Real Estate Cost Segregation & Bonus Depreciation

Full Transcript Below

Intro
Hi, my name is Rod Khleif, and I’m the host of “The Lifetime Cashflow Through Real Estate Investing” podcast. And every week, I interview Multifamily Rock Stars and we talk about how they build incredible wealth for themselves and their families through multifamily properties. So hit the “Like” and “Subscribe” buttons to get notified every Monday when a new episode comes out. Let’s get to it.

Rod
Welcome to another edition of The Lifetime Cashflow. I’m Rod Khleif, and I am thrilled you’re here. And you’re going to get a ton of value from the gentleman I’m interviewing today. His name is Terry Judge, and he’s the founder and CEO of Core Solutions Group. And Core Solutions does cost segregation studies, which is not the most exciting topic in the world, but we’re going to make it as exciting as we can. And we’re going to talk about quite a few other things as well. So we’re going to have some fun today. Welcome to the show, brother.

Terry
Man, great to be here, Rod.

Rod
Yeah. So why don’t we start with having you talk a little bit about your journey and, you know, why you got into cost seg? I mean, I know, you know from reading your bio, but why don’t you just share a little of your story and bring us kind of the current? Yeah.

Terry
Well, the college route really wasn’t you know, my thing. And so I started as a young 19, 20-year-old and got started my own business. I was doing a lawn care business, got into direct selling, kind of learned– I was going for engineering, and then I just like, that was not me.

Rod
Yeah, I saw that in your bio. And I assume that has something to do with this new current path.

Terry
Well, we’ll get there. I have a crazy brain.

Rod
Okay.

Terry
Analytical meets entrepreneurial brain. So went down that journey. You know, in my 20s, through this company that I started, I actually experienced some pretty amazing success for a young guy and, you know, had the boat and the WaveRunners and the Corvettes. And it came a little too quick. Didn’t really have good mentorship around me. Got a little crazy, got a little stupid, started spending the money. Didn’t really have a mentor to help me channel that money and the other things, productive. So I found myself pretty much– my 20s went by like this, found myself somewhat dead broke around 30. And I’m like, oh, my God. I mean, so it was in that reinventing stage. I started another business, got into some utility marketing as far as telecom and gas, and energy in Michigan.

Rod
Interesting.

Terry
I’m from– born and raised in Detroit. So that’s kind of how I started to get into the– then one thing led to the other. Started having some success, started kind of, you know, getting my head back on straight.

Rod
Success selling the utility services?

Terry
Yeah.

Rod
Okay.

Terry
So I found another pathway.

Rod
Okay.

Terry
So make a long story short there, the state of Michigan underregulated deregulation of electricity. And I put all my, no pun intended, energy into that basket, and then that just stopped. The lobbyist came in, shut us down. I was like, okay, well, that sucks.

Rod
Right.

Terry
So at that point, that was probably– I did that for about three to four years. Then somebody sent me something on cost segregation. And at that time, I had no CPA accounting background. I was not an attorney by training. I did have a little of engineering experience going to college. And for some reason, Rod, I just thought that was so intriguing to me. I don’t know why, but I immediately called my CPA and said, what do you know about this tactic? What do you know about the strategy? He said, well, I was at a seminar. There’s a guy on stage talking about this very topic. I said, Is it legal? And why don’t you offer it? And then it just got complicated. But as I was still kind of in the energy business, winding out, something right behind– so when I started looking at cost segregation, I didn’t really, at that point, think I was going to start this company. But there was another program in the tax code called 179D, and that was for energy efficiency. And that was for any building owners, property owners putting in LED lighting, high energy efficiency, HVAC.

Rod
Was this a federal program?

Terry
It’s still in existence.

Rod
Okay.

Terry
So that triggered me. I said, wow, I’m in line with this energy program. So I started digging into this. It’s a federal deduction program where building owners can get multifamily.

Rod
On new construction?

Terry
New construction and existing.

Rod
Really? Okay.

Terry
You can get up to $1.80 a square foot in the form of this taxes center for going– so I’m already in the space of, you know, marketing LED lighting and all this stuff. And then right behind that cost segregation kind fo hit me. And that was the– I had the aha moment that I want to start this boutique company that nobody–

Rod
When was this, by the way?

Terry
This was 2006.

Rod
Oh, wow. That long ago. Okay.

Terry
2006, 2007. So I’ve been at this for 17 years.

Rod
Okay.

Terry
So I started a– I said, I’m going to start this tax advisory company. And I already had clients. The only thing I didn’t have was a CPA network.

Rod
Gotcha.

Terry
So I reached out to a couple of CPAs that I respected in town in Birmingham, Michigan, and one gentleman was a big CPA. And he’s like, this is exactly what I’m looking for. I’ve got clients. I need to meet with you right away. I had no PowerPoint. I had nothing. I didn’t understand the laws yet. So I had to ramp up very quickly. I ended up getting a car dealership owner. His brother died. He was inheriting the business. He was inheriting the buildings. The CPA brings me to this meeting. I do my little pitch. The CPA actually knew more about it at that time than I did. And then the client basically looked at me and said, you know, how much do you charge? And I literally went– I said I had no clue. I just made up a number.

Rod
Wow.

Terry
And he goes, what do I owe you today? I go, just half. I just blurted out $10,000. It just sounded like a good number to start. That launched my company. That concrete–

Rod
So you did a cost seg on a car dealership?

Terry
Two buildings right out of the gate.

Rod
Two buildings. Got you. Okay.

Terry
And that was my first check. I still have a copy of it. Then fast forward, I said, I think I got something here. I think this is marketable. I think there’s a huge gap–

Rod
Hold on. Before you move past that.

Terry
Yeah.

Rod
So how did you satisfy that sale?

Terry
Oh my God.

Rod
I mean, what did you do to do that cost seg because you really didn’t have any experience. Did you hire an engineer? Did you do it yourself? I mean, what did you do?

Terry
I started Googling.

Rod
Okay. You became a Google expert.

Terry
I needed to find a CPA/Engineer because it was now game on. I literally cold called a guy from the old Arthur Andersen days, and Arthur Andersen was just going down.

Rod
Right.

Terry
This guy was– he was one of their top guys in the valuation. He was from West Point.

Rod
A lot of people lost their jobs back then. So, you know, good people were available, right?

Terry
The timing was great.

Rod
Right.

Terry
Him and I ended up partnering. I didn’t actually meet him physically for about six months. I told him, this is what I’m going to do, and you’re going to fly in. I’m going to put together an event for– you know, basically, I had 30 CPAs show up. He came in, kind of did the–

Rod
So you were doing presentation to CPAs?

Terry
That’s how we started.

Rod
Okay. Interesting.

Terry
I pivoted since but I–

Rod
You know, before we go any further, I’m sure there are people wondering what the hell a cost seg is. So maybe we should stop for a second and talk about that–

Terry
Break it down.

Rod
Yeah. Because otherwise their going to lose interest and we’re going to lose people. So guys, in every building, there are lots of different components. There’s the windows, there’s the doors, there’s the carpet, there’s the roof tile, there’s the roofing material, there’s the lumber, there’s the dry wall, there’s the appliances, fixtures, and every one of those has a different remaining life, correct?

Terry
Correct.

Rod
Okay, you stop me if I screw this up because I’m not going to profess to be an expert. But every one of those items has a different remaining life, and the IRS allows you to accelerate depreciation by carefully documenting the remaining life on all of the different components in a building. So you got to break down the building, you know, to its parts.

Terry
Yeah.

Rod
And then you create an– really, it’s an engineer– you’re basically have an engineering firm for lack of a better way to describe it, right?

Terry
Yeah. Basically, it’s a forensic study.

Rod
Right.

Terry
And so the interior, just consider it all five-year property in the cost segregation rules.

Rod
Okay.

Terry
And exterior, land improvement, swimming pools, sidewalks, curbs, drainage, fencing, all that stuff is considered 15-year property.

Rod
Okay.

Terry
Okay? And that just so instead of waiting, why would you let the IRS hold on to that money for 27 and a half years when you can get it and put it in your pocket in today’s dollars, creating that beautiful time value of money.

Rod
Right. And so you’re able to write it off the first few years. And it’s extraordinary. I mean, I know that, you know, typically when we bring investors in– as passive investors in one of our syndications, I mean, we get anywhere from, you know, 50% to 70% in the first year depreciation on whatever amount they put in. I mean, it’s extraordinary. As a write-off. Did I describe that correctly?

Terry
Yeah.

Rod
Okay.

Terry
Yeah. Yeah. Yeah.

Rod
And so, you know, any seasoned good operator is going to be doing a cost seg on their asset year one. We just finished one. You just did one for us on our Nashville asset. And I forgot where we came in, but it was pretty exciting.

Terry
Yeah, over 9.4 million. I think an accelerated depreciation.

Rod
9.4 million in first year depreciation.

Terry
Yeah. And the beautiful thing is, you know, you get it all in year one.

Rod
Right.

Terry
But if you can’t use it all, it has a 20-year carry forward as well.

Rod
Okay. So whatever you use, you push forward.

Terry
You just push it forward.

Rod
Yeah, that’s beautiful. Okay. So the cost seg is all in one year then. It’s the way it works?

Terry
Yeah.

Rod
Okay. Alright.

Terry
Yeah. So right now, we’re in this world of 100% bonus depreciation.

Rod
Well, we’re past 100 now. We’re at 80.

Terry
Well, we’re still in 100 because we’re still doing people’s cost seg studies for 2022 purchases.

Rod
Got you. So just so you understand what he’s talking about, the IRS allowed bonus depreciation, and last year it was 100% in 2022, and it’s diminishing every year. And this year it’s 80%. So you’re finishing up some of the stuff from last year that’s still at 100%. Well, so guys, you know, you’re able to do that incredible first year write-off. And I actually had some confusion around this myself. I wasn’t aware that that was just a one year thing. But whatever you didn’t use, you carry forward is where I got the additional hit.

Terry
Right.

Rod
And so, you know, there are some things I don’t know very well, and taxes is one of them. But okay, so is there anything else to add to this cost seg conversation?

Terry
Well, people always say, well, they’re freaking out because they think that once bonus– once it resets in 2026, this cost segregation go away. And the answer to that is no, it’s just scaling down and–

Rod
Could you explain bonus depreciation because I can’t even explain it well.

Terry
Yeah. So bonus depreciation, again, in the normal cost segregation world, you know, we’re going to go in and we’re going to dissect the building. We’re going to put everything in a five-year or 15-year bucket, right? So it’s going to be one through five on all of your interior. And then it’s going to be one through 15 spread out over the course of– for all your land improvement cost.

Rod
Okay.

Terry
Now, we’re able to take the 15-year becomes one year, the five year becomes one year, everything gets compressed into that first year of ownership.

Rod
Okay.

Terry
It creates this enormous benefit.

Rod
Right.

Terry
And then for, you know, real estate professionals that now can use this huge amount of depreciation, they can use it to offset other income.

Rod
Right.

Terry
They can put it against capital gains if they’ve exited a property. So it becomes like this lever that has so much flexibility.

Rod
But the bonus, what’s the bonus piece?

Terry
So the bonus, again, so you get 100% all the way– you know, that was crazy 2022.

Rod
So 100% of what?

Terry
100% of the available depreciation. So let’s say we buy a building for a million dollars, and let’s just call it 1.2, we back it out. So the basis is 1 million.

Rod
Okay.

Terry
So let’s just say we find 35% in accelerated depreciation through a cost seg, that’s going to generate about $350,000. Right? So that 350 grand is now available to the investor all in one chunk.

Rod
So that’s what bonus depreciation means. It means that you can use 100% of it. So in this year, you’ll be able to use 80% of it.

Terry
Yeah. But the other 20 still gets spread out over the five and 15. So you’re not losing–

Rod
Oh, it doesn’t go away.

Terry
It does not go away.

Rod
Got you.

Terry
It just gets reset and spread back out.

Rod
Got you.

Terry
So you just got to wait for the other 20. You’re going to get it.

Rod
Over time.

Terry
Yeah. Over time.

Rod
Okay. All right. Well, that educated me actually, because I didn’t fully understand it.

Terry
Well, good.

Rod
Yeah, I appreciate it.

Terry
I had a value to Rod Khleif.

Rod
Yeah. And I should know that. It’s a little embarrassing that I don’t. So is there anything else about cost seg that– I mean, it’s pretty straightforward. Is there anything else about it that–

Terry
Here’s something that– because cost segment are not all created equal. It’s very important when someone buys a building, they’re going to start renovating it to get– whether they hire my firm or someone else’s firm, to get the engineers out there before the renovations and the CapEx projects start happening. Because we identify what’s going to be removed, and there’s something called disposition or asset disposition study. So we will monetize the actual components that are being thrown in the dumpster.

Rod
I see.

Terry
And that’ll give us another, you know, one and a half to 2X in depreciation because we’re going to be able to put some values on those assets even though they’re going to be thrown in the dumpster.

Rod
So do the cost seg before you start doing CapEx. Got it. Okay.

Terry
Yeah, that’s important.

Rod
Yeah, no question. You know, you mentioned something I wanted to circle back to for a second. And this is a little off topic, but not really. You know, you mentioned basically going out of business because the government changed some regulations. And, you know, there are a lot of businesses that are at risk at that, like short-term rentals, for example, and the regs where they don’t allow them and things of that nature. And so, you know, one of the beautiful things about multifamily is it’s kind of hard to screw it up, honestly. It’s hard for the government to come in and mess with too much. And, you know, as an asset class, multifamily is the only one that got help in Covid. I mean, we got hundreds of thousands of dollars worth of rent relief money when Covid hit, and none of the other asset classes got it. Retail didn’t get it. Office is dying right now. Warehouse didn’t get it. So, you know, it really is a solid asset class. And let’s shift for a minute to investing as a passive investor because I know you’re a passive investor in about 800– well, actually, let’s have you finish your story. Forgive me, I forgot. I cut you off in the middle. Finish your story, and then we’ll move into passive investing.

Terry
Just my journey?

Rod
Yeah, your journey. Your journey, because I cut you off. I apologize.

Terry
It’s okay. So we ended up– that it was a fast track. Once I got in alignment and I really realized I was going to put together a cost segregation study company, ended up partnering with this guy from Arthur Andersen. He was kind of my back office. He knew how to put together the engineering studies, and we ended up just crushing it that first 12 months.

Rod
Wow.

Terry
You know, I think we did over a million dollars our first year. And I just saw– you know, there’s just a massive need. So since then, we’ve tried to say– most of our clientele are seasoned multifamily operators. That’s where we really provide, I think, our biggest value. So we wanted to add other services. So we’re not just a cost seg firm. If cost seg ever got yanked, we didn’t want to put our pants down.

Rod
Sure. For that very reason we just discussed. Right.

Terry
Yeah. It was a stinger.

Rod
Right.

Terry
So we’ve added other services like energy incentives. Like that, we went back and put back the 179D, and there’s another program called Section 45L. 179D is just another deduction. It’s more 27 and a half year property that we can now pluck out that we otherwise could not.

Rod
Interesting.

Terry
And that comes in with any energy efficiency around appliances or building envelope.

Rod
Building envelope. Interesting. So windows, insulation, things like that.

Terry
Doors, roof, audition, lighting systems, energy management.

Rod
Well, lighting systems, that’s not envelope.

Terry
No, but that’s just part of it. That’s another component we can plug in.

Rod
Okay. So any energy efficiency work that you do, you’re able to help facilitate additional deductions?

Terry
Exactly.

Rod
Okay.

Terry
Now, we have to go through the certification. We have to kind of compare like buildings that we have to prove that now by you spending the money to put energy efficiency into your building that you now are either it’s like on a sliding scale from 20% to 50%. So the more that we can prove through our software modeling that we kind of have to do as a company, we can show that now your building is a green building. It’s using less energy and for that you get another bump in depreciation.

Rod
Oh, wow.

Terry
And it’s based on the square footage.

Rod
Okay.

Terry
So if you get 100,000 square feet, if we can qualify you for $180,000, it creates another $180,000.

Rod
So in a multifamily asset, you would add up all the square footage?

Terry
Yeah.

Rod
Okay. Now, obviously that work has to be post CapEx because you got to do it, right?

Terry
Correct.

Rod
So that’s after you’ve done a cost seg, I would guess, in that situation where we’d circle back to you like that Nashville asset you just did for us. Once, you know, we’ve got, like, we just put in LED lighting and we’re putting in lower flush toilets and things of that nature. Once that’s all done, and we’re putting in new windows, some new windows. So once that’s all done, maybe there’s some additional depreciation.

Terry
So here’s the kicker. And this is so– I hate this provision that– for multifamily, you have to have four stories or more to get this 179D.

Rod
Oh, shoot.

Terry
But the 45L credits is for three stories or less.

Rod
Okay.

Terry
And that’s a $2,000 per unit, dollar for dollar tax credit.

Rod
I see. Okay.

Terry
And that’s for heavy rehab and new construction.

Rod
And it has to be green related, I take it.

Terry
It’s the same type of building envelope, energy self efficient appliances.

Rod
So if you spend two grand on things that are helping with energy efficiency, you can get a $2,000 credit per door.

Terry
Yeah. It is a residential tax credit.

Rod
And that’s called 45L?

Terry
45L.

Rod
Okay, well, definitely, we need to talk about that offline for that asset we’re doing right now. And probably the asset we have in San Antonio as well because we just did a bunch of work there. So is there a time limit on that? Time limit on when you are able to apply for that?

Terry
They just got renewed both of them in the tax codes, so we don’t have to worry about expiring. And they actually gave it a bump. The IRS is so bad at like updating us. There’s still some gaps in what they want us to do and how we want us to do it.

Rod
Okay.

Terry
But as of right now, we can even go back in time and pick up. We can retro.

Rod
Oh, fantastic.

Terry
Yeah.

Rod
Okay, fantastic.

Terry
Just like we can do cost seg, how we can file, we can go back.

Rod
Oh, yeah. I did a cost seg on assets I had for ten years and saved 600 grand. And that was houses, believe it or not. That was a package of houses back in the day.

Terry
That’s beautiful.

Rod
Yeah. Well, let’s shift gears then. Let’s shift gears to passive investing. Okay? And I know you’re in passively investing about 800 doors at least. And actually, guys, if you’re an accredited investor, we actually have a deal coming down the pike right now, screaming deal. But let’s talk about the benefits of passive investing. So why did you invest passively?

Terry
First of all, I needed to start looking at my retirement as I started getting a little older.

Rod
Right.

Terry
I want passive income. I’m attracted to passive income. I don’t have the time to go out and build a real estate company at the moment. So I looked at it like, number one, I can align myself with a seasoned operator that can show me the ropes.

Rod
Right.

Terry
I can put my money into something that has so many mechanisms of appreciation, depreciation, and you preach this nonstop.

Rod
Right.

Terry
I can actually put my money in and I get a paper loss every year on my K1 that eats up any profit, but I still get the profit. It’s like it goes away. It’s like this phantom number. It’s beautiful. And then over time as that– I’m in the deal. I’m an owner. I’m a part owner in the deal. And, you know, you’re in with a good operator, and all of a sudden that thing, they either refi or they sell and you get two extra money.

Rod
Right.

Terry
You know, you can’t do that– I realized as I’m growing my business, I’m like, wait a minute, I got way too much money sitting in the market. This is stupid.

Rod
Right.

Terry
I am so disconnected from that path. And so by coming to events like yours, by the way, thank you, you opened my eyes. Big time. I was sitting in the third row and I’m just writing stuff down. Like I got to get in this business. So you really kicked me in the butt for that.

Rod
Oh, good. I appreciate that.

Terry
That was a phenomenal boot camp.

Rod
Good, good, good. Thank you. By the way, guys, we do have another boot camp coming up virtual, May 6th and 7th. And I think it’s still 97 bucks to come. It’s kind of a no brainer. I don’t sell anything there. So sorry if I introed that when we first opened up this episode. But crazy not to come if you’re interested in this business. Let’s talk about passive investing. Let me chat about it for a minute. So all the things he just said, the tax benefits are fantastic. You know, you work with a seasoned operator. You know, in my case, I spend time teaching my investors what’s going on behind the scenes. We have webinars and we update on a consistent basis. And so you’re learning some of the stuff that I can’t teach from stage. But additionally, the returns are fantastic. I mean, you know, typically on our deals, we’re approximately a 10% cash on cash return, meaning you get 10% of your money every year. And then typically, you know, we’re over a 2% multiple on our disposition event, whether it’s a refinance or a sale. Now, our preferred is to refinance and keep people in the deals. And then once you have your money and, you know, get refinance, get our investors all or most of their money back. And then you know, the returns are infinity because you don’t have any money in. Right? And so if you are accredited, we have a deal coming down the pike right now in Louisiana. It’s a screaming deal that– I can’t say it’s confirmed yet, but it’s looking really good. And so if you’re accredited, text the word “partner” to “72345”, and you’ll get to our website. You can learn a little bit about us, and you can also set up a call. But if that deal comes to fruition, which is like I say, it’s looking good, we’ll probably know within the next couple of weeks. I’m not sure when this episode airs, but check in it may already be available. This deal may already be available. But anyway, yeah, just out of curiosity, the deals that you’ve invested in, what states are they in?

Terry
Oh, man. Well, I did– so Colorado.

Rod
Oh, that’s a good state.

Terry
Michigan.

Rod
Okay.

Terry
Not so good. But the deal was pretty good.

Rod
Okay.

Terry
We did a couple of deals in Tennessee.

Rod
Tennessee. Okay.

Terry
Yeah.

Rod
Fantastic. Hopefully not the West Side of Tennessee, hopefully.

Terry
No.

Rod
Okay, the East good, like Nashville, Knoxville, that area. Okay, good. I talk about Memphis. I got my clock clean in Memphis, and I don’t even want to fly over Memphis airspace. And if you live in Memphis, I’m sorry, but that’s just how I feel. But anyway, you know, when you get your butt kicked somewhere, you kind of don’t even want to think about it anymore. And that was my Memphis experience. But yeah, we bought an asset in Nashville, which I freaking love. Of course, that’s the one you did the cost seg. So let’s talk about this. You’re an entrepreneur. You’re a shiny penny guy like me. I’ve built tons of businesses and some have been a success and many haven’t. And so, you know, where does the drive come from, brother?

Terry
Man, that’s a good question because my dad was blue collar. And I think that was my drive when I looked back. You know, he grinded every day, man. And really at the end of his life, it didn’t accumulate much. And it was just financial illiteracy is what I kind of got out of it. So I knew at an early age– I love my dad. My dad was an amazing man. But family guy, it’s like that “Rich Dad Poor Dad” thing. You know, who am I going to listen to at that point?

Rod
Right.

Terry
So I did have some friends that had some successful fathers that I kind of listened to, and they were doing some single-family and stuff like that. But I’ve always had that drive, man. I don’t know. I guess sometimes–

Rod
What do you think the why is? What’s the why? I mean, I know you’ve got a 20-year-old kid. If that has anything to do with it or if it’s more personal.

Terry
Definitely my son, definitely leaving a legacy, definitely not checking out of here not doing what I know I should have done.

Rod
No regrets, you mean?

Terry
No regrets.

Rod
Right. Yeah.

Terry
I’ve kicked myself that I wish I would have gotten into real estate, probably in my early 30s. I don’t know if I would have been ready in my 20s because I was figuring myself out.

Rod
Right.

Terry
But man, do I kick myself.

Rod
That’s a waste of energy. Respectfully, that’s a waste of energy.

Terry
I don’t mean myself–

Rod
Let me tell you something. Sorry to interrupt.

Terry
No, no.

Rod
But I think we’re headed for the greatest transfer of wealth we’ve ever seen in our freaking lifetimes.

Terry
I’m ready, baby.

Rod
Me too, brother. I’m in a lot of cash. And by the way, guys, you probably heard me say it. I’m going to say it again. It’s coming and you need to pick your freaking vehicle. You know, you can buy businesses. There’s 80 million baby boomers retiring and they have businesses. Maybe you buy businesses. You can do single-family. You can do other asset classes. You can trade stocks, whatever. If it’s multifamily, get your butt to my freaking boot camp, but learn your vehicle right now. Because if you’re trying to learn it in the thick of it, it’s going to be too late. And so you want to get up to speed right away because I really believe that incredible opportunity is coming. And here’s the thing to remember, multifamily takes money, but it doesn’t have to be your own money. And we were talking about the stock market a minute ago. I mean, I read that some serious economists that worked for one of the big houses, Morgan Stan– I can’t remember which one it was, is predicting a 26% decline in stocks this year. Okay? That’s freaking sobering. The stock market has already lost trillions in wealth for people. So, you know, if you’re in a stock market, I’d highly encourage you to get your butt out. That’s my opinion there. But that’s an opinion. But I think it’s a valid one based on where we are economically. But listen, this could be the greatest opportunity of your life, but you got to take action. You got to make a decision and take action and go make it happen. So, do you agree with me?

Terry
Oh, my God. 100%.

Rod
Yeah. Okay. Okay. Well, so with that in mind, are there any words of wisdom you might share with an aspiring multifamily investor, somebody that listens to this podcast? You know, maybe they’re comfortable. We know the comfort zone is a nice, warm place. We also know nothing freaking grows there. Or maybe they’ve got fear or limiting beliefs about their abilities. But what would you say to that?

Terry
I mean, power of proximity is so key.

Rod
Right.

Terry
And we all have fear.

Rod
Right.

Terry
And to go past that fear, face that fear, get into a mastermind, get into some sort of coach, check out Rod Khleif. This man–

Rod
Well, thank you, buddy. I appreciate that.

Terry
I mean, seriously, you pour yourself into this stuff and you do a lot of pro bono work.

Rod
Yeah. No, I do. And I really appreciate that. That wasn’t my intent with that question.

Terry
No, no, no.

Rod
But I will tell you, you know, my Warriors, I don’t know if you even know this. My Warriors now own upwards of 150,000 units that we know of. It’s probably more than that. We’re trying to actually tally them up right now. And I’ve only been teaching five years. So I’m super freaking proud of that. And in fact, we have a Warrior event coming up for my Warriors. We have 300 Warriors in Sarasota here this Saturday and Sunday.

Terry
Coming up?

Rod
Yeah, coming up. Yeah. So we’re doing deep dive on underwriting and things like that just for our students, for our Warriors. A bunch of them coming in. We’re getting ready for it. So, you know, we’re up to our eyeballs. But, you know, super proud of that. And by the way, if you’re interested in the Warrior program, text the word “crush” to “72345” to apply. And we don’t take everybody, but we’ll check you out. You check us out. And I promise you, even if you just have the call, you’ll leave that call better than when you got on it, whether we work together or not. But yeah, very, very proud of that. So let me ask you this, what is your definition of success? When you have your vision of your future, what does success look like to you? Because it’s different for different people. I’m just curious.

Terry
Yeah. It is different for everybody. You know, for me, it’s just really having that freedom to really start to give back. I’m 55 now. I find myself giving back more and more. My charitable, I started–

Rod
No, I know you’re involved in charity.

Terry
Yeah.

Rod
You support some local charities, it looks like. Yeah.

Terry
Yeah. I’m actually supporting this one right here.

Rod
Aerial Recovery?

Terry
This is pretty amazing.

Rod
Oh, really? Well, talk about it for a second. He’s got a hat on that you may not see. It says Aerial Recovery. What’s that about?

Terry
This hit me hard because I was looking for something I could really plug into. So Aerial Recovery is a group of Green Berets, this bad ass men. They come out of the military. They have– there’s a lot of suicide, obviously.

Rod
Yeah. I’ve spent a lot of time helping that. Veteran suicide is fricking horrific.

Terry
So the founder and CEO, he actually– so they’ve got an island out of BVI.

Rod
Okay.

Terry
And they train military folks that when they get out of the military or veterans to kind of have purpose again.

Rod
At this island in British Virgin Islands. Wow.

Terry
And they put them– and so now then they go on missions because these are some of the most bad ass men.

Rod
Oh, yeah.

Terry
They’re trained.

Rod
They’re super skilled.

Terry
Super skilled. So they come on in the world and they lose their identity. So they get their identity back, then they go start doing cool missions like sex trafficking. They go in their crane.

Rod
Oh, wow. Helping with that. Oh, very cool.

Terry
And they rescue people out of third world countries.

Rod
Oh, wow.

Terry
So they were really spending a lot of time in Ukraine, now Turkey with the hurricane or the tornado.

Rod
Wow. No actually, earthquake.

Terry
Earthquake. Sorry. Yeah.

Rod
The third natural disaster, you got it.

Terry
It’s devastating. 50,000 people.

Rod
Oh, it’s horrible.

Terry
So they’re in there doing cool stuff.

Rod
Oh, that’s really cool.

Terry
Yeah. So I’m promoting this and just trying to raise money and–

Rod
Aerial recovery. So guys, make note of that. I freaking love that, man. Yeah, and it’s interesting. You know, when someone is at the height of their game, like these special forces guys, these Green Berets, I mean, that’s really the pinnacle of their life up to that point. It can be like the old astronaut phenomenon where they come back from the moon. It’s like, now what? In fact, I just had Mikey Taylor sitting in that chair, the skateboarding champion, you know, super well known in skateboarding. And he had that same thing happen to him. He fell into serious depression. And so I’m sure that these guys have the same thing. And I love that, buddy. That is freaking–

Terry
It’s Healing the Heroes. That’s the name of it.

Rod
Healing the Heroes. Oh, very cool.

Terry
That’s the name of the program.

Rod
Very, very cool. Well, do you have any book recommendations? And they don’t have to just be real estate related, but any books that you really enjoy or maybe gift more than another?

Terry
What I’m on right now is “Atomic Habits” by James Clear, it’s the author.

Rod
That’s a great book.

Terry
Oh, my God.

Rod
Yeah, it’s good.

Terry
I thought I was doing my morning stuff okay. It dows you in it.

Rod
Nice.

Terry
You know, time is the most– is the asset that we’re trying to– right?

Rod
That’s it.

Terry
Right?

Rod
It’s the only one we have.

Terry
It’s the only one.

Rod
Right.

Terry
How do you spend your day? Who are you plugged into? Who do you surround yourself with? What are you putting in your head? The information is there. You just got to go, you know, and just go grab it.

Rod
Yeah, no question. So in your entrepreneurial career, are there any failures, notable failures that come to mind that might add value to my multifamily investors? Which is entrepreneurship certainly. You know, you’re creating a business plan for one of these assets just like you’d have a business plan for a business. Does anything come to mind that’s brilliant? I mean, I know you’re crazy in your 20s, so that certainly comes to play.

Terry
Yeah. You know, you don’t need to do this alone if you’re a young entrepreneur, but it’s okay to fail. My biggest character-building time in my life is when I freaking failed and fell flat on my face.

Rod
Yeah.

Terry
And that’s when I’m like, whoa, that’s the wake up call. But just get around people. I think if you’re up and coming and you reach out to successful people, you’ll be surprised on they want to help and they’ll reach out to folks and say, hey, you know, I’ve been following you, I like what you’re doing. What does it take for me to buy you lunch? I know a lot of people probably won’t do that, but they need to do that.

Rod
Yeah.

Terry
And I think that is just so– don’t be afraid to fail. And then when you do, make sure you know, you don’t do it again. And then get around people that can coach you and help you. I think that’s phenomenal. If you can do that, you will shortcut your journey immensely.

Rod
Sure. That’s actually the reason I started my Mastermind because there’s so many little tips that people have forgotten that I can’t possibly teach them all of them from stage. And that’s the reason I started it. And it’s been so incredibly valuable just to get around, you know, people that are further along than you are. You know, people that think what you think is hard is easy. This is my Multifamily Boardroom Mastermind, which isn’t right for most of the people listening to this show, but you know,something to aspire to for sure. But, well, listen, Terry, this has been a lot of fun. I really appreciate you coming down here to do it in person, which is just so much better than doing it on freaking Zoom.

Terry
I wish I was number one in the seat. But I’m number two. I’ll take it.

Rod
That’s right. Yeah. We just started this live thing, and I’m really loving it.

Terry
This is cool.

Rod
And I want to try to do every interview I can here.

Terry
So much better than Zoom.

Rod
Right, right, right, right. Exactly. Well, I appreciate having you on, brother. Thank you for coming.

Terry
Thanks, Rod. It’s been awesome.

Outro
So one other quick thing. We encounter so many people that are, frankly, frustrated. They’re looking in the mirror and they’re frustrated that they haven’t been able to escape the rat race. They haven’t been able to build cash flow to the point where they’re able to have financial and time freedom with their families. And maybe they see other people buying real estate and creating incredible cash flow, and they think, well, it’s just scary. You know, buying apartments is intimidating. And I get it. See, that’s why we created our Warrior Mentorship Program. They’re our coaching students and they’ve had extraordinary results. My students, I’ve been teaching about five years and they own upwards of 140,000 units now that we know of, right? And we feel like it’s just getting going. Now, we’re looking to grow this group and really take it to the next level and honestly believe that the greatest transfer of wealth could be upon us right now with this current economic environment. Everything’s going on sale. So we’re looking for people who want to follow a proven framework, really like a blueprint or a map, literally step by step. And then they’re able to leverage our systems and our incredible network to raise money and equity, to find deals and close those deals and build partnerships, really nationwide. So if you’re interested in finding out more about how you can become more in our incredible network and take advantage of the unbelievable opportunities that are upon us, you can apply to my Warrior Mentorship Program by texting the word “CRUSH” to “72345”, or you can go to “MentorWithRod.com” and what we’ll do is we’ll set up a call so you can check us out and we can check you out and see if it’s a fit. Now, again, you can go to “MentorWithRod.com” or text the word “CRUSH” to “72345” to apply, and we will speak soon.