When investing for your retirement, having real synergy at work for retirement income is a real turbo charger.

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Transcript:   Today we’re going to talk about what really is the concept of synergy as it relates to real estate investing. First of all, let’s start out with I’m with you, synergy is a marketing term that has come to mean almost nothing, and have no value whatsoever. It’s the most over used and abused concept there is in marketing today. I’m with you on that. We’re on the same page. However, my test is pretty down and dirty. It must do 1 of 2 things if not both, or it’s not synergy. It either gets you to retirement more quickly, or it gets you to retirement with more retirement income. Hopefully it does both, but if one or those 2 rules aren’t met, you did not use synergy, you used a marketing term. Let’s use an example. All synergy is in my world is to be able to use more than 1 strategy at a time. Sometimes we use 3 or 4 at a time. Yeah, first of all, the buy and hold real estate investment strategy. Doesn’t mean you buy and hold forever. It means you’re not buying low to sell high immediately like a flipper might. The second strategy you might involve is a particular type of depreciation if you’re a high incomer, or $150,000 a year household income or more, or your might bring in cost segregation as a depreciation strategy. I’ll bring these together when I’m done. In order to make the long term investment and cost segregation strategies work even better, you might bring in discounted notes as a long term strategy. Even that as a standalone strategy will do 2 things, both short and long term. Short term it brings in cashflow now, and it will continue to. Long term you make profits because you’re buying these notes at a discount while at the same time you have more income per month coming in after tax then you would have had you not bought those notes, and this is income you don’t need to live on, so it’s like cashflow from real estate, you get to use the income from the notes like the real estate to advance your retirement plan. Let’s take the strategy of buy and hold, cost segregation, and discount note investment to see how that can enhance and maybe push your retirement date much earlier. You buy a couple of pieces of real estate, and let’s say those pieces of real estate costs you $80,000 for down and closing a piece. You paid maybe $300,000 give or take for them. What you do is your use cost segregation, because you guys make a couple hundred thousand a year, and that means the IRS does not allow you to take any left over depreciation from your properties after sheltering the properties cashflow against your ordinary income. You might have, in this scenario, a $5,000 a year annual cashflow per each of these 2 properties, and each of these 2 properties in cost segregation might have a $20,000 a year depreciation dollar figure. You would have $15,000 left over per property per year. $20,000 depreciation, minus $5,000 a year cashflow. That $15,000 per property, should be according to normal thinking, be able to be used against your ordinary income, but since the tax code says you make too much money, it must simply go onto the shelf and gather dust until you no longer own those properties. Let’s turn lemons into lemonade. You buy those properties knowing that you’re going to use cost segregation as a second strategy to your buy and hold approach. Each year both of those properties combine to generate a total of $30,000 of useless, unused depreciation. Well that goes on for say 5 years, and 5 years you’ve now stockpiled $150,000 of unused depreciation, and you say, “Why on earth would I do that on purpose?