There are a lot of big words and complicated ideas that make up the world of real estate investing. My job is not only to help you understand them, but to also entertain you in the process. How’s this for entertainment? If you master today’s topic, you could save or defer tens of thousands of dollars in tax liability. Today on Flipping America!
Cost segregation sounds like a topic you might cover in finance or accounting courses and although not as complicated as “internal rate of return” or as obtuse as the “weighted average cost of capital”, it definitely needs a sexier name. How about “Save a pile of money on Taxes”? Well, there are several ways to do that, so we need something more descriptive. After thinking long and hard about all the possibilities, I’ve decided that “cost segregation” is as good as we are going to get.
Our guest today, David Wiener, is known as “Mr. Cash Flow” has been involved in the business of business for over 30 years. His experience includes 10 years as a medical practice administrator, COO of a medical billing company, and years of business and tax consulting, speaking, and educating.
The CEO of Cash Flow Strategies, Inc., David has worked to assist practices, businesses, and individual real estate investors across the US to maximize their cash flow and become more efficient. David is a recognized expert in A/R management and engineering-based cost segregation.
David has spoken across the US and internationally for over 25 years to medical and dental groups and societies, CPA groups, business associations, Chambers of Commerce, and commercial real estate groups. He leads CPE training for CPA groups annually as well as workshops on tax strategies for owners of commercial and investment property.
His engaging style and quick wit have made him a favorite of large and small audiences coast to coast, and has attracted many return engagements.
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Tags: real estate, real estate investing, Flipping America, Roger Blankenship, rental houses, flipping houses, cost segregation, real estate tax deductions, depreciation, real estate depreciation
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Expected Air Date: Wed 9/21/2022
Guest: David Weiner email@example.com 770-367-8091
2022, Roger Blankenship
There are a lot of big words and complicated ideas that make up the world of real estate investing. My job is not only to help you understand them, but to also entertain you in the process. How’s this for entertainment? If you master today’s topic, you could save or defer tens of thousands of dollars in tax liability.
Today on Flipping America! Cost segregation sounds like a topic you might cover in finance or accounting courses and although not as complicated as “internal rate of return” or as obtuse as the “weighted average cost of capital”, it definitely needs a sexier name. How about “Save a pile of money on Taxes”? Well, there are several ways to do that, so we need something more descriptive. After thinking long and hard about all the possibilities, I’ve decided that “cost segregation” is as good as we are going to get.
Our guest today, David Wiener, is known as “Mr. Cash Flow” has been involved in the business of business for over 30 years. His experience includes 10 years as a medical practice administrator, COO of a medical billing company, and years of business and tax consulting, speaking, and educating. The CEO of Cash Flow Strategies, Inc., David has worked to assist practices, businesses, and individual real estate investors across the US to maximize their cash flow and become more efficient.
David is a recognized expert in A/R management and engineering-based cost segregation. David has spoken across the US and internationally for over 25 years to medical and dental groups and societies, CPA groups, business associations, Chambers of Commerce, and commercial real estate groups. He leads CPE training for CPA groups annually as well as workshops on tax strategies for owners of commercial and investment property. His engaging style and quick wit have made him a favorite of large and small audiences coast to coast, and has attracted many return engagements.
[0:00] There are a lot of big words and complicated ideas that make up the world of real estate investing.
My job is not only to help you understand them but to also entertain you in the process. Well, how’s this for entertainment? If you master today’s topic, you could save or defer tens of
Thousands of dollars in tax liability coming up today on flipping America.
[0:41] Real estate. Wherever you are, whatever your situation, there is an opportunity for you. And now, here’s that flipping America guy, Roger Blankenship. Thank you, Kathy Curtis, hello, America.
Cost segregations sounds like a topic you might cover in finance or accounting courses and although not as complicated as internal rate of return or as of two says the weighted average cost of capital.
[1:09] Definitely needs a sexier name. How about save a pile of money on taxes?
[1:14] Well, there are several ways to do that. So, we need something a little bit more descriptive and after thinking long and hard about all the possibilities. I’ve decided that cost segregation is is as good as we’re gonna get.
Our guest today David Weiner is known as mr cash flow and he’s been involved in the business of business for over 30 years his experience includes
10 years as a medical practice administrator COO of a medical billing company and years of business and tax consulting speaking and education
The CEO of Cashflow Strategies Inc David has worked to assist practices businesses and individual real estate investors all across the United States to maximize their cash flow and become more efficient.
[1:57] Davids are recognized expert in accounts receivable management and engineering based cost segregation he spoken across the country in internationally for over 25 years the medical and dental groups in societies CPA groups
And business associations as well as chambers of commerce and commercial real estate groups.
He leads continuing professional education training for CPA groups annually
As well as workshops on tax strategies for owners of commercial and investment property. In fact, after we got finished with our interview, the other day, recorded for this show,
He got on a plane and went to New Orleans to speak to a group of CPAs there about cost segregation,
His engaging style and quick wit have made him a favorite of large and small audiences coast to coast and he’s attracted many return engagements he’s going to.
[2:47] Join us in just a few moments but first a little bit about what’s going on here flipping America.
Number one international best seller status with my new book Flipping Houses in 10 days
That’s pretty cool and big thanks to Keith Leon and the team at the publishing house they did a terrific job of sitting everything up for launch day and getting,
All the places that people and places in the news release things in I mean press release everything that they did I don’t even know everything that they did but I I really appreciate it and.
[3:32] It’s actually kinda nice. It’s gratifying to see.
Lessons learned the hard way went into the book Flipping Houses in 10 days which is available on Amazon and if you hurry you and your member of Kindle Unlimited you can get,
The Kindle version of the book for free is part of your kindle unlimited membership
And arrange to meet up with me and I will sign it for you. How about that?
Anyway, thanks for that. If you have questions about real estate or real estate investing, send them to questions at flipping America. Net.
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So, we answer all the questions. We’ll answer some of them on the air. If we think that others can learn from it, don’t worry. If you think we’ve heard the question a 1000 times before.
[4:56] We probably have.
We get about a 1000 emails a day not all questions of course but
And in your career and what you’re doing, what you’re thinking about. So, we do wanna hear your questions.
I also want you to take out your phone right now and text the word wit,
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Shout out to a sponsor today flipping America go type in the address look at the indicators based on your own deal criteria and when you see a green light go that’s at flipping America go.
[6:19] To flip starter this is our seminal course and fixing and flipping houses this big part of what we do and we’ve done it a couple 1000 times but we’re still,
Flipping houses today. That’s right. We still have projects going on. Maybe not as many as we used to because we spend a little bit of time.
Creating this show and and doing the live streams and everything else that we have going on now but we still flip houses and we know how to do it and,
I think the the best way for you to get a full education on flipping houses is with,
Flip starter and of course you’ll hear a little bit more about flip start. Coming up in just a minute,
I got an email from a gentleman named Muhammad this week who wanted me to tell him
Mentoring and coaching programs which we did of course and he said he’s a very hard worker and told me he really needs to needs this in his life and so forth. Well, we took the time to answer his questions and sent the information back to him.
And to this point.
[7:26] If you are really a hard worker and you’re really highly motivated,
And you wanna take up my time with questions and ask for a response and we give you the response,
You know, I don’t know what to think but you know, this is not really the first time it’s ever happened. It it surprising how many people will engage me and talk about this position or that opportunity and then they just go dark on this.
[7:54] Maybe I’m getting old. Well, here’s David.
[8:04] Thanks so much.
Glad to have you here, man. And I’ve already given you a little bit of a preview. This is a hard topic to make sound sexy, but this is a very important topic, right?
Making a lot of people money.
Past segregation plus yeah okay let me let me just start that again.
Cost Segregation sounds complicated and I know a number of years ago when I was first introduced to it I thought.
[8:45] What in the world is this,
And so the government gives you the opportunity to.
Typically the way that it’s done is for commercial property or for short-term rental property it’s depreciated over 39 years so,
You take 130 ninth of the property and that’s how much you can deduct it from your taxes every year or in the case of rental residential.
27 and a half years where they came up with that.
It it’s the building and the improvements not the land what we do is we basically break that property up into all of its component pieces and parts at least on paper,
A lot of which can be depreciated according to the tax code at 5 years or 7 years or 15 years,
By speeding up your depreciation.
[9:56] You get a bigger tax break at the beginning.
All of that 5 year 7 year and 15 year life property.
Starting next year it’s 80% and then each year goes down 20% until it reaches oh of course unless.
Congress decides to change that which.
And so that’s cost segregation. It’s breaking that building into its component pieces and parts.
And then because of 100% bonus appreciation gets you a huge deduction in the first year. Okay now you need to,
Bonus depreciation is what happened in the tax cuts and jobs act,
Any property that was purchased between say October of 2017 and the end of 2022,
You can take 100% of all of that shorter life property the 5 year property the 7 year property in the 15 year property 100% the first year.
[11:18] For properties in only three it’ll be 80% and 60 then 40 then 20 then oh.
Now, if you, if you resell this property, you have to recapture everything that you’ve appreciated, right?
To a point there is,
And so I don’t recommend that anybody do a cost segregation study unless they’re planning on hold on hold a proper at least 3 years,
You can still take advantage of some of that depreciation that you’ve taken you will have to pay back some unless you do a 10 31 exchange on the property in which case there is no depreciation recapture,
Okay, guys. That’s why I led off the show by saying, this business can have some big words and some complicated ideas and there’s some complexity involved in here.
You’re gonna need to consult with your tax adviser. You’re also gonna need to talk. Probably with our yesterday. David Weiner. So David, right now, tell us how people can reach out to you if they, if, if they want to.
Best way to reach out to me is either through text.
Or you can just call me at my office at (770) 224-8504.
[12:40] Social media my company is called Cash Flow Strategies you can find me at cash flow strategies. US you can also find me on Facebook,
You name it you’ll find me.
Look for mr cash flow and you’ll find them. Alright. Now, do you do any courses I probably should have asked this for? We got into this recording but do you do any courses on the topic?
I’ve done webinars on it. I teach regularly. A real estate conferences. If you have any real estate conferences and you need a speaker.
[13:32] Let me know I’d be more than happy to come and talk about cost segregation.
Alright, now, back to the cost segregation. It’s interesting to me that you teach CPAs about this. Do you get a group CPAs in the room and they’ve heard of it and they but they don’t really know how to implement it for real estate investors.
No it’s not completely four and they know the concept.
But my dad was a CPA and he always used to tell me to be to be a CPA in today’s world you’ve gotta be about 10 mi wide in a foot deep.
In other words you have to know a little bit about a whole lot of thing.
And so i work with CPA firms all over the country,
And and we take care of it for.
[14:29] Is is they practice you know is there enough settled practice that’s been tested in the courts that we really know what to do or what you cannot do,
I’ll tell you a little bit about the history of cost segregation.
But it was so unaffordable that only the wealthiest of the wealthy could afford it,
Back in 1997.
Provision in the tax code called cost segregation.
Come in and do a full engineering based cost segregation study for them and they took the iris to court.
[15:24] All of their back taxes were obeyed and that same engineer is the founder of cost segregation services inc the company that I work with,
Still the CEO and president still signs every study.
And have a one time trigger tonight.
Maybe a little bit because.
[16:08] The amount that can be accelerated in a property is generally at least in a residential property is about 20% of the property it’s what everything that’s non-structural in the property,
They consider that to be personal property and the structural part of the building to be real property.
If you’re accelerating 20% of it you get this big tax break at the very beginning,
Virginia of the entire thing is what they call the time value of money,
And if you understand the time value of money it becomes a big deal and and to me an absolute no brainer okay,
We’re gonna talk about that as soon as we come back but we gotta take a quick break. We’ll be right back. I’m Roger East David and this is the flipping America show.
I remember winning the bid on my first house at the foreclosure auction in April of 2002. My hands were literally shaking as I hand it over the checks for the purchase,
Fast forward 20 years and over 2000 single family homes and I’ve learned a thing or two.
And I wanna help you fast track your success while at the same time avoiding some of the mistakes I’ve made along the way.
[17:26] I’ve put together a comprehensive course called Flipstarter which is designed to teach you everything you need to know about finding, funding, fixing, and flipping houses.
I don’t hold anything back I tell you everything you need and I sell this course normally for $999 but for a limited time,
It’s available to you for $147,
Flipping America. Net slash flip starter check it out sign up now for lifetime access but this is a limited time offer,
It could go away at any time. Flipping America, flipping America. Net slash flip starter.
Ok David let’s talk now about the time value of money you kinda threw that in there and I don’t know if we’re gonna whip out our financial calculators down do some no let’s not get technical about it alright.
[18:17] Just the idea is,
Yeah, you’d rather have the money now and,
Big institutional investors can do how do I know if my properties are.
Really eligible. I’m I’m thinking maybe for a single family this evening gonna work.
[18:46] Actually a will.
When Jim Shreve that that engineer we were talking about decided to found law segregation services Inc it was with the goal in mind to make it available to the small and medium sized investors,
And so our general rule of thumb is if the if the cost of the property not including the land.
[19:18] It’s worth at least doing a cost segregation estimate on it. We can do a free estimate for anybody,
And we can actually take properties that you’ve owned for even 10, 12, up to 15 years and go back and do a cost segregation study,
And it’s still,
You know when you talk about a one 1 million dollars.
Are in California you see him a lot yeah I just had somebody contact me.
I I had trouble believing this but she’s buying a 12 1 million dollars house to rent.
And before she could rent it she had to put about a one 1 million dollars worth of renovations into.
[20:16] It’s out of my league but.
[20:23] What are you gonna get in rent for something like that $20 thousand a month? $50 thousand a month?
Yeah. Yeah. Alright. So, there that’s where Cost segregation could kinda work. Alright. So, there is a way if people will reach out to you.
They can find out whether or not their properties might qualify. But it needs to be worth at least 200 1000 not counting the value of the land.
I’ll send them especially if they text me it’s makes it very easy,
To get them a free estimate the estimate will show them exactly what the study will cost.
Just know that when we do those estimates we try to shoot about 10% low on the estimated tax benefit cuz I like calling people saying yeah we told you we were gonna get you $40 thousand off your taxes man,
We were off a little bit. It’s actually gonna be $52 thousand.
[21:33] Alright. So, I think that I think that somebody listened to this might be thinking, you know,
When you’re doing a cost segregation let’s take
An example but it’s like a small commercial building that’s worth maybe two 1 million dollars. Let’s take like I used to own a light manufacturing facility in Stockbridge, Georgia,
Today it’s worth two million dollars give us an just an example,
Well, we don’t go by the current value. We go by the the amount you paid for it when you bought it. So, let’s say you bought it for two 1 million dollars, not including the land, just around,
Yeah. Well, or one 1 million dollars,
Basically what we’re gonna do is we’re gonna come in and we’re gonna look at that building.
[22:39] What they call personal property,
Is 20 thousand, right?
We go in and quantify it but I’m just for the sake of our discussion.
[23:07] We’re gonna get.
Access. Basically, your income. Now.
For most people.
[23:35] Which generally is gonna be your rental income.
[23:46] If you have a short term rental it’s not treated the same it’s treated as a business and as long as your materially involved in managing that short-term rental you can deduct it from your total income.
[24:01] Passive loss limitations that I won’t get into here cuz it does get kind of technical in the text. It’s already getting kinda woolly. Yeah, it does get tax and that’s why people call me because i can look at their property, walk ’em through, here’s all the options.
Here’s what it would mean for you and I’ll work directly with their CPA as well cuz people feel pretty comfortable when their CPA says yeah this is a good deal for them,
And so basically I’ll send them the estimate they can take it to their CPA,
Talk to him about it or or we can do a three way Zoom call and i can explain CPA can call me did we get to a ballpark of what I’m gonna say in Texas year one or year two.
[24:39] It depends on your tax bracket.
Off of your income.
They cost is more than you need to oh out your taxes can you defer some of that to the following year,
You buy an apartment building you do a cost like study and then you don’t pay the income tax the next year it’s already due next year,
Buy another farm building,
Because if you take the money that you make off of this and you put it to work for you.
[25:39] It it becomes a whole lot more money and I always kind of explained it to people you know if i was gonna give you a one 1 million dollars.
Would you like me to give it to you.
[25:50] In little pieces over the next 39 years if you want it all today.
Most people just getting the lottery take the cash option for that very reason
120 seconds and i’m got i’m gonna blast you with nine questions if we have time. You ready?
Alright. This is these are questions I ask a lot of the show guests. Number one, how does the general economy affect your business?
[26:23] Well it don’t the real estate market affects my business but the general economy.
If taxes go up.
When I was a kid I wanted to be an astronaut,
It would be Jesus.
There’s not a whole lot of creativity in my business because it’s all facts and figures.
I watched the I watched The Fed. I watched the the stock market.
I watched the inflation rate those kinds of things and I watched the real estate market pretty close there’s a lot of talk about pursuing your passion in entrepreneurial circles talk about the impact.
[27:24] I started my company about well actually I started as a consultant back in 1989.
It was with the whole idea of helping people make more money and keep more money of what they make it’s it’s what I live and breathe everyday I love it I just turn 66 never planned a retire,
Alright and your own personal goal setting and planning how far ahead do you normally look.
[27:53] The older I get the shorter it is,
[28:13] I would say you need to talk to somebody who’s really good at real estate investing and I know a bunch of people so I’ll recommend them to you. Okay.
Number nine understand it is understanding it is impossible to accommodate every person’s lifestyle and spending habits with this answer,
What would you say is the minimum amount of money a person needs in order to retire?
That’s good. You have passed it around table. Alright, everybody. This is Mr. Cash flow, David Weiner. You could find him anywhere on the internet if you’ll just look for mister Cashlow and look up Cost segregation.
Or cash flow strategies. US cash flow strategies. US they’ve thank you for being a great guest on the show today we appreciate you very much,
And that’s all the time we have for today let me leave you with a blessing of the day.
[29:10] For those of you that are new.
[29:23] This is Roger Blankenship for the flipping America show and remember what I say always say, keep your eyes open.
[29:32] You’ve been listening to flipping America real estate investing for everyone. Listen three times a week on stations across the country or on the flipping America app,
Be sure to like us on Facebook find and follow us on Twitter and Instagram and keep your eyes open.