Financial Independence: A Better Perspective

Financial Independence: A Better Perspective is a new podcast hosted by Lance Edwards, bestselling author of “How To Make Big Money in Small Apartments,” and Randy Luebke, Founder of Lifetime Paradigm, Inc., an organization dedicated to helping clients to and through their retirement by fixing broken retirement plans, putting them back on track and making up for both lost time and insufficient savings. In this episode, Lance and Randy discuss how budding real estate investors can overcome one of their primary fears: Where to find the funds they need. They talk about the various ways to raise capital and the importance of seller financing.

Financial Independence: A Better Perspective is a new podcast hosted by Lance Edwards, bestselling author of “How To Make Big Money in Small Apartments,” and Randy Luebke, Founder of Lifetime Paradigm, Inc., an organization dedicated to helping clients to and through their retirement by fixing broken retirement plans, putting them back on track and making up for both lost time and insufficient savings. In this episode, Lance and Randy talk about a perfect topic for a new year – mindset and what it takes to overcome doubts and procrastination and get started on achieving your long-range goals. They tailor the discussion towards taking steps in the right direction to help start a career as real estate investor or entrepreneur.

Financial Independence: A Better Perspective is a new podcast hosted by Lance Edwards, bestselling author of “How To Make Big Money in Small Apartments,” and Randy Luebke, Founder of Lifetime Paradigm, Inc., an organization dedicated to helping clients to and through their retirement by fixing broken retirement plans, putting them back on track and making up for both lost time and insufficient savings. In this episode, Lance and Randy discuss the difference between bad debt and good debt – and how to use good debt prudently to make savvy investments that can pay dividends by producing income, leverage and appreciation in value.

Financial Independence: A Better Perspective is a new podcast hosted by Lance Edwards, bestselling author of “How To Make Big Money in Small Apartments,” and Randy Luebke, Founder of Lifetime Paradigm, Inc., an organization dedicated to helping clients to and through their retirement by fixing broken retirement plans, putting them back on track and making up for both lost time and insufficient savings. In this episode, Lance and Randy discuss year end tax savings strategies and the importance of being prepared with them months before you hit your tax preparer’s office. They also touch on health care deductions and the wisdom of such win-win strategies as having your children work for your business.

Financial Independence: A Better Perspective is a new podcast hosted by Lance Edwards, bestselling author of “How To Make Big Money in Small Apartments,” and Randy Luebke, Founder of Lifetime Paradigm, Inc., an organization dedicated to helping clients to and through their retirement by fixing broken retirement plans, putting them back on track and making up for both lost time and insufficient savings. In this episode, Lance and Randy do a deep dive into the math behind the tax saving logic and advantages of having a Roth IRA, which they call “the granddaddy of IRAs.” They also discuss related issues like the Roth 401(k) and the “back door Roth.”

Financial Independence: A Better Perspective is a new podcast hosted by Lance Edwards, bestselling author of “How To Make Big Money in Small Apartments,” and Randy Luebke, Founder of Lifetime Paradigm, Inc., an organization dedicated to helping clients to and through their retirement by fixing broken retirement plans, putting them back on track and making up for both lost time and insufficient savings. In this episode, Lance and Randy discuss what Lance calls “the three buckets,” or choices an investor can make – active, semi-active or passive – and how to find deals in any of those categories.  

Financial Independence: A Better Perspective is a new podcast hosted by Lance Edwards, bestselling author of “How To Make Big Money in Small Apartments,” and Randy Luebke, Founder of Lifetime Paradigm, Inc., an organization dedicated to helping clients to and through their retirement by fixing broken retirement plans, putting them back on track and making up for both lost time and insufficient savings. In this episode, Lance and Randy recap some of the ideas presented in their previous podcast about Cost Segregation while going into more detail about how to benefit from the CARES Act. As we enter the fourth quarter of 2020, they also discuss practical strategies for year end planning and reducing our annual tax bill.

What you’ll learn in this episode:

*September 15, the day the episode was aired, was, as Randy says, “the day many small business owners got slapped in the face by the IRS because they. . .didn’t do tax planning from the year before.”

*Speaking of late business tax return filings, Randy says owners can make a contribution to an IRA to create a deduction. If you’re self-employed and have no other employees, you can do a SEP.

*Prompted by Lance to list a “pecking order of tools,” Randy says a good basic strategy is to “write all the checks you can, spend all the things you need to spend your money on before the end of the year – and you’re gonna push off receiving your income until the year after.” He suggests you prepay whatever you’re allowed to, including insurance premiums and a new vehicle if you need one. He adds, “Get that money spent in 2020 to create all the expenses you can to reduce your capital, cash flow or your income, and then push all that capital and future income out into 2021.”

*While saying every individual should ask specifics from their CPA, Randy estimates that you can prepay office rent for one or two months to claim it for the future. “You wouldn’t be able to deduct it,” he says. “The idea is to be able to claim the deduction when you write the check.”

*The CARES act, passed in March, allows those who create a net operating loss this year to go back to previous years where they paid taxes and apply that loss towards that income and get the IRS to write a check back to you. Lance confirms, “Whatever your net operating loss is for this year, you can apply it against when you have positive gains up to five years back and get that back at whatever tax rate you were paying.” Randy adds, “You have until you file your tax returns next year to take a cost segregation study from this year and reduce your taxes next year. You have a year on this cost segregation to take advantage of the deductions for 2020.”

*Whether you’re a self-employed one-person shop or one with mom, pop and kids, simple things like 401(k)s and SEPs can work to your advantage. The idea is to be able to take pretax dollars and put them into one of these retirement plans to create a tax deduction – and then defer the earnings on those investments over time and pay taxes on them in the future.

Financial Independence: A Better Perspective is a new podcast hosted by Lance Edwards, bestselling author of “How To Make Big Money in Small Apartments,” and Randy Luebke, Founder of Lifetime Paradigm, Inc., an organization dedicated to helping clients to and through their retirement by fixing broken retirement plans, putting them back on track and making up for both lost time and insufficient savings. In this episode, Lance and Randy interview Todd Strumpfer, Senior Account Executive with Cost Segregation Services. An expert with over ten years of experience, Todd discusses Cost Segregation and how it connects and builds upon standard depreciation. The three also discuss how the CARE Acts plays into it during this time of COVID-19.

What you’ll learn in this episode:

*Cost segregation got its start in the late 90’s. Opening the door to its general use were cases brought by several businesses arguing that parts of their properties wore out fast than 39 years for commercial properties and 27 ½ years for residential rental properties (arbitrary chosen figures). Since Todd started I the business a decade ago, more and more CPAs and tax professionals are recommending it to clients. Jim Shrever, the Founder of Cost Segregation Services, was a pioneer in figuring out how to make this work to the advantage of smaller building owners.

*The IRS allows for depreciation as buildings and inside assets like carpet wear out. If you don’t do cost segregation, you’re doing straight line depreciation. Because of the court cases, the IRS has allowed for building owners to depreciate different items that are part of the property more rapidly.

*A cost segregation study involves going in and getting photos of the property, doing a walkthrough, gathering appraisals and different information. Working with analysts, they do what’s called an engineering-based cost segregation, which is different from accounting based. Engineering based analysis goes deep, with up to 70 building components being analyzed to depreciate a building more rapidly.

*Todd’s company works with a client’s tax professional to apply the results to their tax returns. They have a depreciation schedule going forward that includes much more than land and improvements or land and building. Every component is broken into their correct appreciable life. “They don’t get more depreciation expense, they just get it a lot sooner,” he says. “It’s a non-cash expense.”

Financial Independence: A Better Perspective is a new podcast hosted by Lance Edwards, bestselling author of “How To Make Big Money in Small Apartments,” and Randy Luebke, Founder of Lifetime Paradigm, Inc., an organization dedicated to helping clients to and through their retirement by fixing broken retirement plans, putting them back on track and making up for both lost time and insufficient savings. In this episode, Lance and Randy have a lively exchange about self-directing retirement options. In their view, a retirement account is like a shoebox with multiple investments you can choose and manage yourself – but there are three exceptions. They discuss the value of having a third- party custodian and the advantages of setting up an LLC to direct investments.

What you’ll learn in this episode:

*If you try to talk about self-directing to typical stockbrokers at large firms like Merrill Lynch or Raymond James, they will generally try to sell you their products versus you being able to tell them what you want to invest in.

*In Randy’s view, a retirement account is like a shoebox. Whether it’s a 401(k), SEP or IRA, it has a set of rules dictated by the IRS. But inside that box, you can put almost anything you want, including stocks, bonds, mutual funds, Bitcoin and notes. He mentions three exceptions to this. In general, true self direction means choosing and managing your own investments.

*Lance saysthat his broker at a major house told him he could not use his self-directed IRA to invest in real estate – when he knew he could. The problem was this broker had no real estate to sell him. Randy says most likely if you ask your stockbroker about real estate investing, they’ll suggest a REIT: a Real Estate Investment Trust.

*Randy refers to Tony Robbins’ book Unshakeable and mentions the fact that out of some 300,000 licensed investment advisors in the U.S., only one percent of those are independent Investment Advisor Representatives (IAR). The others can only sell you products their licenses and firms allow them to. They work inside a system that precludes them from giving the “kind of advice these folks are really looking for.”

*Randy mentions the three limitations on the “shoebox” investments. You cannot own collectibles inside a retirement plan, or shares of an S corporation or life insurance. You can own shares of a C corporation, partnerships and LLCs, but not S corps. Some broker dealers will use these and say “things are complicated” to dissuade clients from self-directing.

*Lance and Randy discuss the concept of self-dealing, using the example of a rental property to illustrate. If your IRA or retirement plan owns the property, you can’t use it yourself. But if your IRA buys a rental property and you hire a management company to manage it, that’s an allowable transaction. Adding potential value to it by managing it yourself could get you in trouble. Prohibited self-dealing transactions are any that give you direct benefit or usage.

*Because banks can only sell you the financial products they have for sale, Randy suggests getting the shoebox out of the bank and move it to a third-party custodian that allows for self-directed investments. The custodian’s role is “holding your shoebox.” You’re still making all the decisions as to what that money will be used for.

*Once you find the custodian and pay an upfront fee, you transfer your money from your old bank to the new bank and you can start seeking investments – real estate, gold, silver, etc. If you don’t start using the money to invest, you may have accomplished little while increasing your fees. Randy suggests buying interest in a Delaware Statutory Trust or TIC, because it’s basically a piece of real estate with tenants that is already being managed.

*Lance agrees on the importance of finding “something simple and just put the money to work rather than pay fees to the custodial company and making zero percent.” Once you get your investment set up, you should open a self-directed account immediately.

*Randy discusses the options that exist with an LLC. If you use your IRA for the down payment, closing costs, signing the purchase agreement and distributing the money to the escrow company, the custodian is going to charge you a fee. If you have a lot of activity, the fees add up, including every time you pay your property taxes and insurance. A better option is, instead of having your IRA buy that rental property, buy it with your LLC and your IRA will own your LLC. Randy calls that “checkbook control.”

*The LLC you form has no value at first, but after you have your IRA purchase your LLC, it has all that capital. You don’t own the LLC, your IRA does. Then your LLC is going to buy the property and do the transactions. Everything comes and goes through your LLC checking account (rent deposits in, property taxes out). There’s no third party paying its expenses. It takes a little money to set up the LLC but it’s worth it for the freedom and overall savings it provides. Lance points out that you cannot write yourself a check out of that “checkbook LLC.” That is a prohibited transaction.

Resources:

www.LifetimeParadigm.com (Randy’s website which has info on self-direction and many other topics)

www.LanceEdwards.com

www.FIBetter.com

Financial Independence: A Better Perspective is a new podcast hosted by Lance Edwards, bestselling author of “How To Make Big Money in Small Apartments,” and Randy Luebke, Founder of Lifetime Paradigm, Inc., an organization dedicated to helping clients to and through their retirement by fixing broken retirement plans, putting them back on track and making up for both lost time and insufficient savings. In this episode, Lance and Randy discuss the need to protect your estate plan so that those you designate to inherit your assets when you pass away can get them in an efficient manner. Included among their topics is the importance of “beneficiary designation” and the importance of keeping your beneficiaries up to date as life circumstances evolve.