The Mark Perlberg CPA Podcast
The Mark Perlberg CPA Podcast
EP 113 - Alternative Investment Strategies w/ Dan Holmlund
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Alternative investments offer tax-advantaged strategies that go far beyond traditional real estate while generating impressive returns for savvy investors. Dan Holmlund shares insights from seven years running the Alternative Investing Club, revealing unique opportunities most financial advisors never mention.
• Alternative investments include commercial airplane engines with 100% depreciation benefits
• Special partnership allocations can shift depreciation to partners who need it most
• Medical debt and student loan debt funds provide returns while helping people escape crippling debt
• Solar panel investments can qualify for combined 55% tax credits from federal and state governments
• Real estate partnerships with municipalities can create tax-free property opportunities
• Strategic debt investments offer protection by being first in line during economic downturns
• Operator quality matters more than the investment vehicle itself
• Alternative Investing Club hosts weekly educational sessions with experienced operators
• Cost segregation studies dramatically increase first-year depreciation benefits
• New tax laws make manufacturing buildings 100% deductible, creating syndication opportunities
Learn more about alternative investing strategies by joining the Alternative Investing Club's free weekly meetings at alternativeinvestingclub.com or emailing Daniel@alternativeinvestingclub.com.
Okay, guys, so rarely do I bring clients on to the podcast slash YouTube page, and this is an instance where I'm very excited to introduce someone who I have known for a while now and does some very interesting things. And, for those of you looking for unique and tax-advantaged and tax advantage ways and also really profitable ways to park your money, dan's a really good guy to know, because he has explored a lot of really unique and different things that you're just not going to find in online or whatever, whatever means your financial advisor is sending you, and so he's interviewed tons of people through his vehicle that we're going to talk about, and he's been doing this for a while now and he has gone through this. He's done his own investments as well, and we're going to talk about the world of alternative investing with my wonderful guest, dan Holmland. So, dan, can you introduce yourself in 60 seconds or less and tell everybody about what's going on with you and what you do?
Speaker 2:Sure Mark, thanks for having me here. I have been a client of yours, I think, for five years now, maybe maybe a little bit more yeah.
Speaker 2:Wow. So my background is that I have been interested in real estate investing for, you know, as long as I can imagine. Um, I can't tell you my story in one minute, but it was since I was around 10, I got interested and then I started doing it in college. Um, I worked at Intel as a software engineer for 12 years and I founded the real estate education club at Intel, and in that club we just brought in speaker after speaker after speaker. We had a meeting every single Friday at noon Pacific time, and now that I'm no longer with Intel, we're still doing that and it's just been rebranded as the Alternative Investing Club. So it's a club that's purely educational. We do have a club fund, but it's all about education and learning from other people in order to find the most interesting strategies that are out there.
Speaker 1:Very, cool yeah, learning from other people in order to find the most interesting strategies that are out there. Very cool, yeah, yeah. And you've had some really, and you know, I know cause we've, we've had, we've had some of the some common guests. Where, where some, where are some of the things that were some big wins that you've seen some of your audience have and where are some of the some of the really captivating conversations you've had in this group?
Speaker 2:oh boy. So I actually keep a file on big wins that people in my club tell me about, because you know, sometimes it's kind of a grind running a club and constantly going out and having speakers. We we have, on average, 47 events per year, every single fr, and that could be a bit of a grind. And so whenever I need a little bit of a motivational, I actually go back and refer to the document and so I can tell you that I've had countless people call me and just say, hey, we got started with our first Airbnb home, we got started with our first rental home and we got started with our first rental home and we got started with our first syndication. Those are all fairly common.
Speaker 2:There's quite a few people at Intel Corporation at least, that are there on H-1B visas and they have interesting situations. I had one lady who you know. Sometimes I don't even hear from people that are in my club until you know it's like three years later they decide to introduce themselves. They say they've been attending every week and and um, I had this one lady say I immigrated from Ethiopia 24 years ago and because of your club I've bought my first seven rental homes and it's entirely changed my life. Yeah, and you, you hear those sorts of stories and you're like, wow, I'm, you know it's, it's good to make an impact and and financial education is an area that I'm passionate about and I think that it isn't taught enough, and so finding clubs and finding educational people to be around, uh, is extremely important.
Speaker 1:Very cool. Now you know, when I first met you, you were all in on real estate and only real estate, and then you kind of branched out into the alternative investment club, where I'm and I know that you're still deeply in into real estate. What made you branch out and think to yourself well, first we're all about real estate, now we're all about. Now we're going to broaden our horizons into alternative investments. What was the thought process and what kind of new opportunities did that create?
Speaker 2:You know, to be honest, I was kind of focusing on real estate almost exclusively, and it was actually the people in the club that came to me and this was probably 2022, 2023. And they came to me and they basically said hey, daniel, the real estate market is slowing down quite a bit. We would love to get topics other than real estate. And so it was actually the community that came to me and then I sent out a poll and found that, you know, most of the people that were there were there for the education and we'd had a lot of great education on real estate and it's actually up on the website and up on our YouTube. You can get the last 200 or so meetings that we've had there.
Speaker 2:But they were interested in other things too, and so we started branching out into you know oil wells and how to invest in those. We started branching out to you know oil wells and how to invest in those. We started branching out to different types of funds. We had one speaker come in and speak about. Actually, this was a group that came and spoke about how to invest in in commercial airplanes and, in particular, how to syndicate a commercial airline engine. Well, did you know that when you're sitting on, you know your 737 or your 747 and you look out the window and you see the engine there. There are investors that own fractional shares of the engine itself and, based on the amount of money that that engine brings in, through whatever formulation the airlines use, investors take part in. You know returns from flights that happen with that engine.
Speaker 1:That's fascinating. And you know, talk about the depreciation opportunity. No sub cost segregation needed a hundred percent of that asset. Now we can write off immediately. So if you're you know, let's say you finance it with 20% down and you get a hundred thousand. Put a hundred thousand dollars in and let's say it's 20% down, that's a million dollar write-off right there.
Speaker 2:Yeah yeah, equipment investing is a great way to get depreciation. I'm sure you and your audience knows yeah.
Speaker 1:We had another guy.
Speaker 2:So we have a lot of the standard you know Airbnb, short-term rentals, real estate syndications, real estate funds. We have have had a lot of that. Some of the more unique things we've had. We had a group come in and talk about investing in this. This group had a fund and they were well-known for collecting expensive bottles of wine and whiskey, barrels of whiskey, and so they had that entire fund based on buying it at regular rates and selling it. You know expensive and, um, you know they made their entire entire fund out of flipping wine and whiskey, flipping and holding wine and whiskey. So there's I mean, when you start getting into financial education, you realize that you know there's, there are. The more you learn, the more creative you can be, and that's true with taxes too. The more you learn about your taxes, the more creatively you can save on them. So the same is true on the investing side as well. You'll find people have interesting strategies.
Speaker 1:That's cool, you know, um like in. One of the things we do is with all our clients is we try to take things a level, a layer further every year. So let's say, client is already doing the basics, they got another buying real estate and doing cost eggs. Well, what kind of new opportunities can we create and layer on top of that? That maybe didn't have enough time to explore? So it could be a little thing like maybe this year we do augusta rule we run our primary residence to our business or maybe this year.
Speaker 1:So one of our clients we had a fun conversation this is the first time we got to do this just because we never had capacity to explore this and we decided to dive deep into health, medical-related tech strategies. We had an opportunity to create a business deduction for his wife's pregnancy. It would be like a $20,000 tax deduction against business and we know a business deduction is far greater, more valuable than an itemized deduction. So little things like that. It's always fun when you go further, you explore and see how far you can take these things.
Speaker 2:Did I just hear you say there was a business deduction based on a pregnancy? Absolutely, that is a strategy we haven't had in our club yet.
Speaker 1:Yeah, so I mean the way it works is it's a workaround where you create a health reimbursement account and it only works with sole props or C-Corps. But essentially as a sole prop you can't do it to yourself, but you could hire your spouse and, even if it's your cost, your spouse has a family-related health reimbursement arrangement. It doesn't work for S-Corps. So it's a really cool strategy and when you do it right, I mean, it can be a really neat way to just create some awesome tax savings. But there's a million things out there and there's things that we may never get to and little minutiae where it's just like first we conquer the big ticket items, like the cost eggs and terrible structures and strategies and depreciation strategies and some of those six figure items, but then we can even dive deeper into those little things as we continue the conversations, which is really fun.
Speaker 2:Yeah, this September, um, I will have been running this club almost every single Friday for the last seven years and it's actually kind of rare to come up with a real estate strategy that I haven't heard about. And I and I actually heard a unique strategy yesterday talking to somebody and I don't fully understand it, but I would invite you to come and be part of that particular one, because basically what it was is they wanted to create tax savings in their IRA conversions.
Speaker 1:Oh, I know who you're talking about their IRA conversions.
Speaker 2:Oh, I know who you're talking about. Okay, and so basically they would go out and purchase A-class property that was unlevered no leverage on the property, but they would borrow against the IRA and then use the depreciation to greatly reduce the income in the IRA and basically create the rollover with a very minimal tax footprint. I hope I explained that. At least that's my understanding of it. Anyways, I'm sure there's a lot of detail.
Speaker 1:Yeah. So we had a client do it and it eliminated like 60% of the taxes on the rollover. So like he rolled over a million. Usually that's taxable at a million, but it's only. He only paid taxes on like 400,000 of the million. And then there's other strategies to mitigate the taxable income on the 1040 level. So we've seen it. Now. There are some aggressive ways to do it and some ways that are like all right, are you comfortable with what these guys are doing? And then there are some more conservative stances to do as well. But it's a really cool strategy. And you do it with oil and gas as well Real estate and oil and gas. We've seen people doing it. But yeah, that stuff is really interesting. We presented it with a few of our guys, our clients, and we only had one client that did it. But yeah, isn't that stuff really cool?
Speaker 2:It is. It seems to me, the larger the depreciation on the asset, the more you'd be able to minimize your tax bill. So you can go after oil wells you know, working interest in oil wells give great benefits RV parks, things that give large amounts of depreciation. I want to highlight a story that you helped me with when you you saved me a whole bunch of my taxes. So, uh, you came into the club and gave a talk about, uh, the how to um offset your income using short-term rentals, and it was irs. I'm sorry, what it's a beautiful strategy it is. What is it? Irs 469, was it? I forget, yep, what's it called? Irc 469. Irc 469.
Speaker 2:Okay, so in my particular case, what I did is I went to two other friends of mine who are heavy multifamily investors and we actually had been looking for a short-term rental to all buy together and kind of call a common vacation home that we can rent out as well. So we found something in Idaho, near some skiing out there, and we purchased a small property of five bedrooms, five bedrooms, four bedrooms, four bedrooms. It was six, seventy five, and each of us contributed one third to the down payment, plus a little extra for an operating account. So basically it ended up that each of us contributed 80K. And I went to the other two and I said to them hey, I won't take a management fee, and for Airbnbs and short-term rentals, management fees can be 15 to 20% of your monthly income. And so I said to them I won't take a management fee, we will manage it for as long as we own it. But I want you, in the operating agreement, to assign to me all the depreciation.
Speaker 2:And since they were multifamily investors, they actually had plenty of depreciation. They didn't want the depreciation, so what they were giving up was not necessarily of value to them. They wanted the income. So we all split the income one-third, one-third, one-third. But I don't take a fee and I took the depreciation. Well, I invited you to come over and you did a cost seg on the property. Well, I invited you to come over and you did a cost seg on the property and, if I remember right, the cost seg was returned $100,611.
Speaker 2:And you know I only put 80K in. That's pretty nice, yeah yeah. And it was a first year deduction too, and so you know we walked into that, getting the nice tax deduction, a property and, you know, a vacation house.
Speaker 1:Yeah, so there's to the audience listening. There's a little more to in the technical areas, so make sure you're working with an advisor on it, but there's something. There's a lot of flexibility in the tax laws that relates to partnerships. But there's a lot of flexibility in the tax laws that relates to partnerships and there is something called special partnership allocations. Where the right circumstances align and has an economic substance, there are ways where we can shift certain items on the income statement to different members, and this was an instance where Dan was doing all of the oversight and management, so he was doing all the sweat equity and putting all the work in, and he was able to receive all the benefits of the cost segregation study, which was huge, besides the fact and not only that, but the other members didn't even need the depreciation and even if they had it, they didn't materially participate Not as valuable. So there are some times where the stars align properly and we can create these huge, gigantic tax wins for everyone involved. That was one of them. Yeah, that was a good one.
Speaker 1:Yeah, you know, in the alternate. So it's like there's so much cool stuff out there. There's like the, like you said, the whiskey, there's the, the thing that and the wine and there's you can rent out. You know there's so many other ways that people are, you know, investing alternatively and also getting tax benefits, like investing into things like atm machines and car washes that give you giant chunks of depreciation, which are even more these days. What I'm wondering here is you showed us some really cool stuff, but what I'm also wondering and we've seen this what are some things that have come across your table where you're like I'm not so sure about this. This is a little funky, okay.
Speaker 2:Yeah, so we always screen the people to come in and present and, you know, when we give a standard disclaimer, this is a forum for us to learn from them. We're not representing that they have a great strategy or that you should even participate in it. It's an educational forum. I can't.
Speaker 2:Well, we did have some Bitcoin funds that came in and yeah, that's that's. It was kind of a sad story. We had a. We had a Bitcoin fund that came in and was giving great returns and it worked for a little while and then, when it didn't work, the owner operator of the fund apparently fled the country. That's not good. No, it's not good.
Speaker 2:No, and um, I think it's actually a well-known incident, at least within some of the private investing community. Um, cause he, he raised, I think, over $120 million. So it was a, it was a huge fund, wow, um, you know, and our members, you know we're putting in, I think, 25 to 50 K, that sort of thing, and you know, to a certain extent, there are strategies that are out there that will work and there are ones that won't work. But the biggest determinative factor is is really the operator, the person who's working it, and that's that's the thing you have to be, you know, do the most due diligence on, because a great operator can make a whole home, you know, property in a whole home area, do, do OK, but a poor operator will, will, tank the best property in the best location and that's. That's definitely one lesson we've taken away.
Speaker 1:You know, I have a friend of mine and we've done some projects together and he had a whole speech on that and he is Jeremiah Boshe. I'm not sure you ever met.
Speaker 2:Jeremiah, he's been a speaker at the club.
Speaker 1:Yeah, he's a great guy and he said he had a whole speech about how it's not about the horses but the jockey. Right, he's the person running this that you're putting your your, your money on here. And, uh, you know, in a lot of times where we found in, in many relationships it's like it's not, it isn't the vehicle, while important is also like, how do you feel about the actual person here? Uh, one of the things you were saying earlier about um, you know you had these real estate investor groups of people and they actually kind of take guided you towards these other investment vehicles as well. And you know we've seen the same thing with our clients. Where we start off. You know we were purely focused on real estate, real estate, real estate. But what I found was that these real estate investor clients of ours had other income sources and some of them were burning out as real estate investors. Dude, I don't have real estate professional tax status anymore. What can I do? Or I can't buy another property, I'm exhausted, my wife's pregnant and there's no good deals.
Speaker 2:This market is saturated. I can identify with that somewhat.
Speaker 1:Never heard about that and what I realized was, if I only put myself in the real estate box as a tax advisor, I would be underserving these guys, because there's a whole other world of stuff out there that also is in the best interest of our clients. So one of the first things that we saw that was like an immediate hit with our clients was oil and gas, because it's truly passive. You don't have to do any management, you get poorly distributions. Hopefully you get an immediate tax deduction and as bonus especially as bonus was phasing out and cost tags were looking a lot less attractive this was like a really exciting and huge win for our clients.
Speaker 2:And the biggest advantage to the oil wells is that it'll offset your W-2 income. Yeah Right, you don't have to have real estate professional status. So somebody who works full time yeah, can offset their income with it.
Speaker 1:Yeah, and just like real estate, you have paper losses with oil and gas because of the depletion deduction, so when the money starts coming in, you're offsetting a chunk of that as well, so less money is being taxed and actually hits your account. So that's really cool stuff. And I'm also wondering here what other things are you seeing people who are real estate minded and who maybe started this journey with the interest in real estate? What are some other things that you find them really taking interest in? That taps into those guys who are interested in the financial freedom, the passive income, the wealth building and the equity that comes with real estate. What other things are they really interested in?
Speaker 2:Okay. So when we bring speakers into the Alternative Investing Club, we bring them in in one of three ways. The first way is purely educational talk. Second way is a pitch talk and the third way is through if our club fund is going to raise money for their project.
Speaker 2:And bringing people in in those combinations has brought up a number of interesting people that have strategies and what I've noticed, especially while the real estate market tightened after interest rates went up back in the pandemic, a lot of people that I knew that were just doing like bread and butter multifamily value add started diversifying the strategies that they were using. Some people decided, hey, I'm going to start operating instead of instead of, you know, purchasing equity in multifamily deals, I'm going to start purchasing the debt. And so their strategy was that I want to be more protected and more conservative, because you know when, when a property is sold, the equity holders are the last ones to get paid back. The debt holders are the very first ones to get paid back. The debt holders are the very first ones to get paid back. The bank gets paid back first. Any secondary liens or mortgages get paid back second. Then there's perhaps a mezzanine layer and then there's the equity layers common and then preferred, and so there's a certain order and you can change the order in which you're investing in the capital stack.
Speaker 2:Another thing that I saw people do was to diversify into not just properties but properties that have businesses on top of them. You already mentioned car washes. Car washes became really popular because not only do you own the land, you own a business that's on top of it, and it's not just renting the land. That is your business plan. It is, you know, the car wash itself which is a higher grossing than than probably the land is by itself or the property is by itself. So I saw a lot of diversification and we saw a lot of new interesting fund strategies. Let me tell you about one that I like currently because it's actually very altruistic as well.
Speaker 2:But you have to be very careful and do your due diligence and find people that have a track record doing that, and that is. There's a group called well, there's OCG management, and YRefi is the other group that is doing this, and basically what they're doing is they are advertising. They'll hire a marketing agency that will advertise online to find people that are in medical debt, and so they'll specifically advertise themselves to veterans, to first responders, people who might have been injured in the line of duty and are, you know, paying off their medical bills on their credit card and spending 30% interest on their credit card rates. And they're just, they're in a mountain of debt that they will never, ever climb out of. And what they do is they go and negotiate specifically for the non-performing medical debt loans and they will purchase those loans and then the group that purchases them they're mainly lawyers that know the credit laws very well and they'll go through and verify are all the fair credit practices being followed in the administration of this loan?
Speaker 2:And if it's not being followed, they can actually take it to court and invalidate a large amount of the debt.
Speaker 2:So what they do is they buy the debt and then they go bring it to court, invalidate a lot of it if it wasn't fairly practiced, and that invalidation creates room to both restructure the debt with the first responder or veteran, meaning that rather than a 30% interest rate, this OCG management, for instance, usually has around a 5% interest rate afterwards and a two-year fixed payoff period.
Speaker 2:So it goes from open-ended at 30% to much more manageable and there are a lot of details in here and then that debt invalidation also gives room to pay the investor a good amount of return back. And so what they do is they go out and they purchase these non-performing loans, they restructure it, helping the veteran, helping the first responder, to get out of debt and, at the same time, giving a good return to investors. And so I I love that story at why refi, I believe, does the same strategy, but instead of medical debt, they do they, they do student loan debt, and it's a similar strategy, um, and there's a big demand. There's lots of people in medical debts, the number one cause of bankruptcy in in the, you know us, um, and there's certainly no shortage of people with student loans nowadays. So it's a good business and it's helping people.
Speaker 1:There is um. That's really interesting, you know, and, being a student loan debt, there's a change. I'm going to get a little off topic, but this is really cool for you guys. There's the Trump tax account where you can put in $5,000 a year now and if your child is just born it's $1,000. And it'll grow and compound tax deferred and I see this as a really cool college financing strategy because it's more versatile than the 529. So it'll grow and compound tax deferred and when the child can, they don't just have to spend it on their college because, let's face it, college isn't for everyone.
Speaker 1:And finally, we see an account that recognizes is a little better, so the child can spend it on starting a new business, purchasing a home or college. And when the money is taken out for those qualified expenses, it's taxed at the child's capital gain rate. So not the child's ordinary income rate, like you would see in IRAs, but the capital gain rate. And if they're over 18 and there's no kiddie tax, which they most likely will when they incur these costs there's a good chance they're in the $0 cap gain bracket. We could spread it out and make that happen. How stinking cool is that?
Speaker 2:Makes me wish I hadn't put as much into my 529.
Speaker 1:Yeah, oh, by the way, because of your client, I just scheduled it. You haven't seen an invite yet, but we are doing an advanced college planning strategy session. We have a resource that will help us do it. Just like the tax code is very robust and there's all sorts of ways to win the tax game. Same thing with the FASBA system. There's all sorts of ways to win the FASBA system and get more aid and reduce tuition. So there's just so much cool stuff out there. So now I'm wondering and you yourself, as a real estate investor, you've done a lot of multifamily, you've had a lot of partnerships. What would you say over the past to anyone listening? What are some of the biggest lessons you've learned over the past five years through tremendous changes in the economic environment and interest rates and the real estate market? What are some of the big things you've learned and how is that impacting where you're headed as far as next steps?
Speaker 2:You know a couple of things. First of all, and this is the reason why I run the Alternative Investing Club, just being a lifelong learner is an important strategy and just constantly being interested in what other people are doing and what other people have to say. I've run into a lot of real estate investors who, you know, know their one thing very well and and that's good, but it can also be somewhat limiting. I've seen, I've seen people continue doing multifamily after multifamily didn't make sense in the economy and so being able to learn and change and adapt, I think, is a key thing for investors. One of the other things that I've really noticed is that whenever you, whenever you go and see a real estate presentation or you know a new commercial real estate deal, everybody always has wonderful communication and conservative underwriting and conservative underwriting and frankly, I think that in most cases they do, they're coming at it with good faith effort, but once the deal starts, maybe that communication wasn't as good as it was originally intended to be or, you know, you miss a little bit of a month of communication, two months of communication.
Speaker 2:You have investors that are wondering what's going on. It's really important to and, in particular, I like to start very small with an operator, see how they go. I don't invest with the same operator twice in one year. I always put one investment with them, you know, and just see how they do for a year and what their communication style is like. Are there returns on time? Is it something I can actually, you know, project in a spreadsheet versus oh look, an email came today. So your communication style, the communication style of the people you're investing with, is pivotal Key. One of the people you're investing with is pivotal Key, yeah One of the other things.
Speaker 2:Oh, go ahead.
Speaker 1:Oh no, I was just saying, I can probably keep going.
Speaker 1:I've heard from other very similar stories from our clients who you know, and it's very easy as an audience member, I know firsthand to see those numbers. But dude, how can you not do this? Look at those numbers and be like dude, how can you not do this? Look at those numbers, those graphs and charts, as fancy as they are, those are not promises. Those are not set in stone. There is a possibility that that doesn't happen. It's very easy to fall victim of that if you're an inexperienced investor. What are some other things, dan?
Speaker 2:I was going to say with interest rates the way they are, the importance of having fixed rate debt in a lot of different strategies, that can be very useful.
Speaker 2:One of the other novel strategies and this is one of the ways that I started changing in my investment was I started looking specifically for real estate deals where there was a partnership with a local municipality that gave a tax deduction. So, for instance, a lot of times if you have a certain number of either 25 or 50 percent of your units dedicated to area media income people that are below area media income, municipalities will give you a tax deduction for that. Now you might be causing yourself more work by doing that or, depending on how it works out, in our particular case we weren't and we were partnering with the city of Austin and ended up getting a very large tax break on a really beautiful looking property because we worked with the municipality. We actually got it was actually property tax free for a period of 99 years and we can resell it with the next buyer taking it 85 percent tax free. So, like our whole business plan was not necessary, we were doing a light renovation on it. The whole business plan was really sign on the dotted line and take the tax exemption.
Speaker 2:Wow, that's not bad. It's not bad.
Speaker 1:It's not that so cool, it's like and we can riff a lot of federal tax strategies, but there's also when you have the ability to look at local and even you know state level and local opportunities and you have the right resources. There's so much cool stuff out there and we haven't had a chance to riff on things like low income, new market, historic tax credits. It's just endless. You'll never reach an end.
Speaker 2:It's worth it going and reading about it. I came across a deal. I didn't invest in this one, but I loved what they're doing. It was in Indiana and this was probably five or six years ago, I think it was in, I don't remember the city Columbus, columbus, ohio, I think. It was basically said if you put 50% of the purchase price of your property into renovations in other words, you're doing a deep renovation they would give you a 50% break on taxes. Wow, you know, and there are programs out there as cities are trying to cope with the rising price of housing. Cities are becoming more and more innovative in their strategies too, and if you can find a partnership between and a local municipality, that could turn a non-deal into a great deal.
Speaker 1:Here's something I think you'll really like. We've been talking a lot about solar and we have some time to do this and people are like, well, trump doesn't want to do solar, he's more about oil and gas, and yeah, but we saw some opportunities until 2030 for most of the stuff we're doing, at least 2032. I'll have clear guidance on that. The bill was just released, so give me a break here. We're around that time.
Speaker 2:But anyways. It's 900 pages right.
Speaker 1:Yeah, so with the solar panel, not only are we getting credits but we're getting 100% bonus. I mean the credit reduces basis a little, but it's still really good. And here's a cool thing and I don't know why more people aren't talking about this in the real estate space but we had a client who found an opportunity to put solar panels on his short-term rentals and he gets a 30% tax credit to pay for the panel from the US government. He also is getting a 25% tax credit from the state of South Carolina. That means 55% of the solar panel is being paid for. Now it reduces his basis by half of that, reduces its basis by half of that. So approximately 27.5, well, that's exactly 27.5% reduction in basis.
Speaker 1:So around 72% 73% of the asset is written off. 55% of it is paid for the government, actually, I think on the federal side I should probably have a calculator out, but I think on the federal side, because it's 30%. You're going to write up 85% on the federal side, but anyway. So you're writing off the majority of this asset in year one. You're getting 55% of it paid for by the federal and state government and it's going to save him about $180,000 projected in energy costs. So you're reducing your costs and you're reducing your taxes all at the same time and you're buying the asset over 25 years, so it's like you're not even feeling the payment of the asset. So there's all these neat things where you can stack on these state-level credits on top of the federal, on these state level credits on top of the federal, and it's mind boggling what is out there when you really get the right connections to see these opportunities.
Speaker 2:Yeah, yeah, and that's what being a lifelong learner in investing is. It's just keeping to hearing new strategies, learning from groups like yours, learning from the Alternative Investment Club, other clubs online there's. I mean, education nowadays is out there if you go find it, and the more you invest, the more creative you can become in your investing, and I think it's a skill that this country really needs.
Speaker 1:Yeah, and all you know with AI, you AI. A lot can be learned with AI, but a lot of this is relationship-based and your ability, like you said, to evaluate the people and to think critically through these presentations and recognize that those projections may not be reliable and say where do I have to go deeper into my analysis and also see if this makes sense based on my risk tolerance, my goals, et cetera, et cetera. So AI doesn't solve everything, and certainly this strategy.
Speaker 2:What do you think of AI? I'm curious to get your take on it in taxes and investing.
Speaker 1:I absolutely love it. I mean, we use AI for so many things. I'll use AI to talk through even concepts and tax concepts. So I've been thinking a lot lately about the ROI of paying social security taxes, and at what threshold does it make sense? And I've been having conversations with AI on that. It helps us out with our marketing. I mean, you can't ignore the power of AI as a thinking tool. I treat it as someone who I can have conversations with and make myself smarter and learn faster. And now, if you're looking at the old BBBBA and trying to use AI, I'm warning you that the AI is going to pull from articles that were produced before the bill was released and it's going to give you misinformation. It's flawed, but you know we love ai for you know, as a creative research assistant, it's a conversational uh resource, so I'm all about it yeah, it really is a strategic thinker and a strategic planner.
Speaker 2:it's somebody, I mean, I use it all the time and oftentimes, when I get one answer from an AI, I will go stick it into a different AI in order to get its take, and oftentimes they may not necessarily agree, and that's one thing you have to realize is that these are not infallible. You know database systems that are recalling perfect statistics, but you can actually create strategies where you ask your question to one and then bounce it off another and then take it. You know, come up with your own idea and submit it, and so it's. It's really about you know, uh, agentic AI, where you've got, you know, multiple AI actors and you're having conversations with them.
Speaker 1:Yeah, you know I use AI also when I'm doing marketing and, like I'm not going to find the buttons for an emoji, the AI is doing all the emojis for me these days. But yeah, it's, it's really cool stuff and you can't ignore it. I mean, it's just like for the folks that thought that internet was a fad and didn't put their businesses online and there they eventually had to come around. And then also with social social media, now with AI, you have to accept that this is the new norm. I feel bad for the children trying to learn in school where AI is just feeding them everything they need to know so easily. But it's just the new norm and I'm all for it. You got to embrace it. Hey, mark, there's one last blockbuster out there, or so I've been told the Twitter account is hilarious, you got to follow it.
Speaker 2:You know, you got to embrace it. Hey, mark, there's one last blockbuster out there, or so I've been told. The Twitter account is hilarious, you got to follow it. So that's a group that didn't get on the internet. And now there's one.
Speaker 1:Oh, nice, nice, yeah, cautionary tale, absolutely. So you know. What I want to know from you is what are some things I know you're working on some? You have a new project you're working on and, by the way, as this may be relevant for you, r&d is fully deductible. You used to have to write off over five years fully deductible. You might be in a very good tax bracket, but what are some big projects or concepts, or what are some things that are really getting you excited over the next year and couple of years among the many things you've explored in investment opportunities?
Speaker 2:Well, like I said, I like the debt validation strategy. You know, commercial properties are starting to pick up more right now. We're getting more and more activity and velocity in that. Over the last two to three years it's been, you know, kind of a dead area. We had like an 85% drop in transaction rates and it's starting to pick up again and there are interesting deals out there, and so it's definitely something to look at and but to be cautious about.
Speaker 2:Um, you know, I like to a certain extent I'm I'm trying to focus all my energy on the club and just bringing in great speakers and then, when we find a speaker that we like, you know, having the club, invest with them, and that, honestly, that's where I'm focusing a lot of really conservative investments and then just bringing in educators and then some of them we invest with.
Speaker 2:And so you know, in what I'm going to say here is a little bit of a punt, and that is my strategy is to find as many interesting people as possible and then to cherry pick them. So but, but I will say that commercial properties are doing better and they're starting to pick up. Funds are still very popular, but I think that really planning your tax strategy is extremely important. It's going to become more important as time goes on. I think that our economy is definitely always kind of on the knife's edge and it doesn't take much a you know, black swan event to kind of push it over. And the municipalities, federal government, they're all in positions where we're either going to see increased inflation or we're going to see increased taxes, and so I think tax planning and becoming tax educated is is a must for any investor.
Speaker 1:Yeah, absolutely. And you know these tariffs and these tax cuts, they all come with costs, you know. By the way I imagine you're going to find this so they just made it. So manufacturing buildings are 100% tax deductible. I heard about that. I'm just waiting. You're going to find some folks syndicating those deals any day now. Oh, absolutely Any day now. There's going to be people jumping on that and finding ways to take advantage of it. But yeah, those are really great words of wisdom and I know you've been through a lot and seen a lot of investments, and so what I would like you know you can see in the background of the screen right now, and I think your URL is alternativeinvestingclubcom, correct. Yep, that's correct. You have some really cool content on there.
Speaker 2:We've got a ton of content on there. Um, we've got a ton of content up there, yeah, and we have our free weekly friday meeting.
Speaker 1:Uh noon pacific time every friday yeah, I think just sign up and come our audience is gonna love this stuff, like they really find this stuff interesting. Um, what, do you have a call to action? Or I know we can go to alternative investing clubcom anywhere else you might want to send you know, I think that's my call to action.
Speaker 2:You know. If you want to email me directly, my email is Daniel at alternativeinvestingclubcom. I'm always open to email, but I think the call of actions just go to the website, sign up on the website and attend the Friday meeting. We're a community that's all about education. Like I said, our community originally started at Intel as an Intel employee club and we operated internally to Intel, only opened Intel employees for about four years and then the last three years we've been open to the public and so we've got a good group. We've got around 1300 people in our group and our Friday calls. Our attendance has actually dropped a little bit here in the summer. We were getting 70 to 100 people on a call at the beginning of the year and we're getting like 50 right now. But it's a good group and we always have great speakers that are in there that are talking about different strategies every week.
Speaker 1:Awesome. Well, you know, you guys should definitely check that out. You know, and it's always interesting seeing what Dan's working on. When I first met him and he was at Intel, it was really cool how he was bringing together, bring so much value and bring together so many people. So check that out. And, of course, if you guys want to learn more from me and how holistic tax planning can be incorporated not only to alternative investing strategies but all your sources of income, whether it's your business or your real estate or your stocks, et cetera, et cetera, you can go to prosperaltpacom slash apply and we will prepare for you an opportunity report which will allow you to see a projection of how much we can save in taxes with our advanced strategies for free. You can also go to prosperaltpacom slash opportunity report. You'll get that free report and, if you're interested, you can see what that may cost to learn more about those opportunities and you will learn things that you haven't seen anywhere else. Dan, thank you so much for your time. Happy tax savings.
Speaker 1:And everybody keep in touch. We got more. Great much for your time, Happy tax savings and everybody keep in touch. We've got more great info coming your way.