Entrepreneur Intel

Wes: I'm super excited about our guest today. Uh, he is a growth and strategy expert who has nearly 35 years of entrepreneurial experience. He's an entrepreneur who helps make commercial properties more profitable. His company has saved his clients over two million dollars. Billion dollars total through tax incentives.

He is a CEO of core solutions group. Welcome Terry judge.

Terry Judge: Oh, Wes, so great to be here. When you said 35 years, I about fell out of my chair

Wes: Yeah. Sorry, sorry to date you, but

Terry Judge: You're aging me, brother. You're aging

Wes: sorry, sorry about that, but I'm super excited to have you on here. Um, but I first got to ask you before we dive in, you know, you, you've saved clients 2 billion in revenue. You've been doing this at CORE for 19 years, but dating you back as an entrepreneur for 35 years.

Like what's that, what's the most important lesson you've learned thus far as an entrepreneur?

Terry Judge: Wow. So to break it down to, I guess the top thing, um, there's so many that come to my head, but you know, as a young guy getting started in my journey, I think for me, I was fortunate enough to have. Some people around me, some, mentorships that I didn't even know they were mentors. There were just people that were already kind of where I wanted to get to.

And I just mimic them. I remember my first, even in my first sales job, you know, coming out of college, I said, you know, just who's the top guy in the office. Let me follow him around. And I would literally take my tape recorder back in the day, remember the old tape recorders and just follow him and record his pitches, um, and just And that was where I didn't even know that was like my first mentor, but I just felt like that was a smart thing to do.

If, you're going to succeed in any endeavor, why not seek out somebody that's already doing what you want to achieve and just mimic and copy. So I just thought that was a, I might've picked that up from one of my first sales managers. Like that person might have told me that, I don't know, but I just felt like, okay, I got to gravitate to, to towards somebody in the office that can teach me and accelerate my, my, my game.

And. Not knowing how to do any of that stuff. Cold call, people skills, rapport building. It's, uh, that, that, that just that one little tip there really changed me. And I, and anything I do now is if I want to learn, you know, investing strategies or how to take down a multifamily property, or, you know, just to expand my knowledge, you, it just, it just kind of makes sense that you're going to seek out people that.

You know, you can read a book all day long, Wes, as you got, you know, you, you, it's analysis paralysis, but until you take action, until you actually get out there, roll up the sleeves and see what's really happening behind the scenes. Um, that's really where the rubber meets the road, um, where all the magic happens.

And, uh, and that's really helped me, I think, to, get kind of helped me get to where I'm at today.

Wes: So going back early on for you, is that business specific? What was that? Were you a commercial real estate broker? Like, where did you start in this real estate

Terry Judge: No, no. So no, I, in, in the beginning stages, I was back in God, I was, uh, well, I've sold many different things in my right, right outta college. I was doing different things, but my main gig was like commercial telecom. Like door to door, old school. We were back in the day, we were like, uh, you know, we worked for the big phone company.

I think back in the day it was Ameritech for those that I'm probably dating. A lot of people are

Wes: there cell phones then, or what? What were

Terry Judge: no, it was landlines, man. We were just consulting and we were doing these, these contracts where as competent dereg, I remember, remember when deregulation in the phone service started kicking in.

And, uh, so the, the Ameritech, the, you know, the, the incumbent, the big phone company. that everybody used. They were worried about losing their local dial tone customers because that when deregulation hit, um, people had a choice. And so we would, we would just go out there and secure these contracts. It was kind of fun and funny, but we were literally cold calling.

I'd be in downtown Chicago getting thrown out of buildings. And those days really built some grit and I would just challenge myself every single day. I couldn't quit till like five o'clock at night and I would do all my big sales from like, like four 30 to like five. Cause I would catch some of the executives kind of winding down and I would be able to kind of maneuver my way in.

Um, but anyway, so I, I would just challenge myself. I took the knowledge from the top guy. He would tell me here's what you got to do every single day and I just applied it. I always had a good work ethic.

Um, so my dad, you know, instilled that in me and I think that's, that was a big catalyst.

Wes: It's funny you say that. Like, a lot of entrepreneurs I talk to, a lot of the same circles we run with, it's a very common theme, like, kind of middle of the pack, not the smartest guy, but it's, it's, it's, it's kind of interesting. My, my first, like, job in the cor, I, I kind of went down the corporate, corporate.

Sort of corporate route where I was, I was a loan officer selling mortgages. And I'll never forget my first day. I'm talking to my boss on the phone. He was in California. I'm in like Farmington Hills, Michigan. And I'm like, what do I do? I'm all excited. And I'm first day at the office, you know, my first like real job.

He's like, keep walking, keep walking, turn left. And I'm like, all right, now what? He's like, see the phone. I'm like, yeah, he's like, start dialing, click. I had no idea what I was doing, but it's funny you say that like that. I think that's where grit comes. You know, you, you kind of have to go through the reps to, you know, to kind of get better and live the experience.

So for you, like out of that, doing all that stuff, landing, like what, what led you to go off on your own and start your own company?

Terry Judge: I think I just got tired of being kicked in the teeth. And I felt like, why am I continuously building other people's dreams? Cause I was like, you know, I was reading books. I started getting into Tony Robbins back in the day, Robert Kiyosaki, and you know, you start getting inspired and you can do better, you can do more.

And I knew I was starting to build my skills, my people skills, my rapport building skills. Starting to make some money in, in, in corporate. Um, but I always had this in the back of my mind. Like I'd love to be able to one day, you know, just do my own thing. And I think it was more or less for the freedom.

For me, it was more or less the freedom just to come and go and create my own. Even if I could just replicate my income and just, but not be able to, and just kind of run my own day was so intriguing and inspiring. To me. So I've always had this thing, even when I was a kid, like I, I wanna, I would always think about, God, what kind of business can I start today?

You know? And I had, I, I started cutting grass. I had a side business with cutting lawns, you know, when I was probably 16, you know, 17 years old. So I always had this bug, this drive. Um, but it wasn't until, I mean, I've always been like a, I, I've done some in independent stuff. I've done cons, cons, solo, you know, solo consulting, stuff like that.

But it really wasn't till I was 32, 33 years old. When I really, when I first started my company core that I've been running now for almost 19 years. Um, and it wasn't until then is when I really found this niche that I really took some of the attributes and some of the skills and some of the failures and some of the successes, I was ready, I think, ready mentally to start my own gig and, and that was back in, um, 2005 2006.

Wow.

Wes: I'm really, uh, I'm really excited to have you on, number one, you're a great guy, but I think what you do is really fascinating. You know, the cost segregation, so I gotta ask a favor, explain it like you're talking to a fifth grader. Because I think like what you do, there's so much value. And there's a lot of people that have no idea what it is you do or what cost segregation is.

And I actually have a friend, I'm not going to name names, that has a very successful multifamily business for many years, and he didn't know what cost segregation was, and he was in the industry. So do me a favor and just share with me in the simplest terms, what, what it, what it is at its core. Mm hmm.

Terry Judge: So, yeah, I mean, even my own family still says, you know, what the hell does Terry do for a living? Um, you know, we are, so cost segregation is a just, it's, it's a tax strategy that's been in the code, tax code since 1969, and it just basically says that a real estate investor can write off their property.

Within one to five years versus waiting the normal traditional depreciation schedule for a commercial property in the United States is 39 years. It's 27 and a half years for multi family residential investment property. Any other commercial asset is 39 year property. So in, so if, so if you and I go out and buy, let's say an apartment building West and we pay a million dollars for the building, that building is going to depreciate for 27 and a half years.

Okay. So every year we're going to get a little bit of a deduction off our

Wes: And just to be clear, not to interrupt, but like, depreciation is the, the, the material things lose value, or can you define depreciation on

Terry Judge: Yeah. So depreciation as a whole. Something depreciates, it loses value. Just like when you buy a car, you take it off the lot. You're going to lose like 10, 000 as soon as you drive it off the lot. Same with a building. There's certain assets in a building that are going to wear out. Well, In the normal traditional, you know, what we call a straight line method in depreciation, not to get too deep into the weeds, you know, those assets are going to wear out.

But, but the old way, it just, you know, you're going to still be able to keep, you're not going to be able to write them off or get them off your books. You're going to have to just, you're locked into this 27 and a half year schedule. Um, where we come in and we can break out certain components that actually will wear out, or the IRS will say these assets will depreciate within a five year life. And therefore, we can break apart that building according to these new and improved IRS tax rulings that fall under cost segregation in the tax code. Therefore, if somebody then now buys a building, we can actually write off up to like 30 to 40 percent of that purchase price in year one. It creates this huge kind of this cash benefit because if you, let's say you put down, you know, 100, 000 and you're going to get a 300, 000 tax incentive or tax break, you're up 200, 000.

So that's the game that we show in real estate investors all across the country. Why would you let the IRS hold on to your money for 39 years or 27 and a half years? When you can put that money back in your pocket by depreciating and accelerating that depreciation within that property, creating this time value of money proposition, right?

A dollar today is worth more than a dollar down the road. So by doing what we do for a living, we can write your property off in year one, And you can take that depreciation number, okay, which is an expense, it's a write off, you can use it against income. When we apply it towards income, so let's say the building is producing, you know, 100, 000 a year and you've got a, you've got a 50, 000, you know, tax, uh, um, uh, payment.

Right? So, everyone's making money. You got, you owe the IRS money. We can use that depreciation to wipe out your tax bill and it has a 20 year carry forward. So, there's a lot of moving pieces. So, you know, we, we built some software over the years where we just plug in some numbers and then we show real estate investors, uh, free of charge what their tax savings would look like.

And that's what's accumulated. Over 18 years to two billion dollars now. So instead of writing the check to Uncle Sam at your ordinary income tax rate, which is by the way, almost 40 percent in the United States. It's one of the biggest line items businesses base. We can, we can mitigate that and make it go away.

Wes: So you haven't disappeared, so the IRS hasn't made you go. You're not in a bunker right now, are you, in protection?

Terry Judge: You know what's funny? You know what's funny, Wes? The, it's, it's, it's crazy because the IRS actually views our strategy. Okay. And it's not my strategy. It's just this, Improved strategy in the TACO. They actually look at this as the legitimate way now to write off a building and, but what blows my mind, and I will just tell you this.

Most CPAs in the United States don't do this service. They don't, they don't, first of all, it's not that they don't do it. They, they hire a company like mine. They can, they don't typically offer this in house. And the reason is because it's, there's a lot of legality around it. And you need engineers to actually carve out what, what pieces of the building can be qualified and be written off.

And then we have to, we have a whole format of how we have to follow By the way, and it's all written in the IRS code, they show us how to do it the way they want us to do it. That way, that's why we have no audit risk. This is not an aggressive strategy. It's why I started the company back in 2006. I'm not a CPA by training.

What I witnessed and recognized as an entrepreneur is that nobody was doing this. In 2006, nobody understood this. Nobody, I got, somebody showed this to me or I got introduced to this somehow, some seminar, whatever. Um, I got pretty juiced up about it. I called my CPA. I said, what do you know about cost segregation?

He's like, huh?

Excuse me. He had to Google it. I mean, I'm like really? So I called the next CPA and he's like, I heard of it I was at a seminar in Columbus and some guy on stage was talking about this very topic and I said, is this legal? He says it's legal. I said, do you do it? He said no. I said why? He says I don't have the tools to do it It's not in my wheelhouse.

And what I found was most CPAs across the country don't offer this service However, it is a, it is a, it is a tax service that is available to every taxpayer. So if you're buying your first rental property, duplex, fourplex, 20 unit, 100 unit, all, all the way up, doesn't matter anything, any type of a commercial real estate investment property or residential investment property, you qualify for this strategy.

And we, again, we have, you know, even on a 500, 000 real estate transaction, Let's say an Airbnb, um, that's about a 200, 000 write off, um, that you can apply if you do it right, we can actually, we have strategies that will show even high net worth W 2 earners, how to deploy this strategy and wipe out your W 2 taxes.

There's a certain, another. On top of what I'm sharing, there's multiple layers of this stuff. Yeah. And we just guide people through this. Like we have a very simple process. So it got exciting for me when I was starting off as an entrepreneur thinking, wow, I found a niche in the tax code. And since then, we've been just adding different niches. As, as offerings for our clients to add more value, because again, the IRS, they will promote where they want action. If they want buildings purchased in the commercial real estate space, that's why they promote, they need affordable housing in the United States. That's why they incentivize guys like us to go out and buy real estate and then leverage the tax code to pay no taxes.

It's what Donald Trump does.

Wes: You know, what's interesting is, I think, The first taste I got of it, you know, we have some mutual friends and I invested in a multifamily real estate deal. So these guys go out, buy a couple million dollar piece of property, right? I love it because I don't have to do anything. They're the property manager.

They run the deal, but they raise capital for the deal. So I think in this specific deal, it was a hundred thousand dollars that I invested in the deal. And, uh, at the end of the year, right? I mean, as an entrepreneur, W 2, you have to do your taxes. You're getting K 1 sent to you. Uh, I get a K 1 from the property I put a hundred grand into.

And that property had, for my portion out of the a hundred thousand, I had a 45, 000 loss.

Terry Judge: That's that

Wes: So is that, so for, for, for understanding there's, there's credits and there's expenses, right? Is this a credit against what you owe the IRS or is it just leaned against your, as an expense?

Terry Judge: It's just an expense. It's a deduction. Think of it as like, um, you know, you're a small business owner. You're going to write off your phone. You're going to write off your, you know, your car. You're, this is nothing more than that in, in the scheme of things. It's just bigger numbers.

So it is a deduction.

Yeah.

Wes: so for me on that, right? So if you look at this as. 100, 000 asset for 58, 000 year one, essentially to a certain degree. And then on top of that, there's multiple ways to make money on real estate, right? There's appreciation and all these other different things that go about it. But I want to go back to highlight you on making that decision.

So as an entrepreneur, right? Like that light goes off for you, whether it was a seminar or whatever. I'm thinking in my head, like everybody in this brother, Back in 2006 is running as fast as they can into this space. But I don't hear outside of you, Terry, judge and core, like, I don't, I don't really hear much of cost segregation.

Like, what, what was the market like then, and what does it look like now?

Terry Judge: great question. Um, so nobody was, I mean, very few companies, there was not a lot of competition back in the day. I mean, we, we were one of the earlier pioneers to get in this business. So I had to learn it all from the ground up. Um, I had to kind of figure it out, like how to put the deliverables together.

Uh, I was lucky where I found somebody, you know, that came out of a big accounting firm that, you know, became my partner, uh, back then. And that helped me, but it's it's still this kind of this mystery. It's the let me just say this It's the biggest tax in my opinion in terry's humble opinion It's one of the biggest tax strategies that exist for real estate investors um, and I would it's still probably one of the most missed Um, one of the, one of the services that just doesn't get promoted.

Um, usually from a financial advisor standpoint or from an accounting standpoint, it's usually an afterthought. Um, we typically find and work with the investors. Some of our marketing strategies kind of target more of the, the actual end user. And they literally get pissed off when we bring this to them because they're like, how come my CPA has never introduced me to this?

It's just, I don't understand. And I explained to them, like, listen, this is. You know, this is a, this is a service that CPAs just don't offer in house. They don't have the, the, the, the expertise. They don't want to take on the audit risk. They're, they're not going to pay a guy 150 grand to bring on an engineer.

Um, it's just not their practice. It's not their wheelhouse. It's not in their bandwidth. So they would really, really, they would rather, you know, bring on a specialty company. Matter of fact, the, the IRS frowns upon. CPAs doing this internally. They specifically say in the code, they, you need to have a third party engineering tax specialty company to do this the correct way.

And by doing that, because this is all we do all day long, we can supply audit defense. Everybody can sleep at night and therefore we've had zero disallowances knock on wood over the course of time. Meaning that this is not, now we've had some challenges. IRS will say, Hey, Mr. Client, why do you have a half a million dollars in depreciation on your books or on your tax returns?

We will come in and defend that. And we've had zero, you know, we just show the report and they, the field examiners at the IRS are like, holy shit, like this is intense. Like you guys do it the right way. And we're like, correct. So just because we've been out there long enough, um, we've got We know how to do it.

We stay in communication with the IRS. We follow what they want us to, how they want it presented. Um, every, every T is, you know, crossed, every I is dotted. We don't skimp because we're talking about large dollars per transaction for, for the client. I mean, these are hundreds of thousands of dollars average result and result for the client when they hire us.

Wes: So if, if you, if I think about like the traditional path of like, listen to this person and listen to your teacher, like CPAs are kind of held up here right, at a high regard and financial play. Like why aren't they recommending this? Or is it just so complicated that they can't speak? Intelligently around it, but it's just taboo to me that in 2024, that it's just not more widely accepted or talked about.

Like I said, my, my close friend in this space had no idea. And I'm like, how do I know? And you don't know. And to me, it's like, that's, that's kind of, that's off. Right. That's, that's

Terry Judge: Yeah. We, we still get that quite a bit, man. Um, I just, I, I feel it's just the CPAs. They, if they have a large real estate client base, they're, they're in the know and they're all over this and they are already working with a company like mine, um, for those, those, the smaller CPA firms that might have two or three clients that have real estate, you know, they've just not, you know, they're It hasn't been that big of a, uh, a request for them to go out and learn this and find a strategic partner that can do this.

So I think it's just kind of all over the place. But if you find like a, you know, some of the bigger CPA firms, um, you know, they're there. I just, I just got the phone, you know, with, We're working with a lot of the big CPA firms now. Um, I won't mention any names, but we just got the, I just got the call today earlier, you know, we're putting together a strategic partner with one of the largest CPA firms in Detroit and we work with all of them.

So, um, and we work with midsize, small, and we want to partner with them. We want them to be able to have this service at their disposal. Because if they don't, like you said, it can be egg on their face by not thinking out of the box and having this strategy on hand. And they should, and a lot, and I will say this, that it is changing.

So a lot of the CPAs that we've worked with over the course of time, you know, now that they know this exists, they know the impact, um, they are promoting it during their reviews. You know, the CPAs that just call you and say, Hey Wes, you know what? Hey buddy, it's January. You had a great year. Send me over your crap.

I'm just going to tell you what you owe. And those are the types of CPAs that are dying on the vine. CPA firms are now reinventing themselves to be more of an advisor. More of a planner, especially if they have companies that are growing and they have entrepreneurs that are starting to get into real estate, they have to know this stuff and we teach and educate our CPA partners all the time and support them in this because it is a different type of a service.

It's, it's, it's, it's, there's a lot of, there's over 300 court cases. and IRS revenue rulings that support cost segregation. You have to have engineers on your team to actually physically go in and understand the blueprints and the way the buildings are put together. And then there's the tax piece, which all CPAs understand intimately, depreciation.

So when we, we don't get pushback, CPAs embrace this. Once in a while, we'll get a CPA that'll be so old school. They just push, push back. And what I will tell their client is find a new CPA. Cause that CPA now is doing you a disservice. I have to be honest as a fiduciary person to my clients. And I will point them in the right direction with CPAs that are very savvy with real estate tax.

Wes: So there's so much value here. And I think as an entrepreneur, anybody that starts to kind of go down their path or accumulate You know, money, you have options, right? I mean, you either can reinvest it back in your business and bet on yourself and grow your company. You can put it to a financial advisor.

You can invest in stocks or do it yourself. You know, then there's real estate, right? And I think real estate for me, I'm 43 almost. And you know, there's always, everybody knows real estate's where it's at, but I think that there's this big challenge out there, like the double Dutch thing, like, you know, two jump ropes.

How do you jump in? How do I do it? To me, like with, with what you offer and do it, like people are interested in it. And then if they start to realize and understand how you can add so much more value to that transaction. So investment properties, we're talking just, Hey, I want to accumulate a property a year and rent it out.

I can do cost seg on that piece of property. Is that accurate? Airbnb multifamily commercial. So, you know, I had a business for many years where we were shelling out. I mean, gosh, by the end of the day, by the time we paid for everything like eight, nine, 10, 000 a month in rent, and we did that for many, many years.

And I learned about Costag and I'm like, holy cow, like how much money will we have got back? It makes me nauseous, but talk about, you know, we go in this fictitious million dollar building. First year, we're going to get back, is that about 300, like is there a basic kind of just 30%, 40%?

Terry Judge: yeah, so we take a look at the building, the purchase price. Um, we have to back out the land, okay? Land does not depreciate. So we back out a portion of the land. That's usually 10 to 15 percent off of the purchase price. Okay, so let's just say it's 1. 2, we're going to take 200, 000, just roughly, or 100, 000, whatever, or that would be, yeah, 10 to 15 percent, so 150 grand.

Um, so our basis would be left, let's just call it for simple math, a million dollars. Okay, so 200, 000 went to the land, or 150, whatever it was, and then the rest of it would be towards the real estate. That's, that's called the basis. So we tie our numbers to the basis and from that number, it depends on what asset class it's going to be.

Let's just say it's multifamily. That's a popular asset class people like to invest in. That's going to be about 35 percent that we're going to be able to write off in year one. Um, in, in, in this climate, you know, right now we're, because we're in what's called bonus depreciation, we're able to take 80%.

This year it's gonna be 60%, but 2000, I don't want to get, I don't wanna bore you to death. Big chunk of that. We can take, um, you know, it was a hundred and it was 80. So we can, we can move and, and take 80, let's just call it 80% of, um, of that 35 or 30%, let's say 30%. So there's, there's, there's real numbers.

That, but all, all, all, all said and done, we're taking probably about 35%. of the basis. you can take, you know, 80 percent of that in year one. Some of the other, there's, there's additional benefit. There's some, there's some stuff that you can get the following year and the year after, but you're getting most of that depreciation, um, in year one.

Wes: So if I keep it on simple terms off of that strategy, so you and I. We built, we buy a million dollar piece of property. Uh, we both put in whatever we put in, right. The minimum or whatever we do. That depreciation is going to come back in the form of 350 of which we split 175, 175. So if I'm a business owner, right.

And I happen to, you know, have 175 sitting as income that year, and we have 175 coming back in depreciation. Does that net that out to zero?

Terry Judge: So it, so if, okay, so we get into the rules and when and how you can take the depreciation. If you are a real estate professional, meaning that you do real estate for a living, you then can take that depreciation and use it against income that we consider active. It could be that you could have another business, business income.

It could go against capital gains that maybe you sold a property. You could have three other properties that are generating income and all of a sudden in comes this 175, 000. Tax benefit or depreciation, you can literally apply it to all this other income. And for dollar for dollar, it would take that to zero.

Okay, we'd wipe that out. Now, if you are a business owner, like, you know, you're not a real estate professional, meaning that, like you and I, we own businesses. And, and let's say we own, we bought a piece of property, that property now, you know, either we have a tenant in that property and that there's multiple tenants in that property that are paying us, you know, whatever, 50 grand a year.

We can take a portion of that 175, 000 and then we can wipe out any tax on that 50 grand in income that that building is now producing. And we can, we have a 20 year carry forward. That it'll go against, you never lose it. So there's, there's, there's rules that we get into. I don't want to get into it too deep here.

If there's passive rules and there's active rules. And as when we consult our clients, we say, okay, let's take a look at your overall picture. Let's see what you own, what you're trying to own, and we'll give you some suggestions on where we can convert that passive into active. And therefore, it'll make the most amount of impact to your, to your tax burden.

There's different scenarios for different folks, so there's not a one size fits all. But the rules are the same. We can help plan and help our clients kind of plan through this. Like when you start buying, so let's say somebody's a doctor, and they're making a million bucks a year, and they're getting crushed, or they own an insurance agency, or service companies, whatever they're doing.

I would suggest for them, they can go out and buy a short term rental property. There's something called the material participation loophole, where as long as they manage that property, okay, for let's say 100 hours a year, which is nothing. That Airbnb property, the IRS looks at it as a more of a commercial property.

It's more of a business Therefore it's active. You can take that depreciation and use it against your W 2 Income and it that's why it's in a lot of people don't know this. It's called material participation. I bought it I'll just give it a perfect example. I'm on my own case study As I started getting into this and I'm starting to earn more money in my business and business was growing.

I'm like, what am I going to do with this money? It's kind of what you talked about. What do we stick it in the market? I mean, the market's crazy. It's so unpredictable or you strategize. And you figure out a better use of your hard earned money. And real estate is a safe haven if you do it right. So I bought a short term rental condo down in Naples, Florida.

It was always a goal of mine. I bought it at the end of 21. And I was able to, now I'm not a real estate professional because I spend way too much time in my day, in my day job. You know, I have real estate investments. I, I, I'll talk about that maybe later on. But, um, I, I was able to buy this condo. I put 130, 000 down.

My first year depreciation benefit was 200, 000. So I was like 70, 000 plus. I immediately was able to put tenants in there, which I, I charge a crazy amount of money per month because the demand to be in Naples, and I'm freaking, I'm looking, I wish I was there right now. I have a tenant in my condo right now.

It's killing me. I want to be down there so bad, but I rent it January, February, March pays for almost 85 percent of my carrying costs and they're helping me pay down my mortgage. But I was, the point is that when I bought it, I did a cost segregation study on the condo and I was able to write off, I was able to move 200, 000 West off of my adjusted gross income from what my company pays me.

So I made money. Buying that my dream getaway place and now I'm looking for another one because I look at like now The way I buy real estate is I I don't look at it what it cash flows I look at the tax situation that i'm in And I want this to be a wake up call for people that are out there making money in their business and they're getting smoked because they have no plan and no offense to their CPA, but their CPA is not, they're not real estate experts.

Most CPAs don't have real estate in their portfolio. Some do, but a lot of them don't, and they don't know how to advise, nor do financial advisors. So what I would suggest is, you know, have people, a good CPA that understands real estate tax. Have a cost segregation, yours truly, happy to help. Um, you know, and a financial advisor that aligns with your goals.

What are your strategies? What does your retirement look like? Would you want to develop passive income before you retire? There is a strategy. And a method to the madness by applying, it's not as complicated as you think. I wish I started doing this 15 years ago. I didn't know I was busy building my company, you know, and all of a sudden I'm like, I got a tax bill one year.

This was back in 2020. I almost, I said, I'm an idiot. I am. I am the tax guy. I am the costed guy and I'm getting hammered with the tax bill And I said i'll never let this happen again So I fired my cpa my cpa was with me for almost the whole time of my company career Never brought me one strategy never brought me one idea And when I would bring stuff to her, I would get pushed back.

So I said, no more. I got myself with a real estate CPA. I have saved hundreds of thousands of dollars. I've taken the hundreds of thousands and I've now leveraged myself into a pretty significant passive income situation. I diversified myself and I don't do any of the work. I am a passive investor in some of these deals, except my short term rental that I personally manage, which is nothing.

Okay. Now, if I get more and more Airbnbs, maybe I'll hire a manager because my goal is more freedom as I get older. I don't want more headaches and work. I want more strategy and I want to be able to do smart business transactions with my hard earned money. And I will just tell you, um, you, you know, it's not as difficult as long as you have good guidance and good coaching in your life.

And it goes back to when you asked me that very first question, you know, it's mentorship, it's getting around people that are already way past you and doing this type of stuff. I was not a real estate investor. I was just a cost aggregation tax guy. I had to learn. Cause I hated the stock market. I don't go in there and trade accounts or stocks.

I, I, I have an issue with kind of, I've lost money in that game. I don't, cause I can't control it. Um, you have a, you know, and that's okay. I have, I still have money in, but I, but I'm just taking my earned income and investing it like you. I know you and you and I are probably, I think we're in the same, same syndication where we've invested with, you know, good operators that are, that's, that's what they do all day long is they buy these multifamily and other, you know, Storage and, you know, mobile parts and stuff like that.

Um, you can, you guys, you can learn how to get into this game by simply investing in what's called these syndications and then doing cost segregation. Um, you know, I, I, as a part of your kind of your wealth strategy,

Wes: Yeah. And I, and I try to recommend it. I mean, to anybody that'll listen, because I, like you, blessed with an opportunity, had some massive tax bills and just kind of had to take it on the chin and just thinking back. So, I mean, that, that prompts up some emotion for me in terms of, and maybe somebody that's going to listen to this podcast.

Can, can you retroactively do anything, right? So like if I bought a commercial building in 21, or I bought an Airbnb, my CPA didn't tell me about this opportunity, but now, can I, can, can somebody go back in time?

Terry Judge: Yeah. So what, this is interesting. So the IRS will allow one time, um, automatic consent. So we, as a company, we, we can. We go back to the date you bought that building. It's called a 481 adjustment. Again, just a little tax, tax jargon. You don't have to worry about the, but there is a lever that you can pull.

And we, we do these all day long. We call them a look back study. We can go back to the date you bought the building, redo all your depreciation. We can carry it forward to the, to the current tax year. That triggers another 20 year carry forward if you need it. And we don't have to amend tax returns, which is like, that's phenomenal when you're talking to guys that, you know, or gals, they don't want to disrupt their tax returns.

They don't want to have their

Wes: They don't want to rock the boat, right? They don't want anybody sniffing around, seeing anything, right?

Terry Judge: So this is the cleanest. A way to kind of pull back that or pull forward that lost appreciation. And it becomes like a hidden treasure, right? When we go back, we might pull 300, 000 back into the current tax year. And you're like, and that, you know, you're like, Oh my God, this is, this was a savior.

Wes: So you're saying one time, is that like per one time as you as an individual, or per building? Per building. Right. So just to reiterate, because I think that this is extremely important. So if somebody happens to listen to this podcast, they're sitting on commercial real estate that they bought, an apartment building they bought, an Airbnb, can't be your primary residence. Anything else that you've bought from a real estate perspective, there's an opportunity to go back and do this cost segregation study. So there's an opportunity for you to capture some of that. So I want to go into the next part about, I love your business. And I'm, I'm kind of creating the model in my mind that you thought about this.

When you got into the business, you have such a win win business model because you're, if you find opportunity or to me, you're creating so much value for the individual in terms of what they're going to get back and what they're going to save, talk about how you charge for your services. Uh, cause I think it's, it's also, it's kind of like the icing on the cake for me, because.

It's just,

It's just great. It's just great. It's

almost, it's almost too good.

Terry Judge: It really is. So A, you hire us, we work for free because on the initial benefit analysis, we will provide a complimentary custom savings analysis for you. That's before we even get into the details, we say, you know, send us over your, all we really need is your purchase price, purchase date, property address, asset class, and renovation cost.

Um, or if it's new construction, just tell us it's new construction. And all we, that's all we need. We'll put it into our system. We'll create a benefit analysis for you. You'll, it'll pinpoint and highlights very accurate. You know, we'll tell you, okay, you're going to save 500 grand in available depreciation you can use against income.

And then we, uh, then based on the scope of the project, we will then put together a proposal. We can usually do this within 24 hours. So people love our fast turnaround time. Okay. And that's important to us. We like to move quick. We like to keep things simple, but our, the way we quote is really based on scope of the job.

So how big is the property? Where is the property located? Are there multiple buildings? We do portfolios of buildings. We do, you know, some people say, Hey, I got four, I bought four buildings last year. How much, so it's, but I will just tell you for the value. We charge a fixed price. It's a flat fee. If it's a, let's just call it, you know, a million to three million dollar purchase price, and it's a multi family, you know, we may charge five to eight thousand or ish, around, you know, around that, depending upon complexity.

There's other kind of layers of this. So if somebody is going to be doing renovations and they're going to be rehabbing the property, there's another benefit tied to our studies. We have the capabilities of. We can actually monetize the demolition or the renovations, the stuff that you're actually throwing in the garbage can.

The IRS will allow us to figure out, they look at it like it's an asset. You bought it. It has a, it has a, for, okay, multifamily. It has values for 27 and a half years in their eyes. And we can then figure out what that. If we accelerate and write that off, even though it's thrown in the dumpster, we can add that to your, your tax benefit.

Are you kidding me? when you, someone buys a building, we look at what's called the as built. We want to know what's there. Then we want to know, that's number one, what did you just buy? Okay, it's sitting there. You bought it. You're going to, now you're going to renovate it.

What are you going to do to it? Well, we've got to fix it up. It's a piece of crap. We're going to be tearing out the kitchens. We're going to be putting in new parking lots, curbs, swimming pool. We're going to be doing some major renovations. Well, all that stuff falls into our cost segregation study. So we're going to figure out what's being tore out.

We're going to monetize. We're going to put real values on those assets that are being thrown in the dumpster. Okay. So I want to get my engineers in there before the renovations begin. And then once the finishes are finished or finalized or completed, we get what's called the final change orders, and then we'll finish up The last phase of the study and we want to know everything that was new put in.

We want to know what the cost was and we will build out this beautiful cost segregation study. It's very, very detailed and um, and that will become your audit defense if you ever get flagged or triggered or the IRS says they want to know. You don't even have to send this report into the The numbers that we compute, we put together an executive summary.

That goes off to your CPA. Your CPA will then, we highlight it. We do all the work for the CPA. The CPA literally just plucks off one number and puts it on the tax return, um, under deductions and therefore those go and then, and then that gets triggered and that, and the magic starts happening. And then the CPA will then take it and figure out, okay, what does taxes owe?

We're not a CPA firm. But we bring it all the way to third base and we hand it off to the CPA with a bow. And you know, again, we're talking about even on a million dollar property, in some cases, You know, it could be up to 40 percent ROI, um, you know, that, that, that cost segregation is going to, to, uh, uh, generate. So it's, it's no chump change. And people say, well, what's the smallest one, right? So, I mean, we're doing, we're doing residential homes, you know, we don't like to do one offs. It economically doesn't make sense for us, but, you know, let's say somebody has 10 residential properties. We'll package those up. And that could be 800, 000, 900, 000 in a tax benefit.

Like it's people are like, what? They had no idea a residential investment portfolio. So we will do those, but we like to do them in kind of like three or more. Um, and, and let's say it totals about a 500, 000. Basis, okay. So again, a basis is just the purchase price minus land We kind of back out usually 10 to 15 percent of land cost just FYI there um, and then we do our magic and But yeah, i'd say like people always ask i'd say about five hundred thousand dollars In above makes sense.

You know, we do mobile parks and some of those will trigger, and we just finished up a mobile park. It was 77 percent write off and there's reasons for that. I don't want to get into the, but that's why mobile parks are such an amazing. Investment strategy for real estate investors. And you're seeing more and more, um, private equity money get into, they're trying to get into mobile parks because, and storage is phenomenal.

Multifamily is great. I know I'd say office is probably one of the least, I mean, it's still powerful, but you know, just because of what happened with COVID office and commercial. Some of those spaces are, we're seeing flex space, the rock and roll industrial is, is popular still. Um, our clients are still buying.

They don't care about the interest rate. because cost segregation really mitigates the increase. They just, they're doing it for the tax savings and then they're doing it for the, for the rent. The rents are still going up, especially in multifamily

Wes: again, just to kind of bring everything full circle. So if there's somebody listening that has some multifamily, some commercial, some Airbnb, some property, you can retroactively do an audit. Your services are free to review. You come back with a proposal that's going to show them that they're going to save a ton of cash that's going to come back in their pocket and you charge a relatively nominal fee for all that hard work.

So for me, that, that's unbelievable. Um, and I think like, I'm going to bring all the way back to the beginning point of like surrounding yourself with Smart people. Like I look to you, like you're the expert in this space. I think a lot of people, they might be nervous, right? Like, does this throw an audit?

Does somebody have my back? Or I just don't know. Like I encourage, uh, anybody that's interested to reach out to Terry and core. I mean, they're, they're just really great people. And again, as entrepreneurs looking out for each other, taking advantage of these situations. I mean, That to me is true entrepreneurship, right?

We all didn't go down that traditional path. You know, as, as people go down this path, us entrepreneurs kind of carved out a weird way through the forest. And for me, it's just, you know, real estate's so important, um, just to think about, like to diversify, to get some things going, um, but yeah, Terry, I could talk to you all day about this, but I just want to thank you, uh, for sharing that knowledge.

I, I wanted you to come on. You're, you're a great guy. But I think what you, what you offer is so big and so many people just don't know about it and they're just missing that opportunity. So I hope we've educated, not me. I didn't do anything. You've educated a ton of people about what you do. Um, so if you learn something today, uh, tell somebody about the podcast, but Terry, thank you so much for coming on and sharing really awesome stuff.

Really great nuggets to share with everybody.

Terry Judge: Yeah, man. Thanks, Wes. I hope it helps. Feel free to reach out. Um, do you want me to share my email or anything?

Wes: Yeah, I was gonna ask you, yeah, what is the easiest way to contact you, um, and or your, your office?

Terry Judge: um, I would say the best way would be to just email me directly and then I'll be happy to respond. I'll get you in touch with the right people on my team. They'll be happy to reach out. We'll start the benefit analysis or the, just a basic Q and A, like get yourself educated. We can send you some information on this just so you kind of have a comfort level.

You can talk to your CPA. We will talk to your CPA on your behalf. It's very important that, you know, you put together the right financial team when you're doing new things and you want to explore and make sure you get all the facts and figures. And you're building your network, you know, and you're going to learn a ton.

That's how that's kind of, I think everybody takes that path. So my name Terry Judge, T E R R Y. Judge, J U D G E, at, and then it's CORE, C O R E, advisors. net. Advisors with an O R S dot net.

And, uh, yeah.

Wes: That's great. Well, Terry, thanks again. I really appreciate it.

Terry Judge: Thanks Wes. Thanks for having me, buddy. I enjoyed it.