Dave Zook, an experienced real estate investor and syndicator will talk about the tax benefits of investing in real estate, as well as self storage, and a different kind of investment: ATMs. He has acquired more than $100 million worth of real estate since 2010. Dave has been actively investing in multi-family apartments, self storage, and ATMs.
You can read the entire interview here: https://montecarlorei.com/can-you-avoid-paying-taxes-legally-with-real-estate/
When you understood that you could have a lot of tax benefits to real estate, what happened?
What pushed me over the edge was that around the year 2011, I made my quarterly tax payments. I was getting the feeling that we might have a tax issue, but it wasn't totally prepared for what was coming. I got the call on April the 13th from my CPA saying that we took all the deductibles, you paid your quarterly payments, and you still owe $373,422. So I paid around half a million dollars in taxes that year. Prior to that time, I was having a lot of fun. I was busy. I was putting a lot of time and energy into the business, but it didn't feel like work. It was so much fun. But when I had to pay almost half my earnings back to the government, it wasn't so much fun anymore. After that, I realized during my research that multi-family apartments can be a really good tax shelter. I bought several hundred units of multi-family apartments and I've been tax free ever since. I haven't paid federal tax in a lot of years now.
You are not alone in the real estate world, which is great. So let's talk about taxes. What are some of the great real estate tax benefits that people may not know about?
The Trump tax law change that came through in late 2017, early 2018. There are some things there that really sweetened the real estate game for investors, and it now enables investors to take bonus depreciation on new or used equipment. Combine that with some leverage. Combine that with some cost segregation studies. It's a ridiculous amount of relief that you can get from investing in multi-family apartments.
Can you avoid taxes forever? Or are the people who will potentially inherit some of these properties end up having to pay these taxes?
That's a good question. I get that question a lot. There's a lot of people out there that think like I used to, that when you make a lot of money, you've to pay a lot of taxes. The next question is, well, you've to pay the tax sometime, so might as well pony up and pay it now rather than later. And those two questions are almost the same. Yes, if you don't know what you're doing, then you have to pay a lot of taxes when you make a lot of money. If you don't know what you're doing, you also have to pay the tax sometimes. So you're only just playing the deferral game. If you don't know what you're doing, you're going to have to pay at some time. But if you're strategic, and you have a plan and you've good team members around you, you can make a lot of money and you can pay no tax, ever.
As a syndicator, you actually are fundraising for a very interesting class which is ATM machines. Can you share with us how you came across that as an opportunity, and why did you decide to fundraise outside of real estate?
ATMs is a form of real estate. It doesn't sound like it. You're investing in an ATM location, and instead of having a building sitting on that real estate or instead of having thousands of square feet, you're getting a location agreement that 3 foot by 3 foot. So it is a real estate play, but you're extracting value from that 3 foot by 3 foot space
Support this podcast: https://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support