that up.
Chris Picciurro:That's right. I'll steal it from someone else. Well, if we talk about the kids and teens learning, we're gonna touch on maybe some real estate investing for people that have a significant of significant amount of income or assets. But before we touch on that, what what are maybe 1 or 2 hurdles that you that that the person trying to get that first deal, that first flip, that they that you see are overcomeable. I know, obviously, financing's challenging.
Chris Picciurro:If you are a veteran, which you you there are some special, lending programs which are well deserved. But what are 1 or 2 hurdles to get that first deal, and and is it is it hard are you seeing it's hard for people to take the mentality that, look. I might do my first flip, and I might actually break even, but I'm gonna learn a a ton. And that's gonna be payment enough.
Bill Allen:Yeah. There's there's really, like, 2 2 paths that I see. So a lot of people think there there's an active path and a passive path in real estate. And so I think you need to really be committed if you're gonna be a flipper or you're gonna be a wholesaler or you're gonna be the one that buys the apartments and fixes them up or somebody that has rental property, is that's a very active side of real estate. And and accept the fact that you're you're grabbing yourself another job for a while, while you build that active income.
Bill Allen:And that was me. I was trading my time for money in the beginning. I was understanding it. I was learning it, and I was in on the active side. There's a whole another side that's just passive side.
Bill Allen:Like you said, if you're a high incomer, high net worth person that has money, now you can buy passive income through an apartment investment, a loan to somebody, things like that, where you can actually just, like, buy the cash flow. So those are the 2 paths. I usually tell people, like, if you love your job, if you make a bunch of money, and your time would produce more results inside of your business than it would going to learn real estate on the side, then put it into your business, produce more money, and then go invest it passively. So that's what I I like, I don't know everything about multifamily apartment investment. My partners are very good at operating the buildings, running the numbers, managing the property manager, managing everything.
Bill Allen:I'm very good at making money and putting it in the apartments. Right? So my job is to make more active income and spend my time doing that than going to learn every single thing about the details about the underwriting of the apartment. So those are the two areas that I would point people. Now, if you wanna go the active route, just understand it takes some time and but it's a skill set that nobody could ever take from you for the rest of your life.
Bill Allen:Like, you'll understand real estate, and I, like, I love that asset class. Like, it's a total cheat code when I wanna go buy my own personal house. People call me all the time asking me about their house. I just looked at a contract for the friend, a friend of mine that was selling his house, and he was like, this looks fishy. And I was like, it is.
Bill Allen:Don't take that contract. The the real estate agent didn't know. The attorney wasn't sure. Like, I was like, I've seen this before. I I wouldn't I did a bunch of research on the buyer.
Bill Allen:Like, bad deal. And so it's something that you can use in lots of different areas of your life. So what I would say is if edge if real estate's interesting to you, go become an expert at it. Like, figure out how to become an expert. And the way you do it is by doing it and skinning your knee or by, you know, finding somebody else that will mentor you and help you along the way.
Bill Allen:But even with the mentor, you're still gonna skin your knee. It's just not gonna hurt as
Chris Picciurro:bad. But I would say if you're if you're someone that's getting involved in the active side of things, there are definitely some tax advantages that you can offset. You know, there are rules. There's there's rep status, short term rental loophole, material participation, and those are all in we we talk about those in our podcast and not promote our teaching tax for educational library, but that's that's all in there. But but to remember, if you're active, if it's your primary work that you're doing, there are a ton of tax advantages where you can you can offset other income, may either your own or your spouse, in the current year so that you could you could accelerate some of the deductions through that, if you do what's called the cost segregation study and offset that other income.
Chris Picciurro:So the point is in act if you're that active person, if you built just think about it like this. If you're constantly building your real estate portfolio, you're not gonna pay much in tax. That's the that's the best way to think about it. Now if you're passive, you might not enjoy you might not be able to offset some of your other income, but I would argue that passive investing could be very beneficial. You know, a lot of times someone will come in and then wanna flip it to Bill, kinda how how a deal would work.
Chris Picciurro:But let's say you have someone that wants to invest in a in a in an apartment complex. They they have a $1,000. They're some what's called an accredited investor, so they're they're at a good amount of income or have a $1,000,000 worth of net assets minus their their primary home, and they wanna put a $100,000 and get what we call mailbox money. Well, they might not be able to offset their w two wages with some of the depreciation deduction, but guess what? They're getting mailbox money.
Chris Picciurro:And if you have a significant amount of income, you're probably paying a 35% tax. So if you can get an 8% I'm just making numbers. An 8% return tax free, right, you would have to make 11, 12% somewhere else and potentially have to manage it. So there's a lot of that is a nice advantage of being a passive investor. Having tax free income could be just as powerful as offsetting taxable income somewhere else.
Bill Allen:Yeah. Totally agree. I think a lot of people like, and just some people, like, oh, I can't take advantage of the tax benefit as a real estate professional, so I'm not going to invest in this. It what I love about apartments is it's it's as close to a 100% passive as I've ever found. The key is finding the right partner, finding the right, person who's syndicating and running the deal.
Bill Allen:You wanna know who's gonna run that project for the next 5 to 30 years. Right? Depending on what the timeline is on the on the project. That's the key. Everybody can make a deal look really good on paper, but when the rubber hits the road, you wanna invest with people who you know are in the trenches doing the right thing because they're making the decisions with your money and everybody else's money.
Bill Allen:So, but I mean you got you get cash flow and you get net worth growth. So for any investment I look at 3 things, cash flow, net worth growth, and tax benefit. And so even if you can't use the tax benefit from a syndication or apartment building investment, you're still getting the cash flow and you're getting the net worth growth. So it's like when you look at the stock market, if the stock has dividends and it's gonna grow and the tax benefits are usually like short term or long term capital. So the long term capital gains are taxed better.
Bill Allen:Right? And so apartments, same thing. Just because you can't use the tax benefit doesn't mean it's not a great investment. It's a 100% passive and usually we're seeing returns upwards of 16, 17% plus average annual return. And so we actually haven't produced less than 24% in the last 3 years average annual return.
Bill Allen:And, we're selling a building right now that was, like, one one of the ones that wasn't performing that well. It's probably gonna see somewhere between 13 to 15% then in 1 year. So and and that's those are not, like, indicative of future returns. Everything has risk. Right?
Bill Allen:But, like, it's a great asset class. Like, everybody's gotta live somewhere. There's no housing. We're a rent becoming a renter nation. So these apartments are great opportunities for you to, stack cash, and it's also a great inflation hedge.
Bill Allen:So the key, I think, is is to understand it and get to know it a little bit so so you know where you're putting your money and and what it can do for you. But yeah. It's hard for me to say no to apartments. I'd put all my I'd put all my money in there. That's where all my
Chris Picciurro:money I mean, on the passive side, here's if you're listening to this, here's the way you gotta think about this. Imagine that you your favorite dessert. I mean, mine's chocolate bumpy cake from a place Saunders in Detroit. But imagine your favorite dessert. Imagine that by eating it, you're not gonna lose any weight, but you can eat as much as you want of it and not gain a pound.
Chris Picciurro:That's what passive investing is. You right? Because you're getting the delayed tax, but you're getting the income. And because of the what we call the depreciation deduction, you might you might get a big loss. You might get a big deduction the 1st year you enter into an apartment syndication.
Chris Picciurro:Just because you can't use that loss the 1st year, it carries forward in the future to offset income. So tax free income and growth, especially for people at a high marginal tax rate, is very, very powerful. So, yeah, if you could eat your favorite dessert and not gain any weight, you're gonna be happy. And so if you get cash
Bill Allen:I'm gonna steal that one. You can have the problem in your mouth. Else again.
Chris Picciurro:Well, hey. Hey. You know, apartment investing is I look at it as passive investing is kinda like lifting weights and and active investing is kinda like cardio. You get that immediate result if you're active, but you gotta have both. I really think both are are good.
Bill Allen:And And I do. Like, I take I take all the money that I make in real estate and coaching and education and all the different places, and I dump it all in apartments. Like, I just put $200,000 in our last deal. We just closed 355 units last Friday again. So 2.90 before that, 355.
Bill Allen:And, you know, I put as much money as I possibly can in these things. I mean, you know, you do my taxes, so you see my k one.
Chris Picciurro:And I and I've seen people that you've worked with come in as a passive investor into into a syndication, do a couple, and then and then actually get interested in it and start doing other things too because now they're comfortable with it too. They might go they might have that confidence or they might to go or they could have that that they have that stable amount of income there and they might take a risk somewhere else. And so, yeah, there there's a lot of benefits to real estate investing all the way from, you know, if you're an accredited investor and you're looking at the syndication or or or maybe like you said, Bill, you you can you can invest. We have some other, content. You know, sometimes you run into people that have a lot of money in their in their 401 k or an old IRA.
Chris Picciurro:You could you could it's times you roll it into a self directed account and use that to invest in. Oh, investments like no they got lending and and some syndications will accept that money. So where would someone go, like, if someone's more, you know, interested in learning a little bit more about where they fit in between active and passive? I know you've got a ton of resources and a a very popular YouTube channel I've seen too, so correct them. Yeah.
Bill Allen:Yeah. It's mostly my YouTube channel is mostly aviation stuff and and money and and we we do interviews in the cockpit. My my name, Bill Allen. You can check it out on YouTube and Instagram. It's at billallenrei.
Bill Allen:You can just send me a message on on there or, we have a, I always am raising money. So, like, I have a portal that you can go check out. It talks, like, the webinars are in there. Everything's in there. Any deal that we've done in the past and current, you can go check it out.
Bill Allen:It's 7figuremultifamily.investnext.com. So it's the number 7. So 7figuremultifamily.investnext.com. That's a great place to go just, you know, check it out. And and even if you're like, I'm not ready to invest.
Bill Allen:I just wanna understand what some of these apartments look like. You can go in there and look at the PDF, watch the webinar, watch the call that we do, and, you know, spend 40 minutes hearing other people's questions and understanding a little bit more about who we are and what we do. So, I would love, you know, if you're an accredited investor, even if you're not accredited, jump in there, get to know us a little bit, and and see, like, if we or you don't even understand what that is. Like, you can schedule a call with us in there and and talk through it. Like I said, you gotta pick your partner right.
Bill Allen:You gotta pick the person that has your values. They they have integrity, somebody you wanna work with, and and get to know them. So the best thing you could do is watch a webinar with us and say, yeah. Those 3 guys are people that I wanna work with. Chad, Bill, and Jason are people that I feel like I could work with.
Bill Allen:And that's the most important part. I'll tell you that right now.
Chris Picciurro:And, yeah, I mean, my business partner and I have invested in syndication as well. And then, you know, we've realized that there's some things I like to do active, but for the most part, I like passive. And I and I'll Bill, like you said, I'm much better off doing what I do and and working and spending time with you know, my kids are in that season now that they my time's ticking on them. Right? You know, they're 15, 14, and 11, and I I I'm I started a family a little later than other people.
Chris Picciurro:I was in my, you know, 30, 31, or my early thirties and when it started. And now, you know, I it's so fun to to hang out with them. So absolutely. Well, I I have 5 questions. You know, Journey t, I I used to do this.
Chris Picciurro:Every episode, we had to guess, and for I don't know what happened, why I went away from it. But we're gonna go 5 I don't know.
John Tripolsky:Maybe maybe you scared them off too much. I don't know. Bill, I'd be a little I'd be a little afraid because I don't even a, I don't remember what his questions were. B, I don't know if he tweaked the darn things. So he might well, you know, like you like you mentioned, you're used to getting shot at a little bit.
John Tripolsky:So I just
Bill Allen:I think it'll be fine. You'll be good. The couple questions on the podcast will be alright.
Chris Picciurro:Alright. I'll start we'll start with the easy an easy one. What's one fun fact about yourself that people wouldn't know if they went to your YouTube channel or checked out on Facebook or LinkedIn?
Bill Allen:When I was a kid, I used to love to break dance. Oh, little little was it Alfonso Ribeiro or whatever?
Chris Picciurro:What was that dude that he he he was did all the break dancing and those
Bill Allen:I'm not that old Chris.
Chris Picciurro:Oh, I know. I'm sorry. I am no boom box. No booming system. Well said.
Chris Picciurro:What is your favorite cereal?
Bill Allen:Cinnamon toast crunch. Interesting. That was my sister's. I still eat it. I think I had a bowl 2 nights ago.
Chris Picciurro:I'm a big cereal fan. It's my like, if I'm just lazy and I need a need a bowl of cereal.
Bill Allen:Close second would be Cookie Crisp. I could keep going. I like all the sugary cereals because I wasn't allowed to eat them when I was.
Chris Picciurro:Oh, Golden Graham's for me. Yeah. We had Rice Krispies. Golden Graham's, I love cookie cookie crisp is had used to have baseball cards in it back in the day. You're now this is tough for you.
Chris Picciurro:I mean, obviously and and when people get to know you, you're very modest guy. I know you you travel. You get to vacation a lot. You you have a airplane that you can utilize, for work. But what's your favorite vacation destination?
Chris Picciurro:Yours might be
Bill Allen:The Maldives. It's in the Indian Ocean. It's a island chain in the Indian Ocean. It's Maldives incredible. I've been there twice.
Bill Allen:Absolutely in unbelievable. Like, I love to sit on the beach and snorkel and see the fish. Like, it's my favorite.
Chris Picciurro:I like it. 2 more. Ideal weekend?
Bill Allen:Beach somewhere. Okay. Beach or or offshore fishing. Like, Like, I wanna be doing something like that. So yeah.
Bill Allen:If I just wanna relax, I wanna be on the beach. And I I I just booked my trip to Ocean City, Maryland. We've been going there every year. I grew up, just on that beach when I was a kid, and I'm so excited about it. Like, I cannot wait to go.
Bill Allen:We almost didn't go this year because we're going on Disney cruise in a couple weeks. And I said, we have to do it. So we're doing it the week right before school starts. So I just booked it. Didn't look back.
Bill Allen:I'd be on the beach somewhere like surfing, weight, skimboarding, bodyboarding, playing beach volleyball, pickleball, whatever. But I I need to have sand and saltwater.
Chris Picciurro:John, you know we couldn't have an episode without mentioning pickleball. This might be the first one. I didn't mention it.
John Tripolsky:I was I was just about to say this this one actually goes down in history. Like, I feel like brought
Bill Allen:it up because you guys talked about it before the show. If you didn't bring it up, I wouldn't have said
John Tripolsky:I we're gonna we're gonna mail you a little trophy. I don't know what it's gonna look like. It's probably just gonna be paper mache, but, yes, I'm very shocked. I'm surprised that Chris hasn't brought it up, you know, 2 or 3 times. We should do, like, the teaching tax flow drinking game with pickleball.
John Tripolsky:And then by the time we get to the end of it, everybody will just be so hammered. They won't even know what we're talking about. Give us 5 stars.
Chris Picciurro:I I like it.
Bill Allen:You should give 5 stars. So if you're listening to this right now, just leave a 5 star review, especially for this show instead of telling us your favorite one. Bill is your favorite.
Chris Picciurro:I love it. I love it. And and, you know, you never know. You could could end up in a blind pickleball place. Final question.
Chris Picciurro:If you could have dinner with 1 person, this person could be alive or deceased, who would it be?
Bill Allen:Alive or deceased? Can I pick Jesus?
Chris Picciurro:Actually, that's who I picked. When someone someone asked me that on a podcast, so I stole it. Yep.
Bill Allen:Okay. So most people say I can't pick that. If I couldn't pick that, it would probably be, like, George Washington or or Martin Luther King Junior. Somebody like just massively instrumental in history. No.
Bill Allen:I those those they're all great. I just found a way to say 3. That's alright.
Chris Picciurro:I'm I'm sure that I'll get along. They all have they're all leaders in their own way.
John Tripolsky:Awesome, you guys. Awesome. Well, I hate to cut this one short, but I know we can talk on this topic absolutely forever. And, Bill, I got a a million questions. I think every time I see you now, I'll, you know, just start chipping away at them.
John Tripolsky:But, again, I you know, the first time I ever seen you speak or really been around your audience was at, you know, Flip Pack Live, which, I mean, that was a fantastic event. I I I don't know how many hundreds of people you had there, or maybe pushing a 1,000. The place was packed, but great event.
Bill Allen:I think, yeah, I think we had, like, 1100 people that year that you guys were there. Yeah.
John Tripolsky:Dude, that was that was awesome. And, again, it's I think the biggest thing that I took away from that, again, not not being in the tax world every single day and not being in the real estate investing world every single day, is just the different types of people that are in it. So I think I mean, not that I ever give any advice to anybody, but this is, again, coming from somebody in the middle. There's almost no reason why you can't get into that space. Right?
John Tripolsky:Is that Bill, would you agree with that? I mean, obviously, unless you got something else going on.
Chris Picciurro:But
Bill Allen:I I totally agree. I totally agree. Real estate does not discriminate. So, like, it doesn't matter what your background is. It doesn't matter the color of your skin.
Bill Allen:It doesn't matter if you're a man or a woman. None of it matters. Like, you can get into it for sure. It's possible. It doesn't matter if you're homeless.
Bill Allen:Like, I there's a 20 year old kid that's making $700,000 net profit in my community right now and we've got a, like, 75 year old no. 82 year old woman who's making, like, 4 or $500,000 a year in real estate. So, like, it does not matter. It does not discriminate. You can get into it.
Bill Allen:You just have to have the right mindset, the right path, the right mentor, the right people, the right influence. And and a little bit of skill set and a lot of kind of, like, grit and determination in the beginning. You can do it. For sure. It's not easy, but it's simple.
Bill Allen:That's the best way to close
John Tripolsky:it out. So again, thank you thank you for taking the time to join us. Chris, I guess thank you too. You know, I don't tell you thank you for joining your own show, but, you know, thanks, pal. My pleasure's on.
John Tripolsky:Alright, gentlemen. Well, get thank thank you so much for joining us, everybody, here on the Teaching Tax Full podcast. We're gonna go ahead and wrap this one up, and we will see you back here same time, but different day and a different topic here on the show. Hey, everyone, and thanks for hanging out with us here on the Teaching Tax Full podcast. As I mentioned, thank you, Chris.
John Tripolsky:Thank you, Bill, for taking the time to discuss this topic with us. I know a lot of people in the community have been asking about this directly, indirectly, just to have questions, conversationally. So we're glad to do this. This is a great one. Couldn't think of anybody better than Bill Allen to join us and discuss this topic on real estate investing.
John Tripolsky:As Bill had mentioned, he's got his hands into a lot of stuff, very successful in this world as obviously as everybody else knows too, Chris being the tax guy, especially in the real estate world, it's great to get these 2 gentlemen together. We won't call it hash it out by a stretch of imaginations because seems sounds like they believe in both the same stuff, which makes the conversations a lot easier to have. So I do wanna highlight a few things here that Bill had mentioned and we started to talk about a bit is really the barriers that you may think exist when it comes to real estate investing probably don't exist. And really, you might just be in your own way, frankly, frankly put in regards to that. So definitely connect with Bill and his team.
John Tripolsky:Any questions on that topic or anything on those topics, I should say, they are a fantastic source of information as well as teaching tax flow. As always, anything on the tax side, we are here to assist with. So as always, don't get in your own way. Let us know how we can help. See everybody very soon.
Disclaimer:Investment advisory services are offered through Cabin Advisors, a registered investment adviser. Securities are offered through Cabin Securities, a registered broker dealer. The content of this podcast does not constitute an offer of securities. Offerings can only be made through an offering memorandum, and you should carefully examine the risk factors and other information contained in the memorandum.