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Cost Segregation on Single Family Rentals w/ Joe Viery · Real Estate Investing with RealDealCrew

• 0:00
  If you own a $400,000 rental and nobody has ever told you about cost segregation,
• 0:04
  that is not an accident. Your accountant probably doesn't know it can be done
• 0:10
  on a house that small. Joe Viri has been running these studies since 2007
• 0:17
  and has done them in all 50 states.
• 0:19
  You'll learn what a single family study actually costs.
• 0:23
  how far back you can reach on a property you already own
• 0:26
  And the one rule Joe uses to tell people not to hire him.
• 0:30
  build the system side of your real estate business by heading over to realdealcru.
• 0:35
  Let's get started.
• 0:41
  Joe Viri joins me here today, and you can learn what he can help you with
• 0:45
  by heading over to U S T A G I dot com.
• 0:49
  I'm gonna have that as a clickable link in the show notes.
• 0:52
  We're gonna be talking about the ik exciting world of cost segregation
• 0:57
  and everything associated with that.
• 0:59
  I really appreciate your time here today,
• 1:01
  Joe.
• 1:03
  Well thank you for having me, Jack.
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  I don't know if this is gonna be exciting,
• 1:06
  but it's gonna be well worth the time for anybody who is involved in real estate.
• 1:11
  Well, i i it is kind of exciting because I mean we got kind of a limited time
• 1:15
  or opportunity here, right? Like cost segregation is kind of a hot topic,
• 1:19
  especially because of some of the things that are going on.
• 1:22
  You know, there's some tax incentives right now that people can take advantage of.
• 1:27
  But let's let's go back to two thousand seven.
• 1:29
  What pulled you into this exciting world versus just general tax prep
• 1:35
  and real estate type stuff?
• 1:37
  Well, to give you an idea of who I am,
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  basically in college I started my own business.
• 1:41
  It was not having anything to do with real estate or or or investing or taxes.
• 1:46
  It was in travel. So I worked in the travel,
• 1:48
  I owned my own travel company,
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  not a r travel agency. I did I did special interest trip tours for doctors,
• 1:55
  lawyers, and Indian chiefs. And then in the year 2000,
• 1:57
  that that that industry changed rapidly.
• 2:00
  And in the year 2000, I said, you know,
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  I'm gonna sell the business and I went down the road since I
• 2:05
  was a business management major.
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  I I wanted to get to into something like finance,
• 2:10
  business, investing, and I worked for the California Association
• 2:13
  of Realtors starting in 2000. And for car I helped their members
• 2:19
  and their members' clients with tax problems.
• 2:21
  Like avoiding back in those days,
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  it was avoiding capital gains taxed.
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  And then we all know what happened in 2000 seven and eight.
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  The car that was on the cliff fell off the cliff,
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  and basically the the association
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  the membership cut maybe in half,
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  maybe more in half. I don't really know.
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  But basically it was my job, my position was no longer needed.
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  And so I had done I had a couple clients that came to me and I I couldn't help them
• 2:49
  about income taxes. And some a friend of mine and an associate was bugging me,
• 2:54
  bugging me, bugging me about learning about this new strategy.
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  Finally I just said, okay Mike,
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  let's go to lunch, tell me about the strategy.
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  I learned about it. I helped two clients out.
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  I saved them $50,000 in income taxes.
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  And when my relationship with car ceased,
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  the owner of that cost segregation company said,
• 3:14
  Hey, you're really good at this.
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  Why don't you come and work for me?
• 3:17
  So then I I started in the cost industry,
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  and then in 2000 and six ten years ago,
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  2016, I started my own company,
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  which is US Tax Advisors Group Incorporated,
• 3:27
  or
• 3:28
  Ustagi, U S T A G I.
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  Well that's interesting turn of events.
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  it you kind of it it's kind of interesting how our our direction or
• 3:38
  our plans kinda change when when something is just kind of you kinda
• 3:42
  let let the market dictate what you're gonna do.
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  I was the right place at the right time.
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  I was no bones about it. Because when everybody was hurting and in pain,
• 3:53
  guess what? I from day one was busy.
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  Because what was happening back in in the in the bad days is that I just happened,
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  don't maybe I'm not lucky, maybe that was skilled,
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  but I happen to have a lot of clients that
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  had a lot of cash. So what were they doing when everybody was selling
• 4:10
  and and you know going bankrupt?
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  They were buying. They were buying.
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  They were buying. And they had where they were buying properties that
• 4:16
  had were throwing off a lot of income and a lot of income taxes.
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  So I was never slow. I mean as soon as in 2007,
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  eight when I started, my business has is is gone up.
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  So you mentioned that fifty thousand dollar that first deal,
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  was that like the turning point?
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  Like when you saw that number,
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  was the is that when the light bulb went off and you just like,
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  Hey, this might actually be something I could turn a business into?
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  Well that sh certainly helped me a lot because I like all the other back
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  in those days, all of my sales calls the the number one objection were people would
• 4:50
  say, this is a scam. This must be a scam.
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  There's no way you're gonna save me fifty thousand dollars.
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  There's there's something wrong here.
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  And so I had to do my due diligence to roll up my sleeves and figure out,
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  okay, is this real? Is it a scam?
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  What's going on here? So I studied the the industry.
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  And I studied the IRS and I I looked at the regulations,
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  which is our golden Bible, and I I then knew after a very short period
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  of time that no, this is the real deal.
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  It it sounds amazing that I can give people money,
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  I can avoid them writing a checkout to the IRS,
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  but those two cases helped a lot when I would turn the corner and
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  I saved them actually over fifty thousand dollars.
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  And keep in mind, this was back when they were hurting.
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  So my clients didn't have fifty thousand dollars.
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  I bailed them out and I saved their butts.
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  So, you know, it made me feel good.
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  And I said, you know, I like doing this.
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  You know, this is one of those things that's kind of on people's back of their mind,
• 5:44
  right? Like they it's it's not something that they're typically proactive about.
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  There's likely some gonna be some education,
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  you're probably making your rounds on podcasts and what have you.
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  What are some of the misconceptions associated with this that you'd
• 5:57
  y maybe myths that you'd like to squash here today?
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  there's a there's so many of them I I'll just try and and and and rattle them off.
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  But I mean, still today, people clients and accountants,
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  I work with accountants. I am not an accounting firm.
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  I do not do accounting. I help the accountants apply my studies,
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  my results, but I don't apply the results.
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  So that there's where we draw the line.
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  I don't give tax advice, I don't give legal advice.
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  So basically there's a ton. What what do I still keep hearing?
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  It can only be done on new construction.
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  It could only be done on on big buildings.
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  It could only be done on the on the multi-million dollar dollar buildings.
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  why should I do cost segregation?
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  Because I'm gonna get the depreciation expense over twenty seven and a half years
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  or thirty-nine years using straight line.
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  Why would I ever want to do it?
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  And obviously it's i i i you wanna do it.
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  You wanna take your benefits today.
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  You don't want to wait twenty seven and a half years to get your benefit.
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  what are
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  some of the other ones. I I get people to say I can do it myself.
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  That's an open invitation to you being audited by the IRS.
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  boy, you know, I could go on and on and on.
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  There are d there's just a ton.
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  the ones that I just mentioned are probably the main ones.
• 7:09
  And I will boil it down to probably the most important one nowadays
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  is that that there are many, many people believe that this can only be done
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  on the million dollar buildings.
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  That used to be true when I first started.
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  The the big players, they were doing them in downtown LA,
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  downtown Chicago, New York, Atlanta.
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  They were twenty, thirty, forty,
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  hundred million dollar buildings.
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  I get it, but now the tables have turned.
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  I can do a cost segregation for anybody,
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  even those investors who own single family homes.
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  So that opens the door because there's still a lot of people out there that don't
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  get that. They don't understand that yeah,
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  I it's affordable. I don't charge
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  I I hate to throw out fees because we have to look at each building separately,
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  but let's just say for a single family home,
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  our fee is about a thousand dollars or less.
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  So for a thousand dollars or less and I can save you fifteen thousand dollars
• 8:02
  in taxes, twenty thousand, fifty thousand in taxes,
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  hundred thousand in taxes, it's a no-brainer.
• 8:09
  You you want to be doing cost set.
• 8:11
  Mm. I was gonna ask you about that.
• 8:13
  I I've s I saw that you do have kind of you you've hit everything from single family
• 8:20
  homes to the to multi million dollar projects.
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  What are some of those because of those extremes,
• 8:26
  what actually changes in your approach to to those type of projects?
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  Mainly for the small small investor,
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  I just let know that the reason why they don't know about what I do
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  is because their accountant doesn't know about me.
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  So what happened when I started my company in 2016?
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  I started again it makes me appear smarter than I am,
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  but I started looking into kind of the AI model.
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  I started looking into what is the reason why I can't give a very quality report.
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  without having to fly all over creation and make it a thousands
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  and thousands and thousands of dollars for a feed.
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  And so basically I started I started doing you know my research and
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  so nowadays we we've come up with the analytics to to not have to go out.
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  I still need information on the property.
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  We don't make information up. We're not in that school.
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  We do our reports, the quality reports
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  But I don't have to send somebody because in the old days we had to send somebody
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  to Chicago, to Phoenix, to Seattle.
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  And obviously, especially nowadays,
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  the travel fees are w or travel expenses is is what happened.
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  And so bottom line is I I tell people your accountant has never recommended
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  it for only one reason. They don't know about UST A G I.
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  They don't know there's somebody that can do this.
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  And so they don't even tell you about it because they think that that it's gonna
• 9:46
  be so expensive.
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  For your $400,000 single family home,
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  that no way can you save on income taxes.
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  So that's the number one message.
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  The big boys in town, I will tell you,
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  I will look them in the eye and say,
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  if you are not doing cost segregation,
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  I probably don't want to work with you because there's something wrong up here.
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  Because if you're a big boy and you don't know about the the cost seg,
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  if you're not doing cost seg, basically
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  Like I said, that ship has sailed a long time ago.
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  N but when I first started, none of the big boys were doing it.
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  Very rare were they doing it. Just the big,
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  big, big boys. But nowadays, you know,
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  if you own a a hotel, let's say a five million dollar hotel,
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  you better be doing cost set. Or you got the wrong accountant,
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  for sure.
• 10:30
  Yeah, well you you mentioned regarding trying to do some of this yourself.
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  I I have seen some services that are trying to do this.
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  Maybe it's thanks to AI. You know,
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  we got AI is the hammer, everything's a nail right now.
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  So we gotta we gotta try to generate some software oriented report.
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  Can you kind of break down what you get with those type of services versus what
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  you actually do that separates an engineer based assessment like like some
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  of the things that you provide?
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  Well, there's a couple different they're they're purely looking
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  at information that guess who gives them the information who inputs into their
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  systems. You do. The client does.
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  Clients don't know what goes into making a building.
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  Sure, you know there's carpet,
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  but you don't know all of the nuances of what goes into the building.
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  You don't know how to quantify a linear feet,
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  square feet of all that information.
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  So it's all on you. You have to input that information into their DIY systems.
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  Number one, usually for the same low-cost fee,
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  they will not defend their work.
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  And you have to do all of the work and then they pr produce the report.
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  When we do that kind of study,
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  we take all the information and we input the information in.
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  We gather all the documents from you.
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  We don't expect you to, you know,
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  to to just give us quantities.
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  My engineers measure the quantities looking at the information you you give us.
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  And
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  That based on that, like if you had let's say ten single family homes,
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  are you really gonna spend two to three hours inputting information,
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  getting it, inputting it, and then doing all the work yourself?
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  I mean and and like I said, our fee is gonna be under a thousand dollars.
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  It might be a little bit more than my competitors,
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  but it's gonna be number one a quality study because we're using real data.
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  Now keep in mind, I don't want anybody to mislead anybody.
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  When we use w what we do is we are using an analytical approach.
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  So we are not sending somebody out there with a tape measure.
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  We're not that exact. We are look using all the resources,
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  and everybody knows with what's going on in the world of the internet.
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  I can get recent photos of of almost any building in the United States
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  so I know what's inside the building.
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  I don't have to guess.
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  I can do that on my own. I can go and get a Zillow.
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  I can go to Trulia, blah, blah,
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  blah, blah, blah. I can get all the information we need.
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  And if we get stuck, we'll just ask the client.
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  Hey, I'm sorry, you're gonna have to take a few photos.
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  Run out to the building, have your property manager take a few photos.
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  That's all we need. We just have to know what's there.
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  We can do the rest because when we when we look at a photo,
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  we can tell what the what the dimensions are,
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  what the sizes are, and what the building components are that we can accelerate.
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  So that's the difference
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  Hm.
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  between my inexpensive study and and the other out there.
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  Now there's not a lot of other people out there that are doing small buildings
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  anyway. We're one of the few.
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  Mm-hmm. Yeah, I think that's especially important.
• 13:20
  I I don't you know, the small business stuff or small building stuff,
• 13:24
  I I just it's probably a blind spot for a lot of people,
• 13:27
  especially in the real estate world where you're you're handling,
• 13:32
  you know, short term rentals, rental properties,
• 13:35
  and and a few other things. I mean it it it has to be a pretty significant blind
• 13:40
  spot that people are just frankly not taking advantage of.
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  It
• 13:43
  is. And that's that's my my mission right now is is you know as I'm going down
• 13:47
  the path and and year by year,
• 13:49
  you know, getting more experience,
• 13:50
  my number one job is is to spread the word to let those small investors know that
• 13:56
  they can still save on their income taxes.
• 13:58
  I know the feeling. So I'll I'll give you a real quick story.
• 14:01
  The real quick story is back in the day when I first started,
• 14:05
  I used to do this thing called door knocking.
• 14:07
  That's right. I would walk down the street
• 14:09
  I would knock on doors and I would look for a property owner.
• 14:12
  One of the great places would be hotels because a lot of the property owners manage
• 14:16
  their hotels, they run their hotels.
• 14:17
  So I went to this hotel that was in near where I live and I knocked on
• 14:21
  the door and he goes, that sounds good,
• 14:23
  but I don't need I don't need I don't have to worry about income taxes.
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  I got a lot of deductions, which is true,
• 14:28
  you know, in real estate you have a ton of deductions.
• 14:29
  So you may not need more.
• 14:31
  Let's get that straight. I don't want to work with anybody that doesn't need
• 14:34
  deductions. I only work with people who need the deductions.
• 14:37
  So this guy said, I don't need your deductions.
• 14:39
  He calls me a couple months later and he goes,
• 14:41
  Joe, I need help. What? What happened?
• 14:43
  He goes, well, he goes, I did a ref the the bank refined my loan.
• 14:48
  Now my accountant says I owe $120,000 in income taxes.
• 14:52
  I go, whoa. And he goes, I don't have it.
• 14:55
  So I said, okay, I'll take care of it.
• 14:57
  Let me let me do an analysis for free.
• 14:59
  I told him how much I'd save him,
• 15:00
  which was the his tax bill. And basically I bailed him out and saved him 120,000.
• 15:05
  He didn't have a lot of money,
• 15:07
  so he asked me f what what what he could do for me.
• 15:10
  And he said, I have one idea. Why don't I introduce you to my best friend?
• 15:14
  I go, who's your best friend? He gave me the name of the company.
• 15:17
  He goes, Do you know who that is?
• 15:18
  I go, No. He goes, but they're the largest real estate developer in San Diego.
• 15:22
  So then I so that was it. He just told them you gotta use Joe.
• 15:25
  I and I I'm still to this day doing all of the and they're they're in
• 15:29
  the top fifty of of hotels, senior centers,
• 15:32
  multifamilies, all kinds of buildings,
• 15:34
  storage, they're they're a monster and I still do all of their work to this day.
• 15:37
  And that was all for that one little contact where I saved that guy's butt because
• 15:42
  he did not have the hundred and twenty thousand to pay the IRS.
• 15:45
  Mm-hmm.
• 15:45
  Yeah, it's it's you're just one contact away,
• 15:48
  aren't you? Like I so
• 15:49
  Mm-hmm. Yeah.
• 15:51
  j just to remind everybody, if this is interesting to you and you could
• 15:56
  you can actually take advantage of this,
• 15:58
  head over to UST A G I dot com.
• 16:01
  I'm gonna have that as a clickable link in the show notes.
• 16:03
  If you like what we're chatting about so far,
• 16:05
  do us a favor, share this with one of your friends if you're watching us on YouTube.
• 16:09
  Give us a like and subscribe.
• 16:12
  So could you kind of No,
• 16:12
  And Jack, what we do is i we what we just to sell
• 16:15
  go ahead.
• 16:15
  every we we we only start with one thing.
• 16:17
  We give everybody a no cost analysis.
• 16:19
  We let you know how much we're gonna save you and what the fee is gonna be.
• 16:22
  If we don't think you're worthy,
• 16:24
  then we will tell you we don't want you as a client.
• 16:25
  And my my definition, and this is old school,
• 16:29
  this is nothing, I'm not, I didn't run this through through AI
• 16:32
  or anybody smarter than me. I've always just learned 10 times my fee.
• 16:35
  If I don't save you 10 times my fee,
• 16:38
  so let's say it's $1,000. If I don't save you $10,000 in taxes,
• 16:42
  I will be the first to tell you,
• 16:43
  don't do it.
• 16:44
  Now, if you want to do it just because you want to beat the IRS
• 16:48
  for $8,000 or $6,000, that's up to you.
• 16:50
  I'll I'll do it. But bottom line is we do that no cost estimate
• 16:54
  so everybody knows how much I'm gonna charge and how much I'm gonna save them.
• 16:58
  So that's that there's an input field on the on the website where
• 17:01
  you input your property information and then we'll provide you with the estimate.
• 17:06
  Sure. Yeah, I was gonna ask you about that process.
• 17:09
  Like when somebody takes advantage of that free assessment,
• 17:12
  like could you walk us through like how does this how does this actually work
• 17:16
  and what what information is required of the of the owner?
• 17:21
  Like it
• 17:22
  Yeah.
• 17:23
  yeah, go ahead.
• 17:24
  It it it's it's it's a little bit tough because again,
• 17:28
  we're not a cookie cutter type of firm.
• 17:30
  We first gotta have to get quality information.
• 17:33
  And it's relatively easy, but there's a couple factors that come into play.
• 17:37
  Keep this in mind, and this is one of the when you ask the first question,
• 17:41
  misconceptions. I can go back about fifteen years from when
• 17:46
  the building was acquired.
• 17:47
  Not when it was built. George Washington could have could have could have built that
• 17:50
  building. All I care about is when the new owner bought the building.
• 17:53
  I can go back about 15 years of the mathematical equation and I
• 17:58
  can still provide benefit. What do I mean?
• 17:59
  I mean you're gonna pay me a fee and I think you're I'm gonna give you
• 18:03
  at least 10 times that fee, then I think it's a worthy can't candidate
• 18:07
  for cost segregation. The problem is
• 18:09
  the longer you you've you've owned it the more likelihood there is that you've done
• 18:14
  improvements. And so we do need to know any capital improvements.
• 18:18
  Of course expensing we don't care about.
• 18:20
  If you expense something it's already expensed off the table.
• 18:24
  We can't go back in time and look at that anyway,
• 18:26
  even if you made a mistake. But for capitalized repairs,
• 18:29
  if you put on a new roof, you put on a a new HVAC,
• 18:32
  I can go back and I can I I need to look at those items.
• 18:35
  So if it's a a current year
• 18:37
  Acquisition that's out the window.
• 18:39
  I don't need to know what you did in improvements because most likely
• 18:42
  you haven't done any improvements.
• 18:43
  So basically, all I need it is is a couple answers to a couple questions.
• 18:47
  Number one, what date did you buy it or was it placed in service?
• 18:52
  This is the moving target, meaning that the accountant is the
• 18:55
  one that determines that. I've heard a lot of different theories on on the date,
• 18:59
  place and service, and all of that.
• 19:01
  I don't care. I just need a date that your accountant's gonna record.
• 19:05
  in the tax return that date I need to know what you paid for the building
• 19:10
  and if you know this don't get stuck on this I need to know what
• 19:14
  the building basis is meaning I gotta de I have to deduct the land.
• 19:18
  Land we're not land appraisers so that comes from the accountant or the client.
• 19:22
  I can give you my opinion my company can give you our opinion
• 19:25
  but basically it's best if you decide what you want to allocate to land.
• 19:28
  The IRS loves the county tax
• 19:31
  However, I've seen the county tax be way wrong.
• 19:34
  So be careful. If the county tax looks silly and you're you're in
• 19:38
  the middle of nowhere and it's it's 35%,
• 19:40
  the red bells should be going on.
• 19:43
  Wait a minute, that seems a little high.
• 19:44
  If I'm in the middle of of northern Arizona,
• 19:47
  you know, land value should be 10,
• 19:49
  15%. Why is it 35%? So in other words,
• 19:52
  you've you've got to give me that.
• 19:53
  So I need to know either what you think the land will be.
• 19:56
  If not, I'll just give you my opinion.
• 19:58
  on what the land will be around the country for not major major areas like downtowns
• 20:04
  I'll just use 20% that seems to be a fair number just to get the ball rolling
• 20:08
  and then I need to know the type of building of course is it a fourplex
• 20:12
  is it a single family is it a a multifamily
• 20:15
  And I need to know like how many units,
• 20:17
  I need to know the size of the lot because we charge a little bit more
• 20:21
  for for more land improvements,
• 20:22
  the bigger the lot. most everything fits in this one envelope.
• 20:26
  That's all I need. I'm done. That's all I need.
• 20:28
  Now if you did build build if you did buy the building in the past,
• 20:32
  you past year, you've already filed the tax return.
• 20:35
  All that information's on there.
• 20:37
  So all I need is that piece of paper with all the information.
• 20:40
  That piece of paper is called the federal tax depreciation schedule
• 20:45
  or asset schedule. Many accountants call it a assets,
• 20:49
  fixed assets schedule. It's it's a piece of paper that says,
• 20:52
  here's how much I paid, here's how much is building,
• 20:55
  here's how much is land, and then if there's any improvements,
• 20:58
  they'll be listed on that. If you bought the building three years ago,
• 21:01
  I need your last.
• 21:02
  tax return depreciation schedule.
• 21:04
  So if you're still on extension,
• 21:06
  which a lot of my my clients are,
• 21:08
  meaning they're gonna file their taxes September 15th or October 15th,
• 21:12
  I need your two thousand and twenty that'd be for tax your twenty-five
• 21:16
  if you're on extension. I need your twenty-four,
• 21:19
  which is your last filing, depreciation schedule.
• 21:21
  Well that piece of paper then I don't I need nothing else.
• 21:24
  It tells me everything I need to know.
• 21:26
  But most of the time, the majority of of people contact me the year they
• 21:29
  buy the property. So then I do have to ask them to calculate.
• 21:33
  yeah I do have to get information.
• 21:34
  closing statements would help too if I get a closing statement.
• 21:38
  I can determine all the all the answers.
• 21:40
  But the one thing that we always want is we want the accountant or
• 21:43
  the client to bless our work. We do not make up numbers,
• 21:46
  Jack. We don't make up numbers.
• 21:49
  We use your numbers. I'm gonna beat that into everybody.
• 21:52
  We're not accountants, so we use your numbers,
• 21:54
  whatever you're gonna use. We're not the number and a lot of people don't get that.
• 21:58
  They I you should know my land allocation.
• 22:00
  Say, no. It's up to you. We're not land appraisers.
• 22:03
  Why would I know your land? I can give you my best guess,
• 22:06
  but I'm not gonna but unless you sign off that you agree with my best guess,
• 22:11
  then it's up to you. That's all I need.
• 22:12
  That's all the information. So it's very painless.
• 22:16
  Hm. You you kinda you provide this service in all fifty states,
• 22:20
  right? Like was that a a bit of a lift to just make sure that
• 22:25
  you had everything covered across that I mean,
• 22:28
  the regulations have to be pretty different across each of these states.
• 22:32
  You know, here's a good a a good I'm glad you brought that up because this
• 22:35
  is one thing that they would have to consult with me or my team.
• 22:38
  state by state is different. There is a a document that I have which lets
• 22:43
  me know if the state you are living in filing your tax return complies with
• 22:49
  the federal regulation. For example,
• 22:51
  California does not. You cannot use cost segregation against your California state
• 22:56
  taxes.
• 22:57
  However, Arizona does. So you can use it for both state and federal.
• 23:01
  So so you know that's one thing you do have to know.
• 23:04
  Now that's the only hitch right there.
• 23:07
  Is in and usually the big the largest amount is gonna be by the federal,
• 23:13
  so it's usually not a a a big point.
• 23:16
  It's nice if you can get both state and federal,
• 23:18
  but obviously some states don't even have income tax.
• 23:21
  But obviously the everybody who conforms to the IRS
• 23:25
  We we conform to the IRS. So basically we know we know about that.
• 23:29
  And so there's really us n not too many hiccups as far as what state you live in.
• 23:34
  and again, I've I we've done studies in every single state.
• 23:37
  You know, I already brought up AI and technology.
• 23:40
  Like what has that done or changed in your world?
• 23:44
  Well yes, lots. AI is is really incredible.
• 23:48
  it really has helped us I think to perfect our studies more as
• 23:53
  far as the internal calculations.
• 23:56
  My engineers use it's gonna be meaningless to most of you,
• 23:59
  but it's called RS Means. There's only two
• 24:03
  Two softwares out there that the IRS have faith in,
• 24:06
  Marshall and Swift and R S Means.
• 24:07
  And we use R R S means and and what that means is that when we get calculations,
• 24:11
  we plug it into RS Means and that tells us what the the the actual cost
• 24:17
  of that item is. So if we put in let I'll just make the easy carpet,
• 24:20
  a thousand s you know square foot of carpet,
• 24:23
  it's gonna tell us if the building was bought in two thousand and in
• 24:26
  twenty two it's gonna tell us what the value of that carpet was in 2022.
• 24:31
  So bottom line is AI has helped us there.
• 24:33
  It's helped us to perfect that method and get closer and closer and closer
• 24:37
  to being you know super duper accurate.
• 24:39
  AI in the future, you know our costs are really low,
• 24:41
  but even on the detailed engineering,
• 24:43
  the ones that we can't do analytically,
• 24:46
  by the way, the the breakpoint for us is about one it's one point
• 24:50
  two million dollars in building basis.
• 24:52
  where we have to look at switching out and doing a another type of study,
• 24:56
  not the analytical one. We we see our numbers get degraded over $1.2 million.
• 25:02
  and trust me, it's still gonna be a great value.
• 25:04
  It's just that when I mentioned $1,000,
• 25:06
  now it's gonna probably be a little bit more depending on what your actual building
• 25:10
  basis is. So if you're getting up to now the two million dollar,
• 25:13
  it's not that I'm gonna charge you thousands and thousands of dollars,
• 25:16
  but I am going to charge you more because we are going to have to send somebody
• 25:19
  out there and take pictures.
• 25:20
  But and AI's helped helped us out a lot on all of that.
• 25:23
  You know, taking the photos, doing the calculations,
• 25:26
  and then internally in my company,
• 25:28
  AI is just gonna be a monster.
• 25:30
  I mean, you know, I I hate to tell my my you know,
• 25:33
  my the people out there, but yeah,
• 25:35
  I mean it's gonna impact my company tremendously because a lot of the work
• 25:38
  is one day will be replaced by AI.
• 25:40
  Well, this is a really interesting conversation,
• 25:42
  Joe. before we start to jump into the rapid fire,
• 25:45
  is there anything else we should have tried to hit on here today?
• 25:48
  Like I I'm sure we're missing quite a few things.
• 25:50
  I even saw somewhere in in my notes that you also offer I'm gonna be
• 25:57
  I don't even know what some of these are.
• 25:58
  179D, forty five L and
• 25:59
  Yeah.
• 26:01
  R and D tax crest credits along with CAS segregation.
• 26:05
  How do investors typically
• 26:06
  No, that's gone. No, that
• 26:09
  that ship is sailed. Sorry, the IR the the Congress pulled that off the table
• 26:14
  as of June thirtieth of of this year.
• 26:16
  It is no longer available. It was a a great deal and maybe it'll come back.
• 26:20
  A new administration will bring it back.
• 26:22
  But what that was is you got tax credits or tax deductions if you
• 26:27
  did anything to the building to improve the energy consumption.
• 26:31
  Well obviously if you're gonna be doing a major refit of your building improvements,
• 26:35
  of course you're gonna you're gonna impact the building shell,
• 26:39
  the the H VAC, the the the electrical outlets,
• 26:43
  the electrical appliances, fixtures,
• 26:46
  all of that's gonna be changed.
• 26:47
  So a lot of our clients could could qualify.
• 26:50
  But that has been taken off the table as of June thirtieth.
• 26:53
  It is no longer in play anymore.
• 26:55
  Maybe one day the for big buildings it was called the one hundred seventy nine D.
• 26:59
  And for the smaller building it was called the 45L,
• 27:02
  meaning a residential building was a forty five L and you got either a
• 27:06
  tax credit or you got deductions.
• 27:08
  It was a great g a great thing,
• 27:10
  but until they bring it back and they may try because I know a lot
• 27:14
  of our clients are barking up the tree that this is
• 27:17
  Totally unfair, but you know, so far they're standing by June June thirtieth this
• 27:23
  year.
• 27:25
  When when people engage you, or is there like a a packet of information that
• 27:29
  is just like your ideal person that comes to you and they're completely prepared?
• 27:34
  What are some of those low hanging fruits that are just awesome to have in hand?
• 27:39
  No, w we are we're old school.
• 27:40
  We're we're one on one with our clients.
• 27:42
  Well you have an advisor that's gonna call you and go over everything in person.
• 27:45
  If you wanna go to the website,
• 27:47
  it it's on the website. But basically,
• 27:49
  once we get your information, we'll prepare an estimate of benefit,
• 27:52
  we'll we'll give you the fee, and then we'll call you and we'll say,
• 27:54
  look, do you have any questions?
• 27:55
  Do you understand this? now let's get again really,
• 27:58
  really clear. There are some candidates out there,
• 28:01
  I'm I'm gonna be jaded, I think,
• 28:03
  but I I think I'm gonna be kind of accurate too,
• 28:05
  that don't need our service.
• 28:07
  Okay, like for example, the stupid one.
• 28:09
  If you don't pay income taxes,
• 28:11
  don't call Joe. And a lot of people get really excited about this.
• 28:15
  income tax, I'm gonna say and then I ask you,
• 28:17
  how much did you pay in income tax last year?
• 28:19
  Nothing. Well, you don't need me.
• 28:21
  You know, you don't need me. The other the other problem in in our world
• 28:26
  is and I'm not gonna get into it,
• 28:27
  but passive versus active investors.
• 28:30
  The gold is becoming active. However,
• 28:33
  one of my
• 28:34
  my favorite accountants who is heavy in a cost seg he tells his clients every single
• 28:39
  one he doesn't care you'll always use the losses from cost segregation even though
• 28:45
  it may not be this year do cost seg on every single building but I
• 28:50
  can g explain that to to the individuals but most of the time passive investors
• 28:55
  are a no-brainer they still want to do it but there are certain circumstances where
• 28:59
  I'll tell the passive investor you know
• 29:02
  You probably don't want to pay me any money now.
• 29:04
  Wait until you become an active investor or you w where
• 29:07
  it becomes worthwhile because when you're when you're a passive investor
• 29:11
  is there's limitation to the losses I give you.
• 29:13
  That fifty thousand dollar number we we gave you,
• 29:16
  for a passive investor you're you're maxed out at twenty five grand.
• 29:19
  So you cannot use that fifty thousand.
• 29:21
  You're done at at twenty-five thousand dollars and sometimes that blows
• 29:26
  up the whole deal. Like you need more in losses and gonna have to find your losses
• 29:30
  somewhere else.
• 29:30
  Well is there anything else we should have hit on,
• 29:32
  Joe?
• 29:32
  I think we did a pretty good job,
• 29:34
  Jack. I I really do. I think we we covered the basics and that's all
• 29:38
  the people need is the basics.
• 29:39
  They just need to know they can get a no-cost analysis from us,
• 29:42
  an estimated benefit, and then take it we always advise take it to your accountant,
• 29:47
  take it to your partners. We don't make these decisions,
• 29:50
  we just give you the information,
• 29:51
  you go to the experts. If you don't need it,
• 29:54
  we're done. We'll say call me when you need it.
• 29:56
  Well, I appreciate your time, Joe.
• 29:58
  If you're ready, we'll jump into the rapid fire and close out this episode.
• 30:01
  But before we do, just to remind everybody,
• 30:03
  again, it is U S T A G I dot com.
• 30:07
  I'm gonna have that as a clickable link in the show notes.
• 30:09
  But if you're ready, Joe, we'll jump into the rapid fire and close out this episode.
• 30:13
  ~ ready, I'm ready, Jack.
• 30:13
  What
• 30:17
  what lie do real estate investors often tell themselves?
• 30:20
  Boy. probably that it's not gonna be a job,
• 30:24
  it's gonna be easy to own real estate.
• 30:27
  And they don't understand that if you wanna be good at it,
• 30:30
  you really gotta know you gotta know your investment.
• 30:34
  And it's it is it gonna be easy?
• 30:36
  It it might be fun, but I don't think investing in real estate,
• 30:39
  if you really wanna be like some of my very wealthy clients,
• 30:42
  it's gonna take time.
• 30:44
  And it is you you need to put the time in.
• 30:46
  Having somebody else manage your properties is an is a way to go,
• 30:50
  but my successful investors, they have their hands on.
• 30:54
  If you could go back in time and give your younger self a piece of advice,
• 30:57
  what would it be?
• 30:58
  I would say I did this in the past,
• 31:01
  but if I was going back to my younger self,
• 31:03
  I would say read more books. The knowledge base out in the world is out there.
• 31:10
  Nowadays, all you have to do is take the time,
• 31:13
  the energy, the effort to soak it up and and and to learn from other people.
• 31:18
  Learn from other people who are probably smarter than you.
• 31:21
  As you were scaling your business,
• 31:23
  what was your first hire and would you change it?
• 31:26
  That's a really good question.
• 31:27
  Absolutely not. I he was a great guy,
• 31:30
  my first hire. We were almost like partners,
• 31:33
  but he had no financial interest in in the company.
• 31:36
  Instead what he is doing now, and I support him,
• 31:39
  we're still friends, is that he split off and he did his own he's doing
• 31:42
  his own company.
• 31:44
  I feel good about that. I don't really care because I i th there's
• 31:47
  so much business out there. I don't have to worry about competition.
• 31:50
  And he's a great guy and he was very knowledgeable and back in the day,
• 31:54
  when we were a small shop, he was really helpful and and it you know,
• 31:57
  he was he was the rock that I could depend on.
• 31:59
  And finally, what was the single tool or process have you implemented that
• 32:03
  has had the biggest time saving impact?
• 32:06
  here's this is for everybody. This is my mantra.
• 32:08
  I beat this with a drum, and I do this.
• 32:11
  Hire people who know what they're doing.
• 32:15
  For example, if you're in real estate,
• 32:18
  do you want the accountant who who ninety ninety five percent of his clients
• 32:23
  are are people who work at Costco?
• 32:25
  I would say no. I don't care what a good real estate accountant will cost you.
• 32:31
  But it's gonna save you money.
• 32:33
  If it's gonna be double what the other guy cost,
• 32:35
  it will save you money. Find good realtors,
• 32:38
  find good lending institutions,
• 32:41
  find people who know the real estate state market,
• 32:44
  you're gonna pay more.
• 32:46
  But I guarantee you, I'm not gonna guarantee you,
• 32:49
  but I'll tell you my opinion is that you know,
• 32:51
  you're gonna come out way ahead down the long run.
• 32:53
  There are so many brilliant people out there that do these real estate investing
• 32:58
  groups and they've been down every rabbit hole.
• 33:01
  Soak up their information like a sponge.
• 33:03
  Use them.
• 33:04
  something that makes you me makes me think for there for a second because
• 33:07
  you know we've we've heard the old adage of you get what you pay for
• 33:10
  but I don't think a lot of people apply that to like the people they hire.
• 33:15
  Yeah, it it's tricky, I'll tell you,
• 33:17
  the the the people you hire is is the tough one.
• 33:19
  If any if you were to ask me another question,
• 33:21
  which is the the most difficult part of your business,
• 33:25
  th that is employees, the hiring function.
• 33:28
  that and and nobody everybody will agree with me.
• 33:30
  That's to me the most challenging part of of owning your own business
• 33:34
  is is the employee part. It's the most gratifying but it's tough.
• 33:37
  Well, Joe, this is just fantastic.
• 33:39
  One more time you can find more information at UST A G I dot com.
• 33:45
  Clickable link in the show notes.
• 33:46
  But hope you'll consider coming back again sometime.
• 33:49
  This was great to meet you and until next time it
• 33:51
  I sure can. Yep.
• 33:52
  was great to great to chat with you.
• 33:55
  Thank you, Jack.