How Ted Cooper Built a Shopping Center Empire Without Paying Income Tax

Ted Cooper (00:00)
But the wealth was acquired buying houses, foreclosures, apartments in lesser areas, so you could get your sweat equity. And so if you buy properties for the right price and fix them up and keep them over long term with inflation, the rents go up, the values go up. And of course, don’t forget there’s significant depreciation. So all the money I’ve ever made in my real estate, I’ve never paid one dollar in income taxes. And that’s key. And by the way I’m a commercial landscape contractor and I’m an arborist. I’ve had that business for over fifty years.

Joseph Crooms (02:01)
Hey everyone. Welcome to Investor Fuel Real Estate Pros Podcast. Today I have with me his name is Ted Cooper and today I’m joined by someone I’ve been looking into chatting with who’s making some serious moves and has been making moves in this industry for over forty something years. Am I correct about that, Ted? And he’s very s experienced, very successful.

Ted Cooper (02:23)
Yes, sir.

Joseph Crooms (02:28)
So Ted, say say hi to everyone. All right. So I think our listeners are really going to take something away from how you approach business, how you build relationships, but also how you network with different niches and you have drawn together the team. So let’s dive in. So, first off, for people who may not be familiar with your world, give us the short version. What’s your main focus?

Ted Cooper (02:30)
Hi everyone.

Joseph Crooms (02:55)
these days and what markets are you operating in?

Ted Cooper (02:59)
I invest in retail shopping centers and malls from Texas to Florida to the south and the southeast currently.

Joseph Crooms (03:08)
And what that’s your market and that’s what that’s that’s where you work at, right? So love that. what caught my attention about you, Ted, was the way you were able to you you you realize that you use lawyers not in Silicon Valley where you live. But tell us why you chose to utilize these lawyers and how have they helped you capitalize in the real estate industry.

Ted Cooper (03:31)
Well, out here in Silicon Valley, everything’s more expensive. And law firms charge for real estate anywhere from thousand fifteen hundred dollars an hour. Law firms I use in the South and Southeast, who I’ve done business with for you know forty plus years, they charge me maybe max, and I’m talking the principals, three fifty, four hundred an hour, which may sound like a lot to most people, but that’s cheap. And and their expertise is fantastic. They they represented Wells Fargo, Bank of America.

you know, b real estate investment trusts, but because I got them with them early, they’re still my attorneys and then their firms became very large. And their work product is excellent.

Joseph Crooms (04:10)
Mm-hmm Ted, let me ask you this. You know, I I I know there’s always let’s talk about some of the real estate that you have built. How many shopping centers or malls have you accumulated over say the next the last five years?

Ted Cooper (05:13)
I probably currently own about fifteen shopping centers and malls. I own the largest mall in Birmingham, Alabama. I paid 81 million for it. Brooke Highland Plaza. But I used I used to own lot more properties, but I used to initially buy in areas that were like we call them secondary, tertiary markets. And now that I’m 67 years old, the last 10, 15 years, I figured I need to own in the best areas.

Joseph Crooms (05:25)
Hmm.

Ted Cooper (05:41)
possible areas in the best possible locations because I’m not getting any younger.

But the wealth was acquired buying houses, foreclosures, apartments in lesser areas, so you could get your sweat equity. And so if you buy properties for the right price and fix them up and keep them over long term with inflation, the rents go up, the values go up. And of course, don’t forget there’s significant depreciation. So all the money I’ve ever made in my real estate, I’ve never paid one dollar in income taxes. And that’s key. And by the way,

I’m a commercial landscape contractor and I’m an arborist. I’ve had that business for over fifty years.

So I’ve taken the money from that business and I kept buying beat up houses, beat up apartments over and over and over and over again, keeping some of them 25, 30 years and you know, they went up significantly. But though in the beginning, those were not the kind you would drive your friends by and say, Hey, look what I own. You know I mean? But guess what? Real estate always goes up over time and with inflation. And the other thing I would do is I would rent out to

Section eight people. So you go down to the county and they have standards you have to you know make sure all the screens are fixed, the houses are painted and all that kind of stuff and the appliances are in working order, et cetera, et cetera. But they never miss a payment. The payment comes on the first every month. Boom, boom, boom, boom. So my dad and my mentors taught me that. So that’s how I started in the beginning. And then, you know, over twenty, twenty five years started to own significant number of apartments, houses developed, all that kind of stuff. In the end was the cherry picking.

Of the larger shopping centers, regional malls, malls, and I’ve been blessed for that. And there’s no taxes. I’ve never paid taxes. Want to reiterate that. How you compound wealth is by not paying taxes legally. And so I always tell people, listen, you all get mad at Trump, man, he pays no taxes. I said, Listen, God spoke through a jackass in the old testament. We’re all jackasses because we’re not perfect. But pay attention. How do the billionaires become billionaires? They don’t pay taxes legally.

Because you get the depreciation of the properties. And mind you, the other part of the wealth accumulation is you’re paying down significant principal. I pay down, you know, seven figure plus principal every year. So no matter what I do, my net worth going up at least a million bucks a year or more because of the principal reduction on my real estate. So there’s a lot of ways to skin the cat with real estate.

Joseph Crooms (07:59)
And you said o over the the years, h you know, how how long have you been operating at that million dollar level?

Ted Cooper (08:06)
I was making about a hundred and fifty thousand a year in my landscape business when I was twenty one years old. I went to college, I have five college degrees, I played basketball in college. I was making small money in real estate to start with, like twenty five, fifty thousand a year. And then I started increasing the real estate a little more, a little more, and the business a little more, a little more, and then I noticed something. I wasn’t paying taxes on the real estate because of the depreciation.

I’m like, wait, you what? I’m gonna put a little more effort into this real estate. And then I started making a hundred grand a year, a hundred and fifty and so on and so forth up the line. And it took a real big increase when interest rates were declining. The best time to buy real estate always is in the wintertime. No matter whoever tells you anything, remember this. Real estate’s slow in the wintertime. People take vacations, it’s the holiday season, they’re Christmas shopping, so therefore there’s more room to get a better deal because there’s not as many people

floating around looking at real estate in the wintertime. And so that’s one of the keys. I’d say ninety five percent of all the deals I’ve ever done, I made my offers, got in contract in the wintertime, for sure.

Joseph Crooms (09:14)
Ted, would you say most of those were in the residential side or in the in the commercial side?

Ted Cooper (09:55)
In the first 20 to 25 years, it was all houses and apartment buildings. And then I Googled bad property managers and I had my photo. I got to know my tenants too well and they let them take advantage of me a little bit. It’s always better to hire professional management than you’re at arm’s length. And there’s a huge difference between the retail shopping centers and malls and residential. I get to bill back to my tenants’ property taxes, insurance, and all commonary maintenance. Whereas on the apartment buildings,

I have to pay for it all. The other thing is the negative about apartments these days is some states, like my wonderful state of California, has rent control. And I don’t like any government entity telling me what to do. I just don’t like that. ⁓ and also I prefer I’ve owned all across the country. I own the outlet center the Seaside Oregon. I made nine million on. And ⁓ well, another thing I was gonna mention is sometimes when you’re looking at properties, you might see somebody’s books and you see something and you go, they’re doing something I don’t like.

And at first, when I used to see those things, I’d be like, I’m running for the hills. My dad taught me this. Every time something doesn’t seem right, there’s an opportunity. Why? Because as a Christian man, I’m always gonna run my business as legit. And so I bought an outlet center one time where the operations manager, the onsite manager, formed her own landscaping business and she was stealing from the partnership $350,000 a year and a hundred thousand on the advertising budget. I wanted to run scared.

My dad and my mentor said, no, no, no, no. You have her fired, you buy that property, and guess what? That four hundred and fifty thousand dollars a year becomes part of your net operating income. And voila, you’re gonna make seven million plus seven fifty a year cash flow. I made I made close to nine million net on that one deal. Just having her fired, I took over and landed a couple tenants. It was the most amazing thing. And I traded that. I also, by the way, I always 1031 exchange. So another thing is you never sell your real estate.

unless you ten thirty one exchange. Why? No taxes. No taxes. And so you have to buy something of equal or greater value and you have to 45 days after you close escrow to identify what you’re gonna buy and 180 days to close the escrow. And so I’ve ten thirty one to every single deal that I’ve owned and then sold. Always. And the advantage of that is this also. Let’s say I die.

And my wife is alive. She gets to do what’s called a step up basis, on on the cost of stocks and real estate. So if I have five million equity in a property, guess what? She she’s not gonna know taxes on it. But I have things set up in trust where I avoid all that stuff, anyways. The wealthy people always put things in trust, but people that may not have trust, that’s something good to know. And and also the fact is I don’t know what the current laws are on

net worth, but I think Trump put it up to like thirteen or fourteen million, you can die and not have to pay a a state taxes, which is good to know always. You’ll always be thinking long run, short run, you know what mean?

Joseph Crooms (13:02)
Thanks for sharing that. you you may have sorta alluded to this, but if you can hone in on this question I’m about to ask you, what’s been the key to keeping your machine running smoothly?

Ted Cooper (13:13)
Mm, that’s a great question.

Well, as a Christian man I pray a lot for God’s wisdom, for his people, people to come into my life that can help me find deals, whatever, you know, opportunities. I I’m very blessed because all the people that work for me, not only my landscape have been this. I have one of my workers worked for me forty four years and his Christmas present for the last two years is I paid off his house. And where I live in Silicon Valley, that’s a lot of money and he well earned the money.

But always taking care of people along the way. Always take care of the people. You do not live your life thinking that I’m gonna make millions of dollars and live like a pig and not care about people. I I don’t live that way. I have I have a different alternative than most people. You’ll laugh when I tell you this. I drove a 2010 SUV for many years or an old pickup truck. I finally got my ma my wife and my kids so mad they said, We’re not going in your cars no more unless you get a real car, Dad.

They go, we get it. You want to live a humble life. So I’m the I’m one of the least materialistic people you’ve ever met in your life. But that being said, when I travel, it’s always first class, nicest resorts, because my mama taught me it’s okay to smell the rose roses and enjoy the fruits of your labor. So also I’m building a network. I want to mention this. You brought up a really good point. Because of my landscaping business, there’s a crossover in the real estate because a lot of the people I work for.

Are the national property managers like CBRE, JLL, Cushman Wakefield? Well, they’re always calling me, wanting to do deals with me, manage my properties, do my leasing, and I’m always wanting to get landscape work from them. So I’m like, you help me here, I’ll help you there. And so networking can come in many different ways. And I always suggest to people I think a part of your life, you should always keep yourself in good shape and work out and be healthy. I belong to the number one rated health club in the United States. Why? Because in Silicon Valley, not only is this a nice club.

This is the who’s who of Silicon Valley. The CEOs, the executives always tell young people, be nice to these old guys. When you play in the basketball league, these are your you could be your future boss. So you build a fantastic network of people. And so those are the people as you grow old that you can do deals with, they can bring deals to you. You know what I mean? And you can always make money in real estate. I’ll show you another way. I taught young people this.

You can be a hustler finding the deals, doing the cold calls, and you know you don’t have the money to do the deals, but you know people like me that do have the money to do the deals. And so you can get yourself a finder’s fee and a cut of the deal because you hustled and got found these opportunities. So I used to teach young people, I used to call them my what do we call bird dogs. So I teach them my criteria and they’d do all the hard work. And they’d say, Hey, I got a foreclosure for you.

come look at this property and I met all my criteria. And so I’d write good checks and cut of the deal. And in the very end when we traded out of them, there’s profit. I always cut apart the part of the cheese, always share my pie. There’s an old expression, my dad taught me this. Never leave the room when the deal is cut. Stay in the room.

Joseph Crooms (16:55)
when you stay in that room, what are you listening for or look what are you looking for?

Ted Cooper (16:59)
Well, for for me when I’m with young people, I love young people. I only have six kids. It’s not like I didn’t try to trade two of them for a two for one, but nobody would do the trade. I I look for people that want to learn capitalism, that want to see and realize they don’t teach you this in college. I have five college degrees and no one ever taught me the things that I do. Nobody. My dad did, my mentors did.

When I was 13, I was smarter than most realtors or brokers in the United States as adults because I had a father who graduated from UC Berkeley at 15 and he played professional tennis. He was super smart, had a photographic memory. He brainwashed us on real estate. He said, do not listen to anybody else. You always have opportunities in real estate. You can buy fixer uppers. He taught me in apartments. You always get a termite report. Well, termite people are the most expensive people in the industry. So what you do is you negotiate either to get the termite clearance from the people selling.

Or give you a credit and then you have a contractor do the work forty, fifty, sixty cents on the dollar, and you can pocket a little extra money so you could put in different appliances or you know, put in different kind of flooring or whatever, you know, use that money towards fixing up your properties. ⁓ there’s all kinds of opportunities. You want me to tell you one of the greatest real estate deals I ever did? I had a bird dog come to me. I used to have a finance company, used to lend money on hard hard hard money loans, but then the government changed

Joseph Crooms (18:12)
Shock.

Ted Cooper (18:20)
The rules where it had to be five year minimum on a on a homeowner occupied. But before that, I had a lot of money rolling in foreclosures. Half the time I ended up foreclosing and get those properties and half the time they’d sell or whatever. Well, I had this guy, one of my bird dogs, call me and he goes, Man, I got this great house. It’s owned by Cisco, the networking company up in Los Altas Hills. So he drives me up there and I look at it and I look over and I see this piece of land next to it. And I Hey, who gets that piece of land? He goes, You do. I go, Well, how am I, you know, is it a separate parcel? What is it? And he goes, separate parcel.

So when bought the property, I offered low. They wanted a fast sale, offered all cash. I bought the property and had two separate title policies done. And I ended up owning the house, fixed it up, flipped it, and kept the lot for free. I still own that lot. And believe me, that lot’s worth millions. It’s in a very wealthy town, Los Altas Hills. So, I mean, it’s all things are possible in real estate. You you never know. You know what I mean? You have to pay attention.

But always I suggest young people surround yourself with older, wiser, smarter people. Jesus told us to disciple. Jesus had 12 people, he discipled. It’s okay for us to have a couple people that are older, wiser, smarter. I find that old people like me will always be willing to help younger people. If people ask, I will help them because I want them to succeed. But I also mentioned to them along the path, you gotta help others. Gotta help the needy, gotta help the poor. You cannot live this life and be blessed.

And think that that doesn’t matter because Jesus talks seven times more about helping the poor than salvation, which is crazy to think about. But it’s a test of our faith and our walk with God that we help the needy along the way. So if you’re blessed, help others. Don’t just live this life and be materialistic and you know, this is that’s that’s not the lifestyle I I represent nor I encourage, you know. So you never know how deals come. You know, if you have a good network of people, also people get divorced, they want a fast sale.

people die. They want a fast sale. A lot of times when there’s like let’s say four kids and s last parent dies, it needs to be fixed up. They don’t want to fix it up. They just want their money. See, make an offer, you know, 75 cents on the dollar, see what happens. Also, it can represent yourself so so you can get that commission credited to you and use a real estate attorney to do the deal. I’ve done that many times where I didn’t use any realtor or broker. You know what I mean? And so you ask for, you know.

credit for that. So a lot of ways to do things. sweat equity is the best for beginners. Sweat equity. Buy fixer uppers, houses that need work, you know, you can take your time fixing them up, whatnot. And you know, they get into duplexes and fourplexes and a little bigger and a little bigger. And you know, pretty soon you’re sitting there going, like another thing I always say is this if you go up to any man or woman 60 years old or older and ask them, Do you wish you’d own more real estate in your life?

Answer is yes, a hundred percent of the time. I’m sixty seven. You can ask me the same question. I tell you yes. You know what I mean? Because it’s the greatest way, safest way to accumulate wealth. You know, stocks go up and they down, and you know, micros MU stock is going up, you know, seventy five to a hundred dollars a day, down a day. I mean, who knows what what from whatever. And you know, it’s it’s almost like gambling, but real estate over time always wins. Always wins.

Joseph Crooms (21:38)
That’s great, man. That’s the kind of stuff that people don’t talk enough about. And honestly, it’s what separates the folks from those that’s dabbling to the ones like yourself who stayed in for the long term. Let me ask you this question. What’s your what do you focus on solving or s solving or scaling next? What’s the next goal for you?

Ted Cooper (21:58)
I I invested in a company that I own thirty percent of that’s about to hit really big. and long story short, we have a nanopowder and we use a surfactant and we can clean contamination in Kuwait where there was the war and the bombs were there and it’s this the whole soil is contaminated. There’s twelve billion sitting in a fund with the UN and we passed two levels. And so w we’re we have five tests going on in the world right now with the largest oil companies in the world.

clean their oil wells and their water basins. So when you drill, there’s a lot of water used and there’s excess water into these water basins that are contaminated. So we we have the the process and the the nanopowder and the technology to clean them. So we’re about to land some major contracts, have major cash flow coming in. Well g what do you think I’m going to do with that money? I’m gonna be buying real estate. Okay. And so my bird dogs, I’m giving the heads up because I I have an approximate time when the money’s big money’s gonna start coming in towards the end of the year and then all next year.

And also we have ways to our contracts are asking for five year contracts, we’re asking for seven. We have ways to finance those contracts so we can have access to very large capital. And I think you’re gonna see you know if interest rates just come down just a little bit more. Like for me, the magic number is five percent to five and a quarter. That’s my number. I know I can do deals, they’ll pencil out, lenders will lend the money, and there’d be a lot of opportunities because there’s something like

Two, three trillion dollars worth of loans coming due in the next two to three years in commercial real estate. And a lot of people they aren’t gonna be able to refinance the existing debt because they went and got loans at three and a quarter, three and a half, four. You know what I mean? So they’re gonna have to sell off other properties in order to come up with the difference on the refines. So there’ll be some opportunities where they want quick sales. Like, I mean, I can offer the

Last couple weeks a couple of single tenant banks that have fifteen year leases that are A rated banks. You know what I mean? I’m like I’m offering to me really cheap. I’m just like, wow. That just that shows me what’s going on. So accumulating cash right now, then I’ll be looking for serious opportunities. You know, I I’m way past the buying foreclosures and buying apartments. However, I I I would do them if some of my children want to participate. with me. I I don’t

Do partnerships with anybody anymore on anything. I do everything by myself. that’s just I I’ve decided years ago I don’t like having partners. So I only have partners on one property right now. And it’s with my ex-wife. Which there’s that’s another story for another day. But there there’s always opportunities in real estate. Always. And if we can get interest rates down just a little, just a just one, you know, three quarters of a point, one point, all the numbers max you know manage.

my my scoreboard, the possibilities.

Joseph Crooms (24:43)
Ted, you know, y the thank you for telling the story of the relationships. Thank you for sharing your your your business deals, your your your your your future business deals that and and and also how you further gonna make some investments in in this future plan that you have. But you’re gonna go back right back to real estate. Thank you for sharing and and telling us also how the you should mo learn and have people wisdom.

So you can’t fake relationships, everything in this space. All right, before we wrap up, if someone wanted to reach out to you, Ted, connect with you, maybe collaborate or learn more about what you’re doing, what’s the best way for them to reach you?

Ted Cooper (25:24)
On LinkedIn under Ted Cooper in Los Gatos. I used to live in Los Gatos. Lived just I live in a small town next to it now called Monte Sereno. And so I’ve had a lot of young people get a hold of me there and drop me, you know, their phone numbers or whatever. And so what I do is I I like helping young people. That is like my one of my favorite things to do. I wish I could teach at some college or something. I’d do it for free on capitalism because they don’t teach this stuff in college.

You know, they teach you go get a job to work for someone else. And you know, I have a whole another story for that. I have no problem with people working for people. But I think they should always have their eyes open to having something on the side, and real estate’s always good. Especially when you think about being tax free. You know, you buy stocks and you sell like I hear people want to be day traders. Guess what? That’s ordinary income. You have to hold them at least a year to be capital gain. But if you hold real estate and have the depreciation

makes your investment tax free. So you’re rolling and accumulating and appreciating tax free money. Imagine doing it for 30, 40 years. That’s what I’ve done. And you know, made you know big, big money, very large money. And I kind of laugh about it because, you know, you you know how with kids you want to defy your parents a little bit. That’s all my dad ever talked about. He said, you gotta have a relationship with God and you got to own real estate. All the rest doesn’t matter. You want to work out, work out.

You know, hang out with your friends. You never know. by the way, I’ve never drank alcohol ever. As a grown adult. I I’m a total health freak. In the gym five, six days a week, walk, jog my dog five thousand steps a day, eat healthy, have an Italian wife. That’s that can be a problem. She’s such a good cook. But I live a a life of routine. My life is routine. I never miss church. I never miss appointments.

Keep my word. I’m an honorable man. And people remember that. And when you close real estate deals, they remember that. That you weren’t difficult. You know, always be professional in your transactions with people, be kind. If someone makes a mistake, it’s okay. I’ve never closed a real estate deal ever. That didn’t find a mistake on the closing statement, by the way. You gotta watch those things really closely on the credits, the probations, stuff like that. Excuse me.

Joseph Crooms (27:40)
Listen, this was

Ted Cooper (27:42)
LinkedIn, Ted Cooper, Las Gatos. and can always get a hold of me that way.

Joseph Crooms (27:47)
Perfect. Well listen, Ted, I appreciate your time, your experience, your perspective that and your philosophy. We need more people in spaces who are doing it the right way. Thanks again for being here. welcome. And for those of you tuning in, if you I know you got some value from this, make sure you subscribe. We got more conversations coming with operators, just like Ted Cooper.

who are out there building real businesses. We see you on the next episode of Investor Fuel Real Estate Pros podcast. Ted, say goodbye to everyone.

Ted Cooper (28:25)
Bye guys.