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Show Summary
In this episode of the Investor Fuel podcast, host Michelle Kesil speaks with Scott Saunders, an expert in 1031 exchanges and tax strategies for real estate investing. Scott shares insights on how to keep more money, store it effectively, and deploy it into passive income through real estate. He emphasizes the importance of community support in achieving financial freedom and discusses strategies for optimizing real estate portfolios and understanding tax benefits. Listeners are encouraged to engage with resources and communities that can help them on their journey to financial independence.
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Investor Fuel Show Transcript:
Scott Saunders (00:00)
Gosh, the key to doing it, you know, for anybody for doing that, it’s really creating a, you’re really creating a real estate business, right? As an investor, the tax code is going to give you some advantages when you are a business owner. And then the tax code is really friendly to real estate. So that’s a big key is just realizing you’ve got.all of these incentives in the tax code that make it easier to buy a property, to take advantage of all these different things in the tax code, whether it’s a 1031 exchange or for the audience that doesn’t know what that is, it’s just a way to dispose of a property held for investment, redeploy all of the money into another what we call like kind property and defer paying taxes. So that alone is a powerful strategy.
Michelle Kesil (02:13)
Hey everybody, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil, and today I’m joined by someone that I’m looking forward to chatting with, Scott Saunders, who has been making serious moves in the 1031 exchange space and really teaching people how to work on their tax strategy, how to create more financial freedom. So excited to have you here today, Scott.Scott Saunders (02:39)
Michelle, it’s great to visit with you. It’s always fun to talk about how to use some of the economic forces, flip them around and use them to build wealth with tax strategy, real estate and some of those things. So great to be with you today.Michelle Kesil (02:52)
Yeah, absolutely. think our listeners are going to get a lot out of this conversation. So let’s dive in first off for those that are not familiar with you and your world yet. Can you just give the summary of what it is that you’re focusing on?Scott Saunders (03:08)
Absolutely. I’m in a group called Wealth Outside of Wall Street. And what we do is we teach people how to do three things. And I’ll break it down simply. How to keep more money. So the dollars you make, how to keep more of that. And so a big piece of that is using tax strategy effectively. Right? Looking at the tax code and using those things to keep more dollars. Number two, we teach people where to keep those dollars, where to store them.we store them in a place called a vault, what we call a vault, which is a way where you’ve got the capital accessible and it’s earning a return. And it’s much better than storing it in a bank. And then number three, we teach people how to deploy that capital and buy what we call turnkey rental real estate, single family homes and markets around the country. So combining, keeping more money.
storing it safely in a vault and then deploying it into single-family rentals that are turnkey, that are nice properties. The combination of that is called the passive income machine. And that’s what we do is we help people get that in place. And then all of a sudden, all of those economic forces that are working against people begin economic forces that can really help them out, move them forward in terms of beginning to build wealth using real estate and all of those strategies combined.
Michelle Kesil (04:27)
Amazing, that is so powerful. What got you into this line of work?Scott Saunders (04:32)
You know, it’s a great question. I’ve always been kind of on the tax side of things. So you mentioned 1031 exchanges. I’ve done that since 1988. So I’ve got a deep understanding of the tax code, how to use the code with real estate. And a few years ago, about five, six years ago, I stumbled into somebody that was implementing these strategies. See some of that just wrote a book with a bestselling author on this and really became friends with him and started learning and implementing.implementing the system that he had in place of doing that. there’s a whole community of investors all over the country, fact, all over the world doing this and kind of combining those things together. I’ve been in that community doing it myself. So I came in with a few real estate assets and then I started deploying my capital and started acquiring single family rentals in different markets around the country.
Michelle Kesil (05:24)
Amazing. So what has been like the main keys to keeping this business running smoothly?Scott Saunders (06:19)
Gosh, the key to doing it, you know, for anybody for doing that, it’s really creating a, you’re really creating a real estate business, right? As an investor, the tax code is going to give you some advantages when you are a business owner. And then the tax code is really friendly to real estate. So that’s a big key is just realizing you’ve got.all of these incentives in the tax code that make it easier to buy a property, to take advantage of all these different things in the tax code, whether it’s a 1031 exchange or for the audience that doesn’t know what that is, it’s just a way to dispose of a property held for investment, redeploy all of the money into another what we call like kind property and defer paying taxes. So that alone is a powerful strategy.
But when we deal with real estate, we’ve got things like depreciation, which is a tax
benefit. We’ve now got something in the tax called bonus depreciation, which is a super big tax benefit. It allows people to kind of supercharge their investments. You’ve got cash flow coming in and you got all these incentives. you know, that’s what it’s it’s taking advantage and beginning to learn how do you apply those to your life as you buy a rental property or two or three, you’re then creating a real estate business and it unlocks all of those things in the tax code. So that’s the benefit of it.
is now we’ve got the tax code working for us. And so that gives some people hope because you’ve got X amount of income coming in, you pay Uncle Sam and all the taxes, there’s a little bit left over. If you’re able to keep a bigger share of that, now you’ve got more capital which you can deploy into real estate. So helping people get on that path and showing them ways to do that, I get fired up about that. It’s exciting and it’s fun. And frankly, Michelle,
That’s life changing doing that. know, people all over have began to implement this and their eyes goes big as saucers when they realize there’s a whole nother way out there to get ahead. And it’s different than, you know, what Wall Street teaches or the financial planner, which is a kind of, put your money in a 401k and an IRA and just trust the system. It’ll all work out. Mathematically, it just doesn’t. And I think intuitively, a lot of people know that in their gut when they’re realistic, but it doesn’t work. This is a,
It’s a way, it’s a path that does work. It allows people to step more into a position of ownership. So they take fake dollars, right? That’s what we have is fake currency. And then they invest that into real assets, real estate, single family rentals.
Michelle Kesil (08:48)
Yeah, absolutely. That is such powerful wisdom for people to have that other solution that can really take them further. So let’s say someone is new to this journey and wants to get started in this philosophy that you’re sharing. How can someone start implementing the first steps? What do they need to learn? What do they need to just start in order to begin this journey?Scott Saunders (09:50)
Yeah, thanks for asking that. Yeah, there are some different ways to do that. Fortunately, there is a book coming out, believe it or not, at the end of this week, written by the principal, Ryan Lee. He wrote that with Robert Allen. The book’s called Retire in 10 Years or Less. So that book’s coming out. People can go into Amazon, get it for a buck 99. So it’s not a whole lot. I think a paperback’s like $17, $18 for that book. That book takes…10 plus years of experience and wisdom with those two gentlemen combines it together and it really lays out the roadmap for people to get ahead financially. that’s a great tool. And the neat thing about that, there’s a whole online companion course that’s free when you buy the book that begins unpacking these concepts where people can start to learn about things. For example, you know, the financial system’s broken.
learning about that. We give people a financial calculator where they can plug in their numbers and see what they’re going to have when they retire. And is that enough money to really live on when you adjust it for inflation? 99 % of the time it isn’t. So we get some tools with that. There’s also a community called Wealth Outside Wall Street. So wealthoutsidewallstreet.com where can people can learn more. And so there are free webinars and things. But engaging with other people. You know, what’s neat about this podcast is
you’re providing a platform of education for people that want to grow. They want to become better investors. want to become, they want to get to financial freedom more efficiently and faster, and then want to have a base of bigger cashflow and more assets. And so getting involved with other people in a community where everybody’s kind of doing that together really makes a big difference. mean, think about it, Michelle, not everybody that we work with in the workplace has the same objective. Some people are fine.
Kind of just punching in and punching out and going through the motions and it’s a smaller segment of people that really Have a dream of a bigger life for themselves and their family They want to go on awesome vacations with the people they love and care about they want to spend time You know, I mean if I were to boil it down we think so much about real estate about being about buying assets and doors and cash flow But the ultimate goal is how do we buy our time back? How do we get our precious time? And how do we share that with the people that are?
closest to us that we want to spend it with. So to me, that’s the end game, right? Using these tools and strategies together to get our time back. So then we can do things that are meaningful. We can live lives of purpose, necessarily having the worry of how do we meet our day to day living expenses and letting this passive income machine that we built up using these strategies together, create that cash flow. And really what it does is it creates
source of income that grows over time and gets larger and larger. know, traditional financial planning, Michelle, is, you know, get X amount of cash and then draw it down over retirement and then hope to heck you don’t outlive your money. But, know, that’s kind of the challenge that people my age are looking at. And so we teach a whole nother strategy, which is one of abundance and how to increase the cash flow and have all those things working for you. And, you know, it applies to people of all ages, people that are younger than maybe are going, how am I ever going to
to
get ahead in my 20s and 30s. How am going to buy a home? We teach strategies that will show people how to do those things, how to actually get into your first house, how to save money for the first investment property. It’s not as hard or complicated. So we try to make it very systematic and very easy. We’re not going out, you know, buying multi-million dollar apartment complexes. We’re buying single family homes in the Midwest that are maybe a hundred to two hundred and fifty thousand dollars.
you know numbers that people can get into. If people have challenges with capital, we’ll teach them how to partner and how to come up with cash from other sources. So we try to offer hope and purpose and a plan and a strategy and sorry I’m giving you a long-winded answer here, but we actually do something that’s really neat. With anybody that comes into our community, we provide an individualized game plan to show them exactly how they can, with their current income, achieve financial freedom and
10 years or less. And so we’ll look at their income and their assets and we’ll unpack year by year what are the targets, what are the goals they need to hit to achieve financial freedom in 10 years or less. And to me, that’s a whole lot better than working 40 or 50 years and maybe not even getting the job done. In fact, most don’t. So that’s what we do is we get people on that path and show them the tools and resources to do that.
Michelle Kesil (14:22)
Amazing, I love that answer. It sounds like you’re helping so many people really reach those goals that they have for their future. So you mentioned a few times that you have this community, can you expand on what that is, what that looks like, what you support people with through that?Scott Saunders (15:22)
Absolutely. So wealth outside of Wall Street are investors all over the country. In fact, we’ve got people in New Zealand and so, you know, all over the place in that community. We then implement this. We show people how to create their own passive income machine. So we’ve got four different phases of that. So we kind of have an intake process where we’ll see where somebody’s at. We’ll set some goals and targets. And that community happens online. So we’ve got regular meetings online in aWe get together several times a year. just did an event in Indianapolis a week or two ago where we met in person and we looked at properties. We went on a bus tour and we looked at one of the turnkey providers and we spent several hours looking at properties that they showcased there. But that community will meet together and then we’re all connected obviously through social media. So we’ve got a circle platform where if people have questions, they post a question there and they’ll have a whole bunch of people chiming in with an answer. So it’s a real
supportive community where everybody is helping each other get ahead. We’re all on the paths of financial freedom. We’re all excited about that and we realize maybe we know people in our family that have that goal and our neighbors or our friends, but within the community we’re now with people that are like-minded, that are all moving in the same direction and the coolest thing is everybody is so encouraging and supportive, right? Everybody’s given high fives and people have successes.
Just like anybody with real estate, people have challenges, stuff goes wrong. We help each other out. We roll up our sleeves. We try and provide solutions. So there’s a very supportive community together doing that. So a lot of it online within a few live meetings and really again, kind of the gateway for people to access it and to learn is that book, right? Yeah, think it’s got a website. Retirein10years.com is a website where there’s more on that. We’ve got a summit coming up.
here in the next couple days with all sorts of really big speakers in the real estate and entrepreneurial spaces. So that’s what we’re about there.
Michelle Kesil (17:23)
Yeah, amazing. That’s incredible. I think there’s so much power in finding that support group and having that network of people that can offer guidance and brainstorm with you together.Scott Saunders (17:36)
Yeah, it’s, you know, it takes a, you know, it’s that it takes a village. We’re all better off when we’re in a community of like-minded people move in the same direction. Um, as a boy scout and you’ll learn in scouts that if you got a big fire and you take one log off of that fire, even though it’s a big hot fire and you kick it off to the side on a cold night, eventually that log’s going to die out the flame because it’s just cold. It’s naturally just going to go down when you got all the wood together and a fire, the wood actually.reinforces and keeps the fire burning brightly because the wood next to one another keeps the heat there. And I think it’s like that, you know, being as part of a community is now you’ve got those connections and those people encouraging you on giving you input guidance, you know, and helping you out and then cheering you along the way. mean, let’s be honest, Michelle, it’s it’s tough to get ahead. It takes work and effort. You know, if it was easy, everybody would be buying real estate and doing it. It’s hard. So some
Sometimes it’s nice to just have people that are encouraging along the way like, hey, you hit a goal, great job. That’s what makes it worthwhile is being able to celebrate those victories along the way because it takes a lot of work. Nobody gets ahead by accident. It’s always by being intentional, having a goal and a vision, and then stepping into that goal and vision. So super key.
Michelle Kesil (18:56)
Yeah, I agree with that. So what are you focused on solving or scaling to next in your business?Scott Saunders (19:04)
That’s a great question. I want to change my portfolio. I’ve got a portfolio of 80 plus single family rentals. And for me, where I’m at, I want to increase the quality of those. So some of them I grabbed quickly when rates were low and I was just kind of fast and furious about getting assets. I’m at the point now where I want to kind of optimize the portfolio. So I’ve got equity that I can redeploy in a 1031 exchange into better assets. So for me, I want to get higher quality assets.So I like to get assets that are in better neighborhoods with better tenants, better appreciation potential. Frankly, the average age of my portfolio, it’s older than I’d like. So I like to actually upgrade into newer assets or new construction so I don’t have as much maintenance and repairs. So that’s the piece of it I’m looking to do is to kind of optimize, curate, and do that. So you build a portfolio and a lot of times you have equity building up.
And it’s important to kind of look at that and go, hey, what is my return on my equity? Could that cash be working harder for me? And I’m looking at my portfolio and I work with friends and peers of mine where at a certain point in time, things, the economic forces have allowed the properties to appreciate and the debt to be paid down. But there’s some debt equity there that can be better deployed and I can get it working harder by redeploying it into better quality assets. that’s on the real estate portfolio side. That’s what I’m working on right now.
Michelle Kesil (20:28)
Amazing. That’s so exciting to expand into that. So I know you mentioned in the beginning the tax strategy. Can you maybe share an example of that for the listeners to understand more?Scott Saunders (20:42)
Absolutely. You know, when it comes to tax strategy, if I were to simplify it, a lot of people think why have a CPA or accountant. That’s just a tax preparer. They prepare the forms, they put the data from your past year in the right boxes, and they’ll keep you out of jail. But it’s reporting.What most people need is they need tax strategy, which is very different. That’s somebody coming alongside you and saying, what do you do? What are the opportunities in the tax code? And how can we either align what you’re doing now or maybe realign it so you can take advantage of all these incentives in the code? Tom Wheelwright is a well-known CPA. He’s got a great book called Tax-Free Wealth. So step one, pick up Tax-Free Wealth. It’s not going to show you any one strategy.
strategy, but it’s going to show you how the tax code works. And he has a great statement that says if you want to change your tax, you have to change your facts.
And I think that’s a really important understanding that if we want to look like a real estate business, we have to set up the right structures. And it doesn’t have to be complicated where we’ve got, you know, a bazillion trust in the Cook Islands and Swiss bank accounts. know, it doesn’t have to be that complicated that sometimes people think of, but setting up the right business structures on both your passive income and then active income sides that allow you to take advantage and unlock these things in the tax
code. I’ll give you an example. Let me give you a practical one. I have a real estate business. So I have a holding company for my real estate business and it’s a partnership with myself and my daughter, my oldest daughter.
We, because we have a business, can go ahead and just like any business, we can do a business meeting. We can fly out on a Thursday to a nice location next to a pool and a beach. We conduct a business meeting for a minimum of four hours. So let’s say five or six hours on a Friday. Then we can stay at that resort Saturday, Sunday, and Monday and fly back. So we conduct business just like we’re going to do anyway, where we look at the books and how the properties are performing. That is a business trip.
It’s no different than going on a business conference for somebody that wins a sales award and you go to a nice resort. But now what I’ve done is I’ve been able to shift a personal expense that I want to do anyway, go to a nice resort for five days. And I’ve been able to make that a legitimate business expense because I’ve conducted business appropriately. I followed all the IRS rules, but because of the way I structured it by using my brain and understanding of the tax code, I’ve got a five day trip that I can
right off legitimately for that business thing by doing the business things but I’ve got stuff on the sides of it so the flight out on Thursdays they’re covered.
the flight back on Monday, staying at the resort, all the meals and everything is all part of a business trip if done properly. And there are dozens of these. you know, anybody that wants to know more of these, ⁓ you know, I’d be happy at the end or if you want my contact information. This is what I love doing is teaching about tax strategy and how to get these structures optimized. We’ve got relationships with some great tax professionals out there that will help on tax strategy. So it’s not CPA. It’s not tax.
prep, it’s the strategy side. And I think if there’s anything you do, the tax code, most people look at the tax code, they look at the first few pages where you have the form, you know, basically you make X amount of money and here’s what you pay. There’s thousands of pages, literally over 75,000 pages of tax code behind that. That’s where all the opportunity is. knowing what the real estate provisions are and being able to take advantage of those in your real estate business, it allows you to
have a lot more income. And when you have more income, what can you do? You can go out and more real estate. And you can get to your financial freedom faster by creating these mechanisms and putting in these forces in play.
Michelle Kesil (24:31)
Yeah, amazing. That is so helpful. So before we wrap up here, if people want to hear more about what you’re offering, connect, just reach out to you. Where can people find you?Scott Saunders (24:42)
Yeah, great question. I’ll give my email. I’m Coach Scott.at wealthoutsidewallstreet.com. So [email protected]. If you want more information, go to wealthoutsidewallstreet.com and then you can also go and the book is fabulous. So it’s everything that I’ve been doing consolidated down by an expert. If you look at it, it’s retirein10years.com forward slash book. You can pick up the Kindle version on Amazon. It’s written by Ryan D. Lee and Robert
Allen, Robert Allen wrote some best selling books creating wealth and some other ones. So the website, the book is probably the best gateway. You know, if you spend a couple bucks, you can’t even buy a cup of nice coffee for a buck 99 anymore. So spend it, invest a dollar 99, get the book and that’s going to unlock everything. And, you know, I’d love to chat with anybody. So if people have questions, hit me up on email. More than happy to to engage and answer questions along the way.
Michelle Kesil (25:40)
Perfect. Well, listen, I appreciate your time, your story, and your perspective. Thank you for being here.Scott Saunders (25:45)
Thank you, Michelle.Michelle Kesil (25:46)
Awesome. And for those tuning in, if you got value from this, make sure that you’ve subscribed. We’ve got more conversations with operators just like Scott, who are building real businesses. And we’ll see you on our next episode.
