Dentistry Uncensored with Howard Farran
Dentistry Uncensored with Howard Farran
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1516 Tom Wheelwright CPA, CEO of WealthAbility, on Achieving Financial Goals by Reducing Your Taxes : Dentistry Uncensored with Howard Farran

1516 Tom Wheelwright CPA, CEO of WealthAbility, on Achieving Financial Goals by Reducing Your Taxes : Dentistry Uncensored with Howard Farran

12/8/2020 4:00:00 AM   |   Comments: 0   |   Views: 210
Tom Wheelwright is a CPA, CEO of WealthAbility®, Best-Selling Author of Tax-Free Wealth (Rich Dad Advisors Series), Speaker, Entrepreneur and Host of 2 popular podcasts: The WealthAbility™ Show with Tom Wheelwright CPA and The WealthAbility® for CPAs Show. Wheelwright has spoken on stage on every continent to over 100k entrepreneurs, small business owners and investors. His goal is to help people achieve their financial dreams faster by permanently and legally reducing their taxes. Wheelwright is a Contributor to Entrepreneur magazine, and his work has been seen in Forbes, The Wall Street Journal, The Washington Post and on FOX and Friends, Marketplace / NPR, ABC News Radio and hundreds of media.

VIDEO - DUwHF #1516 - Tom Wheelwright

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Please excuse any typos as this was digitally transcribed.
It is just a huge honor for me today to be podcast interviewing Tom Wheelwright CPA he is a tax and wealth expert uh CEO wealth ability best-selling author of tax-free wealth rich dad advisor series speaker entrepreneur and host of two popular podcasts the wealth ability show with tom will write CPA and the wealth ability for CPA show um he's also dental town's first CPA thanks for being our first and only CPA tom and for guiding us on so many strategically brilliant decisions uh over the decades will wright has spoken on stage on every continent to over 100 000 entrepreneurs small business owners and investors his goal is to help people achieve their financial dreams faster by permanently and legally reducing their taxes will wright is a contributor to entrepreneur magazine and his work has been seen in Forbes the wall street journal the Washington post and on fox and friends marketplace npr abc news radio and hundreds of media for more information visit his website or forward slash tom how are you doing tom it's great to be here with you Howard it is absolutely an honor and a privilege to be with you my god every time i see you out there i always start yelling in the room that was my CPA that was Donald town's first CPA my gosh i knew you were brilliant the day i met you but uh man you really got on to have a a an amazing career you but you do say you've lectured on every continent and i want to know i'm dying to know what did those penguins think of your lecture in antarctica i'm still trying to get that gig i can't whatever it is you know they've got their their media people just won't let me down there to uh speak to them so um all the other continents i've been on but not that one you know i had this crazy idea when back in the day i did uh three Arizona iron mans in a row and a lot of my friends were doing those uh climb the tallest mountain in all seven continents and i did um Australia and i did um uh Kelly in um Africa but the guys that did the tallest one in antarctica you're not gonna believe the stories they say somebody has to stay awake all night because when you get in your sleeping bag the the natural sweat that comes out of you your sleeping bag is frozen ice and you could never get out of it and you would die so someone has to be out of the bag to break up the ice so you can get out of your sleeping bag and i thought you know I’m in phoenix I’ll I’ll pass uh palm trees scare me I’m okay with uh six continents that's fine I’m good you're okay with what I’m good with six continents that's plenty oh my god yeah just do the ocean that's 70 percent of the earth just give one lecture out there uh I’ve done that before I’ve done I’ve done multiple cruises so well the ocean that's 70 percent of earth so um my gosh um i i hate to ask you this question right off the bat but you and i have been around the block a few times and we we saw the whole uh market tank and y2k and then we saw lehman's brother i think a lot of people are so wrapped up in this pandemic they forgot that the year before the pandemic people like warren buffett stopped buying stocks and everybody was saying the metrics were too high and everybody was so afraid the market was going to collapse and then the virus came out and everybody's all worried about the virus but that i i don't know is it possible that the actual um next recession could be as bad as the pandemic i think it could be worse uh i i don't think there's any question we built up this bubble and we continue to build up this bubble and you've got these uh um mmt people who think that deficits don't even matter and so you can continue to build this bubble we've got lowest interest rates in history they and they're gonna go down to zero and uh when you do that then you just build this bubble and at some point you would think it's gonna collapse and when it collapses it could be huge i got to be careful with this one well the when the y2k bubble bob um greenspan everybody thought he was a god because he lowered interest rates to almost zero but they they never rose them back i mean if i if i put a dollar in the bank it won't even pay me one percent interest on my savings rate because the u.s government's 20 trillion dollars in debt they can't afford to pay an interest rate of 5 so so everything is so skewed to where there there's no reward for savings it looks like um they're just gambling in the stock market like a casino yeah well in fact if you look at the sovereign funds the sovereign funds are all invested in the stock in the us stock market and so that means like the sovereign funds of south korea and the sovereign fund of singapore and the sovereign fund of uh of norway all these come these countries with surplus money they're all invested in the stock market and then on top of that you have all the pension plans so the low interest rates kill the pension plans right because they're they're basing their whole um analysis on like eight percent rates eight percent gains well so now the pension plans are going into the stock market and these are pension plans that are administered by teachers and administrators and government people that absolutely have no idea what they're doing and you know i think that's actually going to be one of our next big crises is the pension plan crisis you know and i don't like to discuss uh religion especially with my two older sister my oldest sister is a nun that that's always a bad debate that's why i wanted to see if uh that's why you lectured antarctica to think you were lecturing to a bunch of uh my sisters uh at her convent they they dress like penguins but um i don't like to discuss religion sex politics or violence but i mean we we've only had two parties uh for the last 160 years and and neither one of them shows any interest in cutting spending or raising taxes in fact i thought the last election um some of those commercials like oh well if you vote for this guy they're going to raise taxes well dude raising taxes is paying your bills so if you don't want to pay your bills tell me which bill you want me to stop paying and the program they will cut but now now it's not i mean i i cannot believe i i i could i can't even believe this last election i mean it's like one robbed the bank and one drove the getaway car and then and then one thinks their guy's better than the other and they're both driving us completely off a financial cliff which is why i want to bring you on the show well you know you know what's fascinating to me Howard is that um the democrats have actually um included in their platform modern monetary theory which modern monetary theory if you read up on it uh says that deficits don't matter okay up to a very large point i mean they point to uh japan and they say look japan's been running 200 of gdp deficits for 20 years and they're still going okay because they get to print their own currency okay so they they go to this idea that if you can print your own currency like the us can like japan can like china can you can never run out of money okay the only problem with that is is that at some point when it you know inflation gets starts getting away from you will congress who's required to raise taxes because at some point you do have to raise taxes will congress have the heart to do it my guess is not and at that point we have runaway inflation so i i think it's just a very dangerous game they're playing yeah and do you yeah and the other thing is i mean you know this country is not very old i mean it's only it's not even 300 years old and i mean how many different currencies I’ve already had i mean it was a tobacco paper each state printed their own i mean i i don't think any about the i mean none of these currencies last forever especially when you start counterfeiting them and just start printing them i remember after the lehman's brother deal it would take a year before the federal reserve chairman admitted that while the congress was debating that bailout package he printed eight trillion dollars on his computer i mean he didn't have to print the money you know you go back a couple hundred years you needed tobacco leaves and then you had to print these uh little paper dollar bills and it was just a computer injury so he just did a computer entry in the middle of the night and made eight trillion dollars out of nowhere and i go back to um milton friedman you know something's crazy when the new york times is running stories that oh it took a pandemic to prove that milton friedman didn't know what he was talking about and you know he's uh none of this stuff lasted this long and he doesn't make any sense I’m like wow so you know the stories get really crazy at the top of the bubble but when the biggest newspaper in america is saying that milton friedman doesn't know what he's talking about and it's written by some journalist who's probably you know not old enough to buy a coffee at starbucks it's just like it's just insanity yeah it's it's a fascinating time i mean it's going to be a while right you know the good news is is that while we can't control it we can certainly control the things we do about it it's fascinating to me that the democrats and the republicans are arguing over whether they should spend 1.8 trillion as a next stimulus package or three or three trillion on the extremist package i mean we're not talking about you know we're talking about a difference of trillion you know trillions of dollars uh they think that they and if you talk to economy a lot of economists think you need to put that much money back into the economy else this economy will just crash and you know that's what happens in a bubble you have to keep pumping air into it in order for it to keep from crashing well so what would so what is i mean what happened to you and wilf ability i mean how how does your message hold during these insane times and by the way should my homies should they go to uh and by the way will write is a wheel like like like you spell a wheel w-h-e-e-l but wright um has a w in front of us so it's tom will like the wheel on your car and write with a w w-r-i-g-h-t um was that the right spelling of your name what i always say is it's wheel like a car and right like the brothers oh there you go we'll like the car ride so should they go to tom or should they go is the best place to go um what we've been doing interesting um Howard I’ve actually uh I’ve learned a lot from you you say you learn from me but I’ve learned a ton from you um weltability we now have a network of uh over 50 CPA firms worldwide um and we're actually training them to help people build wealth not through the stock market not through savings but rather through business entrepreneurship real estate commodities and things like that the alternative investments so to speak that really have a lot more staying power than uh the traditional investments like the stock market and savings accounts and and we do it and what's the great thing about it is um you know the tax law is really a series of incentives when you look at the tax law it's fundamentally a series of incentives and then you have to look at okay so who are who is it incentives for well it's incentives for business owners first it's in standards for real estate investors incentives for people who do energy people do research and development people who do agriculture so those are where the incentives are very few incentives are towards the stock market most of them are towards actual entrepreneurship which is what i love about what you do however because you're actually working with dentists to be better entrepreneurs and uh that's actually the area where they can there's so much you can do from a tax standpoint um the cares act uh most people don't realize that that big that big stimulus package had major tax implications and they were tremendous tax benefits uh for people and um and you know all we have to do is look at what does the government really want us to do where does where they want to put our money and we do that we get tax benefits and at the same time we make more money so it's actually to me this is a great time because it just means that those who are financially educated are really going to do well and those who aren't are going to pay the price well is that um covered in your book you wrote a book uh tax-free wealth how to build massive wealth by permanently lowering your taxes um you can get on amazon and it's got um oh my god it's got 254 five-star reviews 254. that is amazing uh to put that in perspective my book has 54 uh five stars so i i have the same amount of ratings with you if you just get rid of that first uh is there any way i can get rid of that first two in front of your deal or uh but but tell us about that book i mean um it says uh tax free wealth is about tax planning concepts it's about how to use your country's tax laws to your benefit in his book tom will write will tell you how the tax laws work and how they are designed to reduce your taxes not to increase your taxes once you understand this basic principle you no longer need to be afraid of the tax laws they are there to help you and your business not to hinder you once you understand the basic principles of tax reduction you can then you can begin immediately reducing your taxes eventually you may even be able to legally eliminate your income taxes and drastically reduce your other taxes once you do that you can live a tax-free wealth so how does um so talk about that because the the the single biggest thread on dental town which has oh my god hundreds of thousands of posts over the last 20 years is why do you only three per why how come only three percent of the dentist can retire debt free at 65. so how would how would you answer that question from your years in dentistry and accounting why do you think only three percent of the dentist can retire 65 uh debt-free tax-free and do you even believe that number yeah well i i maybe that's high i don't know i mean maybe it's less than three percent um so here's what happens Howard first of all i think people com people are fed alive by wall street that's that's the fundamental issue is that we can sincerely get a lie from wall street that the government continues to promote and the lie is that wall street's better at handling your money than you are so you need to turn it over to them and let them handle your money and you need to do it through a 401k an ira a pension plan a profit sharing plan because guess what you're going to be in a lower tax bracket when you retire well based on what you're saying that's probably true because people are retiring poor okay so the only way you're in a lower tax bracket when you retire is if you tire poor right if you retire with the same amount of money you were making while you were working then you would be in a higher tax bracket right because you don't have all the business deductions and all the other deductions that you have so the key is if you you go back to the the subtitle in my book it's how to permanently reduce your taxes so here's the key so Howard there's there's one line in the tax law that says all income is taxable there unless we say it isn't there's another line that says nothing's deductible unless we say it is there's about 30 pages of charts and tables to tell us how much tax to pay and then the rest of it is a roadmap to reducing your taxes it's this is what you do to reduce your taxes and most of that is permanent tax reduction the problem is is that most advisors because most advisors are kind of conjoined with wall street they say well you know the way to do it is to defer your taxes to a later year well it's a horrible idea think about this if you put your money into a pension plan or a 400k you're probably investing that in the stock market and if you invest in the stock market you're probably getting income one of two ways either through dividends or capital gains both of which are taxed at half the rate of ordinary income if you're outside of a qualified retirement plan but tax at the ordinary rates if you're inside a qualified retirement plan so you're actually increasing your taxes by doing your investing inside an ira or 401k or a pension plan what people don't tell anybody else what wall street doesn't want you to know really is that most of the tax law is permanent tax savings there are things like um what a strategy we have in the book called buy borrow die where you you buy real estate for example dentists here's a here's a perfect example dentists ought to be owning their own real estate in my mind okay you you own your real estate where your practice is the real estate then it goes up in value you you know you as you've done Howard very successfully you expand your practice to multiple locations right and then what you do is you buy the real estate each time well okay so eventually you're going okay I’m going to retire well now you have all this real estate okay it's renting you've gotten big depreciation deductions eventually you go i don't want to own that real estate anymore so now you sell it but you do a what's called a 1031 exchange and you buy different real estate you buy like a walgreens or a walmart and get a lease back on that right they do a sale lease back so that's like buying a bond it's like buying a walmart bond well that's the safest thing you can possibly buy right so you don't pay any tax now when you die all those capital gains that have been built up in that completely go away so now what you've done is you've got this tax deduction every year for depreciation you've got all these tax benefits along the way you've never paid tax any time you wanted money you just borrowed money against the property that's not taxable and then you die all the taxes go away so that's just an example i mean there's so many ways to never pay tax that why people i I’ll give you another example at a real estate literally some a real estate instructor he's very well known and he comes to me as a client he goes because I’m so proud you know one of my goals was to pay a million dollars in tax and I’m going are you out of your mind why would you want to pay a million dollars in tax i said so listen here's what we're gonna do and we went through a little strategy and i said you're gonna first of all you're gonna go out you're gonna buy find your own deal instead of doing it for your students you're gonna do one for yourself we went from a 935 000 tax bill and i can say this because he said this from stage publicly many times 935 000 tax bill one year to zero tax bill the next year and and just and what he did was is he found a deal that made him a bunch of money so he's he made three hundred thousand dollars a year in cash flow from this property and paid zero tax now to me that's a pretty good way to do things right rather than stocking things away stocking money won a pension plan or 400k and have that buy hold and price strategy you know you buy the stocks you hold them and pray that they go up but what happens if you want to retire when the market crashes i mean think about all the people who wanted to retire in 2008 910 and they couldn't retire because they were dependent on their stock market fed ira 401k pension plan and all of a sudden it dropped 50 percent and now they can retire so they go back to work what are they they're you know they're now they're greeters at walmart now they're greeters at costco and that's what they're doing for the next 10 years of their life until the stock market goes back up and they can afford to retire so you know the whole thing is a matter of a lack of financial education and it's it's because we're we're so ingrained in this idea that wall street does a better job with our money than we do and that's that's just baloney they're not smarter than you are you are you're much better at handling your own money and when you deal with your own money you get much better tax results as well and think about it what if you had that so let's say you made five hundred thousand dollars in a year and you paid 150 000 in tax what if you had that 150 000 back and could invest that i mean think about over the years what kind of a an accelerator that is to your wealth to me that's why people retire poor because they're actually taught that you're going to be in a lower tax bracket when you retire which means you're being taught to retire poor it's actually ingrained in our culture Howard well tom you know we live just a couple miles apart we're both right here in phoenix I’m in phoenix here in chandler if you ever get a client who's like an 80 year old multi-millionaire and she's a widow will you uh will you fix this up i mean oh I’ll even I’ll even drive clear to scottsdale i might even drive all the way to tucson if you could fix me up with that but is there another another thing going i mean you know obviously um the pendulum swing and and the last time i saw inflation crippling inflation was 1980 um it went all the way to 21 unemployment and um was double digit inflation was a double digit i mean just crazy um what was going on and then it's been gone ever since paul voker the new york fed took over and um crushed inflation he said um and it's been gone wouldn't there be another reason to be into real estate because you know to be to be holding your wealth in something other than a piece of paper that can be printed by the us government a dollar bill would it wouldn't it be safer isn't that the argument for people who like gold or real estate or just something the government can't print wouldn't that be a better bet 40 years there's two really really good arguments for real estate as an example but hard assets in general okay so the first is is that um it's always there right it doesn't go away right i mean it may it may wear out a little bit but it doesn't go away it's always there and it always has value okay it can go down in value but the second thing is that it actually produces income uh via you know via rents right so if you have a good property it's you're going to rent that you're going to make repairs etc but the renters are going to pay for your repairs the renters are going to pay for the upkeep on top of giving you cash flow so you're going to have this cash flow for a very long time but here's the other thing you can use debt with real estate and debt is the best inflation hedge in the history of the world it's the best inflation hitch it's better than gold it's better than life insurance and better than any other kind of inflation hedge ever invented is debt because if you really believe that uh i mean we're not going to go lower uh we can't go too much lower in our interest rates now so enter interest rates inflation can only go up you know and so if you if you think that okay we're out of control we're going to be more out of control in the future inflation's going to come back then you'd like to pay that debt back with cheaper dollars in the future and so real estate's just a great way to do that if you look at historically you look at the really wealthy families that have had generational wealth their money's always gone three places they store their their wealth in real estate um gold and silver precious metals and in uh fine art and those are the three places they store their wealth because those are the three things that never ever over the long run lose value they always have some kind of value to them and the great thing about real estate or the great thing about um you know investing in energy and and even business is that it's constantly producing cash flow and can produce cash flow for a very very very long period of time and you're right you're not dependent on somebody on a piece of paper that somebody can print and just print as much as they want huh um dentist it seems like you know if you say dentist um people always think of two things when they think of dennis they think oh dennis love golf and they they do love real estate i mean there are so many dental real estate podcasts posts on downtown dentaltown has uh 62 podcasts and by by the way i i wish you would um load your podcast on downtown it's free i mean uh um and there's a quarter million dentist on that site and those uh those podcasts i mean some of those views are crazy there's a dentist in florida that put a podcast on that app he already has 650 000 views and just blows my mind but they they love real estate why do you think dennis have always liked golf and real estate you know dennis um I’ve always loved dennis's clients the dentists are an interesting great because you have two things that are important um when it comes to financial and tax planning you have time and you have money okay and those are two things the the problem with doctors um they have well multiple issues with doctors one is they think they know everything dentists are actually uh quite willing to learn okay so i love that about dentists um doctors don't have any time dentists typically you know manage their time very very well i mean i always have been impressed with the dental industry and how you've managed the insurance companies so much better than any other medical industry and so so you guys have a real opportunity you know because you have some time you can go out and do the real estate you can actually be invested in real estate plus practices are very real estate centric right i mean it's it's location it's having the real estate and you can always buy your own real estate so i actually think it's a i think it's a great place for dentists you know you don't have to uh you really could do it within your own practices as you build those practices out like you teach and uh and and just have an amazing amount of real estate and that's going to be enough wealth to to have a great retirement and never pay taxes on it so so tom to back to specifics so um the dentists listen to you that that are big in real estate and want to list that do you actually do their CPA accounting or do you refer them to a CPA in your network or do you refer or should the dentist have his CPA join your network i mean how does he learn uh your philosophy that's actually the great thing about our network so you gotta you have a choice now okay it used to be that you know i i had to you know find you know i had to find somebody for you you had to you had to switch your CPA now you could either come to us and we'll find a CPA for you that's that's the right fit for you or you can bring your CPA to us and we'll train your CPA so we're we're happy either way we just want dentists are actually a group that we absolutely love love love working with i love working with dennis i always have and um they're just a really good they're really good business people as a general rule really good clients and uh and willing to learn new things and willing to take you know you know to actually think about things differently than they have in the past you guys are always learning and that's to me that's the key is that you're engaged in the process because i always say that if you want to change your tax you have to change your facts but i can't change your facts for you you have to do it so the fact that dentists are willing to learn and actually take action i think is a huge benefit and so we're we're just happy to help whether it's whether you need a new CPA or whether you really like your CPA and they just need to learn i mean either way uh you know come see us and we'll help any way we can so so if if a dentist wanted you to be their CPA is that the forward slash tom uh would just be right there's a you can schedule a call and we'll absolutely get you set up absolutely oh okay so are you is that you it is me only you because i know you do i know you do stuff with um um rich dad poor dad uh um kiwasaki um is that is that related to him it's not it's not wealth ability is my company my partner and i we we've had this company actually you know my partner ann um you worked with her too uh back in the day and the two of us have stayed together we've now been partners 20 years and um uh she she runs the you know she basically runs the back end and I’m kind of the front man for it so uh which is odd because she's the pretty one um I’m not but you know it's okay i mean uh well speaking of anne um what was zan's last name mathis ann mathis um speaking of ann uh um i talked to lori this morning and the first thing she told me to do is she saw that i was podcasting and she's like oh my god tell tom i said hi and all that stuff and uh um and by the way um you know to be clear of my homies i i um these are not commercials tom how much did you pay me to come on the show today uh i paid you nothing and you called me or did i call you you know what i i i had no idea i called you i I’m the one who called you and um because I’m always seeing you out there and i knew you're um but i i can vouch he's a great guy he was our dental town uh first CPA back in uh the the year and all that kind of stuff but um so do you think um okay so i I’m gonna just lay it all out there dennis the thing i love about dennis they're cynical bastards i mean they they just are they're just cynical bastards and um they're like ah this is Howard and his buddy in phoenix and and all this kind of stuff like that um if this was so obvious why would more cpas not be doing it because because it's hard work it's really hard work okay um you know i i think that uh i think one of the four letter words in my industry is easy and another one's lazy and uh and we have a lot and it's really easy to say max out your 401k it's really easy to say do a pension plan it's very hard the kind of work we do is really hard we will take how we're going to take three to six months right off the bat every every other week with with a new client every single client that comes in we spend three to six months with just to establish a plan of action before we ever do any act you know actually implementation we spend three to six months and that's not easy i mean we have uh we actually have cpas that come into our network they take a couple of clients in and then they bail they go this works too hard it's too hard so it's not i mean we work really hard for what we do and i think that's really it i do i think it's just really hard work that we do you really have to be knowledgeable you really have to be trained well um you know me I’m a big educator I’m a big trainer that's what i love to do and uh and i I’m a big I’m a big fan of my industry at the same time my industry tends to be a little uh stayed and set in their ways and so you know what we find is well we actually have a rule that to be a member of our network you have to be an entrepreneur first and the CPA second and uh so we only have entrepreneurs in our network and so that that allows them to relate better to uh other entrepreneurs but we're really you know we're just there to change we're just there to change the world but it's it's hard work i want to say two experiences that you remind me of that I’ve lived through when i was little you know the birth to ten mom and dad had seven kids very very poor dad saved up his money and he got into a sonic drive-in franchise and he went from one to nine locations and i can still remember roger carpenter from coffeeville kansas i was 10 years old and i i thought sonic was so cool because this guy had a hundred and he had an airplane when when we went and visited him we we flew to the other places and um i just thought you know wow this this t this guy used to be a teacher in coffeeville kansas got into sonic like my dad did got a hundred and he has an airplane i mean i just thought it was blown away but i can still remember him text lecturing my dad the most important thing is to own the land underneath your restaurant you want to own that damn land we're buying prime locations and then um he saw that a lot of franchisees um had very different thoughts at and the other one was dan carney in wichita kansas who was an amazing guy available to young dumb kids like me in high school he he wasn't into real estate he was into the business of pizza and he didn't care but i noticed these dsos now there's a bunch of corporate chain dentistries and i i still think the smartest one out there is rick kirschner of uh of um comfort dental um because what he does is he goes and buys the the uh he'll buy he'll never build new he'll buy an old building like 2 000 square foot and it'd be maybe he used to be a state farm agent or an accountant or whatever but he's on nice four lane street he buys that renovates into a dental office sells the franchise to one or two dentists and then when they um they they buy the franchise and the franchise costs exactly what rick paid for the land and building and the build out which which is exactly what mcdonald's does mcdonald's doesn't have a franchise price because we don't know where you're talking about you talking about downtown manhattan or downtown coffeyville kansas but they go buy the best real estate they buy the land say the land's half million they'll build their box four hundred thousand they'll put the guts in another three hundred and if the total is one point two they'll say hey tom will right um the mcdonald's franchise is 1.2 million dollars so then you pay them so now they're debt free and then they take twelve percent off the top i think kirschner takes I’m not sure i think it's it's less i think it's like five percent but uh one or two percent of that uh it just goes to uh advertising but the bottom line is mcdonald's wakes up every morning and they have like 40 000 paid off properties making a rent payment which is twelve percent of sales you can't do a percent of sales in dentistry because that's fee splitting which is highly illegal so rick wakes up every the first day of every month and several hundred paid off comfort dentals send him a rent check so he has no doubt and and and you always pay attention because he's one of my friends where if he wants to have lunch with you he sends his jet to pick me up and i go to the uh i mean i and and to park your car they just have a driver come pick you up at your house take you to his jet you fly there and have lunch with uh rick his wife cindy and two dogs i mean so when usually when people pick you up with a jet for lunch uh you should pay attention but would you say um that mcdonald's is really more a real estate company than a hamburger friday coke company no question ray kroc was very clear about that he wanted the real estate uh the the the franchise was just a way for him to get the real estate and have good tenants in there that paid him the rent for the real estate so they're absolutely a real estate company and like you said i mean there are lots of companies out there that are that you know their their whole model is to own the real estate this is what I’m saying is that even the way the tax law works so if you own your own real estate and you own the business you don't have any limitations on the deductions you take for the real estate if you own the real estate and then rent it to somebody else you do have limitations okay so why you don't own your own real estate when you're in business is like beside me i mean i own i own my building that my CPA firm is in okay i have a little CPA firms i still have a little CPA firm so i um sold off the big CPA firm now i have a little CPA term and that's that's when that's when we departed when you were my CPA uh my account then you you sold that firm right and you recommended us to go to the other place if you're wondering out there why am i still not using because you you sold that and and and you recommended we we go to these new people but i think that was mainly just to get rid of your dumb short fat bald friend and all with tooky but but anyway continue there was that that wasn't so so yeah so mc mcdonald's is clearly a real estate company disguised by a um a hamburger fry do you think the hamburglar was the one who uh disguised this on the getaway it could be it could be so amber ronald mcdonald that you know it's a it's a so then so here's a question i hate to ask you because timing is everything and um humans have never predicted anything so i mean they didn't predict the fall of the berlin wall i didn't read anything ahead of the arab uprising um the history books they still can't even figure out why world war one broke out like that in such a way i mean one one fourteen-year-old kid shoots a king and the next thing everybody in the europe is shooting each other um crazy times but so so someone listening to you right now they're they're probably scared because um we're right now we're in the middle of a pandemic you know maybe we're having a vaccine whatever they're they're there they did a stimulus package in march for three trillion we used to add a trillion dollars of debt a year now we've already added three trillion and they're talking about three children three trillion more what what would you advise to the typical 50 60 year old dentist right now or even all dentists even a young kid you know what the same thing that that you would tell them about their dentistry business it's all about cash flow right so real estate is about cash flow business uh your dentistry practices is about cash flow um uh what if you're an energy it's about cash flow so the the key is to focus on the cash flow if you have good if you have a good piece of real estate location location location right and you have good cash flow coming in then you know you know that even if you like drop 20 percent of your tenants you know 20 percent then you're still making money now here's the thing about dennis you guys are in a great profession you're because you're always going to be needed i mean they're you're you're always an essential business right i I’m in a similar profession right we're in we're always in essential business so um you know you're not gonna you're not thinking of my dentistry practice is just gonna fold overnight because of pandemic no i mean you got shut down for a little bit but then you gotta open back up and you know people have to have this well if you if you're if your dentist if dentistry practices are your tenants wouldn't that be a great tenant to have no matter what happens so it's really all about cash flow and as long as you focus on cash flow and not appreciation and not you know any of this other stuff but you focus on cash flow you're going to be fine i remember in sam walton's autobiography which was called made in america an amazing story and i want to remind you to people that when sam walton was alive i mean it it was i mean hell the name of his autobiography is made in america he he was truly an american right out of bentonville arkansas uh my dad took me there when i was 10 years old to go trout fishing just to see the birth of where where this man was from but um in his book um he got him and his wife helen got massively screwed over by one of their landlords who wasn't going to who kind of acted like yeah we'll renew your lease when it comes up or whatever but had no intention at noon at least because he saw this hot business and he wanted him to go out of business and then he opened up a competing business model right across the street and sam swore I’ll never ever rent again i mean he um you know back back in the day um but that reminds me so if you go to dental town and you just put in a search for real estate there's just a gazillion threads but some guy posted this morning um is there a limit to percent increase what ll can charge per month um every year I’m paying around 4 500 a month rent with 2500 dollar cam charge where rent increased 3 per year and can say the same with previous ll i would pay around four to five thousand as year in recon charges with the newest uh mega ll this year i had to pay almost eighteen thousand dollars tax and nine thousand dollars a year in reconciliation charges on top of the 2 000 water sewage charge with previous ll tax and water sewage was included in the cam now i get a letter from ll stating that they are increasing the cam by another 250 a month and will add 1450 extra per month as property tax I’m sure they will you know blah blah blah blah but i mean isn't the best answer to what he's saying is uh gosh darn i mean how would you even answer that where would you even start so first thing is is own your own real estate and then you're the landlord so you don't have to worry about that okay but then the same thing is you know this is this is why you have a team i mean this is something we teach all the time is that you know business is a team sport and so you've got to have a good real estate attorney who's reading that lease and explaining that to you an accountant who can actually run through the numbers but the problem is is that attorneys are really good with words but they can't do math and accountants are really good at math but they can't be law okay so you've got to have that team working together and this is the case right there where uh that dennis needs to sit down to the accountant and his real estate attorney and say okay before we ever enter into this lease what does this lease say and what are the restrictions on the landlord in raising rents and cam charges and so forth because you should have a limit right you should absolutely have a limit on those camp charges that they can only increase a certain percent a year and just like you have a limit on your rent increase right that's limited every year so why don't you have a limit on that that's where you bring the team together and you make much better decisions when you make them as a team and do you have um yeah i mean i i had a friend out here i couldn't believe it he um he rented his dental office as part of like this 10 000 square foot building and he only had a couple thousand square foot and on one side was like a yoga studio and a bunch of low people didn't have a lot of money invested they could just walk which explains the other phenomena that on student loan debt if once you owe over a hundred thousand dollars the default rates almost zilch it's all the 20 000 and under who are defaulting they never had skin in the game to begin with so anyway long story short the roof starts leaking and it turns out it's a triple net lease and um the the tenants got to pay for it well it was a huge bill the whole damn roof had to be redone and the yoga studio and the little coffee shop said you know you forget it they just walked they did they didn't care if they declared bankruptcy or whatever i mean um you know you're a yoga um you know why do you need money if you just eat kale and uh so so the bottom line is he was stuck with the whole damn bill or he you know he was stuck with the whole thing so the my question is well holy moly i'd be really mad at your real estate attorney who signed that lease for you what did your attorney say and guess what he said to me i i didn't i didn't have an attorney look at i I’m a dentist damn it i i know everything i i know the difference in a cosine and a tangent algebra calculus trig and i always yell stay at your lane i always say that at graduation when you walk up to get your degree from your dental school the dean should shake your hand and whisper in here you're a doctor of dental surgery you don't know about anything else get a team stay in your lane you drill phil and bill but you don't sign a 10-year lease without having somebody that's a doctor of dental leases on your team so who so fill out that team there's a lot of kids listing this podcast listeners are young what's a team include okay number one person on your team is your bookkeeper okay number one i can't tell you how many dentists pharmacists you know doctors they're going oh my wife does my bookkeeping bad idea never should be a relative okay don't ever use a bookkeeper as a relative period shout out to lori zolowski she was my first bookkeeper she sat right next to me 25 years later as president of the company best single decision i know i remember lori so well she's amazing and there you go she was and she was a good bookkeeper i mean she was a really good bookkeeper so um you you know you start out right good bookkeeper then you have to have an accountant now remember the bookkeeper is there for accuracy and the accountant is there for analysis okay so again the bookkeeper the bookkeeper's job is accuracy the accountant's job is analysis okay so the account's the one that you should be looking at ratios you should be looking at okay what does this mean what's my cash flow mean what are these different reports mean and make sure that but and double check the bookkeeper right plus analyzing it from a tax standpoint then you have your attorney your attorney needs to pay for the bookkeeper's job is accuracy right and the accountant's job is analysis analysis analysis I’m the world's slowest typer I’m sorry go on going that's all right so so now you've got those two working together now you need to add an attorney now and I’m talking about uh some kind of a general contract business attorney okay for me in my business i do a lot of uh I’m constantly creating intellectual property so my primary attorney is an intellectual property attorney but i also have a real estate attorney and i also have a contract attorney i also have a tax i actually have a tax attorney that i go to you know for for uh you know actually drafting documents from a tax standpoint and so you know there's multiple attorneys but you've got to have one attorney that you can go to on any kind of matter and just say please you know help me understand or can you get me a referral to an attorney that's a specialist in this area but you've got to have an attorney and the attorney and the account have to be in communication all the time okay they've got to be in constant communication with each other because otherwise the attorney says well that's the accounts job the account says well that's the attorney's job and nothing ever gets done so so the attorney's job is the attorney's job is to put it on paper that's their job so the bookkeeper's job is accuracy the accountant's job is analysis so the attorney's job in one word that starts with a is um i have no idea what that word would be I’m just thinking about validation because that'd be great because bookkeeper's job is accuracy captain's job is analysis the attorney's job is hmm should start with an a to be a really cool one-liner I’ll have to think about that one okay um but but really they're they're the ones who put it down on paper they write the words um they make sure that that it stands up in in the law that it'll stand up in court and that it makes sense from a legal standpoint okay so they're they're looking at it from a very different perspective from the account the account's looking at it from the analysis it's really you talk about that that whole lease issue and I’m going okay well part of that's the attorney but part of it also is I’m guessing that same dentist did not have their accountant look at the lease either and the problem is is that the attorney will write the will write a lease they'll look at and say this works from a legal standpoint but the account's the one doing the analysis so they're going do the numbers work here what happens with that cam charge that's in a that's an account that should be reviewing that that's not an attorney that should be reviewing that that's the accountant so that's why they have to work together okay words and numbers uh accountants or numbers and and attorneys and words and and so those two have to work together on pretty much any deal you ever do well well said and um i i noticed um i noticed that um when my dad was in his businesses that a lot of the people who had problems um their accountant wasn't even in the state and they they just didn't know their numbers and again the accountant's job as analysis the bookkeeper's job is accuracy that they didn't have their own bookkeeper they didn't know their numbers in fact it was just sad that um um you know we my all four of my boys were born here in all watuki um which which was annexed by phoenix so it's really phoenix Arizona but if you walk up to anybody in all watuki and say where do you live they say owatuki and they say do you live in fact if you even ask him do you live in phoenix they say no i live in all watuki so that's the deal there but my boys we would we would go to restaurants and there's only been three restaurants that have stayed open since my dental office opened in 87 all the other ones burn and churn they have about a 40 60 going out of business in the first few years crazy but um i i would tell my boys i say boys um well let's ask this person you know the owner when he comes by let's ask him what his food cost is um because when my dad was in sonic food cost was 31 percent crew labor was 18 and and well he would ask him what their food cost is and they'd and the the guy would leave him and eric i mean he wasn't even eight years old he'd say wow dad he doesn't know his numbers i said yeah and he doesn't know his numbers would be gone and then the ones that stayed my boys still talk about they'll walk up there because one time i said i noticed you you you quit doing the um the dining room um or the uh the the tablecloth you always had a a um a tablecloth over a table and you got rid of them she goes well you know what turns out that you know it was a dollar per table per order and it's just um out of control and we we we tried several rays if i could have got it down to 50 cents a table i would have kept the tablecloths but I’m not going to waste a dollar on every single order for a damn tablecloth and i just sit there and thought oh my god this woman knows her numbers i mean she's and and and the other thing is and i hate to say this because it sounds just horrible to say um it sounds so racist but it always it always seems like it's the immigrants who know their numbers in their business and work the hardest like like I’ve noticed i was talking to my dry cleaner guy and him and his wife were from korea and i said you know there's no national um you know um dry cleaning chains that go coast goes you know you got mcdonald's goes how come there's not a dry cleaner ghost he goes because immigrants take those jobs and we will work 7 a.m to 7 p.m seven days a week until we die how do you americans compete with that but I’ve noticed the the um the ipos on on nasdaq i mean almost every ipo is not a foreign is a foreign-born person and I’ve noticed all the restaurants out here that know their costs and stay in business they're always immigrants they immigrants always know their numbers do you think that maybe growing up rich in america even poor americans think that they're poor i mean they're they're not poor if you go to any other economies but do you think do you have you noticed that immigrants um just work harder for lower costs and know their numbers there's a great sense of entitlement in america right now um rich or poor there's a great cell there's this whole idea of it I’m entitled to this I’m entitled to this I’m entitled to that and I’m entitled to work less hours I’m entitled to to make money I’m entitled to go to college i mean all of those things are entitlements and and it's across the income span it has nothing to do with how much money you make um but for example i had i have a a client three russian brothers and uh they they immigrated here with their their parents and the three brothers they start construction they told me after a year they go how do you not get rich in america it is so easy to get rich here because when you compare our laws and our systems to russian or chinese or european systems they're all so restrictive and ours are not and all it takes is a little elbow grease and watching your numbers and paying attention and it's not that hard to make money i mean it's just not it's we are still the land of opportunity and if you can't make money here you can't make money anywhere and uh and that's the problem is that we just have we we do have this feeling that we're entitled uh to to our standard of living we're entitled to to what we do and so that's why i think the people that come from other countries they just have a different you know they have a different view of life and they go wow it was so hard there the regulations were hard or the the politics were hard or whatever and here i can pretty much do whatever i want so all i have to do is work hard get my education and and there's no restrictions on me and so i think that's why you see people from other countries have such a leg up because yeah they're willing to work they're willing to work more but on top of that um they don't feel like they're entitled to anything they feel like they're they're it's okay that they have to work seven a.m to seven p.m that's not a bad thing that they would have been doing that where they came from for you know 10 of what they're making now so they're thrilled they're going i don't i don't mind and you know this is what you have to do yeah i mean then that's what set off the arab uprising is when they try to take away that guy's own fruit card and um just the corruption because um you know he was competing against someone that was paying bribes but i um i i can't believe we already went over an hour but i still gotta um can i keep you for overtime for a few minutes absolutely um so you're in you're right here in chandler and we got a dental school out there in mesa and we got a dental school in glendale and they're both private schools and those kids are coming out 400 000 in student loans so they they first think well i got so much debt I’m just gonna get a job at a big um corporate um like um heartland or aspen or mb2 and I’m just gonna um do that until my debts paid off and then other people are saying well the average practice for sale is about 750 000 um maybe you should just go borrow 750 because the banks will loan to dennis so they have a pulse because the their bankruptcy rate is less than one percent and they and and those one percent all have the same thing in common they had their license taken away and their license taken away um was always for liquor drugs and women and uh which i don't know why they didn't call me first but um so if you don't have your license taken away um you're not gonna go bankrupt but they say well i don't want to go borrow 750 000 I’m already 400 000 in debt and then when you talk about setting up like a retirement like an ira fund they're like well I’m not going to put a thousand dollars a month in ira when i have a 5 000 a month student loan payment so can you just switch this whole conversation and pretend that you're talking to a 25 year old girl from mesa she just walked out of school she's four hundred thousand dollars of debt and by the way tom um dentists don't take orders well i mean there's two types of people you either love to give orders or take orders and when you put three dentists in a building and they all have to work for a boss they get along like vinegar and water and and you can prove this because they change jobs every year so usually if they've been out of school five years they've had at least five jobs before they start their own so how would you tackle the new graduate with 400 000 of debt right here in your own town you know i i start by asking so how are you going to pay that off i didn't pay that off if if you've got a 400 000 debt and what's your so so what's their starting salary going to be hard oh they they'll make a um i i would say they make a 25 of what they produce versus a minimum day rate of about 500 so they'll probably make 145 000. a year making 150 000 a year how are you ever going to pay off a 400 000 debt okay now you take this and you go well wait a minute what if we bought a practice what do we bought a practice for 750 000 what kind of income does that what kind of income would that throw off that 750 000 loan what kind of income would that throw off Howard you know well i mean they i mean the average can keep their overhead at 65 percent if they're just average one-third of that would be net okay so you got 250 000. so so you got 250 000 okay now it's just it's all about the numbers i mean you know like you and you and your kids I’m all about the numbers and so I’m just going to say look here's what happens if you buy a practice here's the numbers here's the net here's a you know and here's how fast you pass that that debt okay and include the 750 plus the 400 and here's how much debt you're gonna pay off here's how it works okay how much are you gonna have left over at the end of the day on top of that remember the interest expense is deductible still at least you know a good portion of it is and really for for dentists it's going to be 100 right so your interest expense is deductible so you're really only paying 60 anyway of that interest expense right the government's paying the other 40 and uh plus it you know you've got all your all your business expenses so you've got to look at your tax side of that too and after you look at your tax side of it and you because you got big tax on wages right you don't have big tax on on your business earnings i mean you can get those down pretty low so if if that's the case how much money do i have left over so i would just sit down and say you know would you be willing to just sit down and let's go through the numbers and let the numbers speak you know you don't have to convince anybody of anything the numbers can can tell the the story you know if the story is look you're better off getting a job for a few years and get a job for a few years you know the story is better you're better off building your practice then the next question is okay if I’m throwing off 250 000 a year now in my practice all right what's the potential of that can i grow that to 300 400 because guess what your salary increases from the job are not nearly going to be as much as your income increases from the business so you got to build that into the projected projection as well but i always take how would i take everything back to the numbers because numbers are just they're unemotional they're not it's not me telling you what to do let's go here's the numbers you make the decision but you know we were talking about entitled and i i want to say this because i don't think uh many people um want to pop the bubble on their customers heads i mean i i have i called my seminar dennis transcends because i have no problem calling my homies on their you know what i mean and I’ve seen these kids come out of school and i say look i know your dad go home and move in with your dad now you don't have any rent mortgage equipment and he'll love it and he's like oh I’m going to get married and have a grandkid i said he'll love the grandkid 10 times more than you go home and and so so they don't buy the practice they took a job but they go out and buy a 400 000 home in chandler and I’m like whoa you didn't want to buy a dental office for 7.50 so you bought a house consumption for 450 and then got a wife who's who married a rich dennis she believes it no matter what the numbers say so she's not going gonna work she's just gonna sit home and have about a half dozen kids um my god just um i mean i i and and then again i see this only with asians and africans where they come to america they come out of dental school they get out of school they buy a practice they move into their practice they live in their practice even though it's illegal out here west it's not illegal in new york and new jersey in fact um the founder of facebook mark zuckerberg his dad ed zuckerberg is a dentist and the dental office was on the first floor of the house and ed and his four kids including mark lived on the second and the third floor and and they'll say well how are they gonna know I’m living in my dental office but the point is they come out of ump 400 000 in debt buy a dental office live in it their office phone is their iphone they don't even have a car and three or four years later she's has no debt and she's piling up cash that is not something that happens when you're born in phoenix well that's that that's the tough part of that right and because you've got to be you've got to be willing to look creatively and say what's possible not just what is it but what's possible and you know mixed use property i mean you say you can't live in your dental office but you can have mixed use property here so you can you can have you can have you can have residential you can get zoned uh even in phoenix Arizona so you've got zoned commercial on the bottom and residential on the top we have many mixed use properties so that's everywhere you go you can get mixed use property then not necessarily a home okay but it's some place that you get mixed-use property and uh you know there's just lots of opportunities there to you know keep your ex you know here's the thing when you buy a house you're buying a liability you're not buying an asset you're buying a liability because a live bill is really anything that takes money out of your pocket an asset something puts money in your pocket so you buy a practice you're buying something that's putting money into your pocket you buy a house you're buying something that's taking money out of your pocket and it's it's really that simple that's why i say you run the numbers you go do you want cash coming in or do you want cash going out which one do you want so they should just go to uh not i like that and we're good to go all right and how do they contact you if they're listening to you right right on the button there is a a schedule a call button and uh we you know uh schedule call uh our our people will be all over you know there's there's no charge to that call we'll look at your tax returns we'll look at your situation we'll go here we'll make some recommendations here you know here's maybe the direction you want to go um and uh and you know we'll see if there's and if if you want to bring your CPA to us because you love your CPA but they just don't understand this stuff bring your CPA to us if you want to come to us and you go look i don't like my CPA anyway you come to us and we're just uh you know we'll we'll we'll set you up basically we'll we'll take care of you wow um wow wow wow um thank you so much for coming on the show um oh well you gotta you got a shout out for uh kiyosaki um you've done a lot with him and he's another neighbor he lives in uh paradise valley which is between phoenix and scottsdale so um shout out to uh kiyosaki uh just to make a word about him absolutely so rich dad poor dad the single most popular book ever written in financial education when um uh sold like 40 million some copies i mean it's just an amazing i they still sell over a million copies a year of that book and if the new york times were realistic they would have it as the number one bestseller all the time because it is it's probably the number one bestseller of any non-fiction book um ever and uh it's uh and and we continue to write new books um i wrote this book him so this is uh this book called uh why the rich are getting richer and if you you have to look at the very bottom and it has my name in a really small print but we did write this book together that's why the rich are getting richer and um and then we uh there's other rich dad advisors and we wrote this book about building a team called more important than money so there's that book we're writing a new book right now um about how to have uh your infinite returns how to make your uh you know money work for you kind of instead of getting a five or ten percent return get infinite returns and uh there's ksi is great it's a great team it's a it's a terrific privilege to be part of that team and i mean we got real estate guys in there we've got the attorneys in there we an attorney in there we've got a stock guy in there we've got a social entrepreneur in there we've got all sorts of so there's all sorts of good stuff so anytime you go to a rich dad advisor series of books rich dad any other rich books are going to be great yeah and uh is he still living in paradise valley yeah he still lives up there in phoenix yeah yeah well um tell him i said hi and um and what i love the most about him is how uh i love the book but what you know as a dad of four sons i love the fact that my four boys were glued to that and uh my gosh they um they took that soda hard and they at a very very young age they decided they weren't going to be an employer an employee they were going to be an employer and um so um just you know it's so amazing when someone touches your kids heart and spirit and all that stuff but hey thomas thank you so much for coming on the show just an absolute honor to podcast you and if you ever got any extra free time get on that dental town and uh I’ll send you some yeah I’ll send you some links because um i think dennis are your market they they love golf and real estate and you're the king of real estate i can vouch for that i mean i can vouch for that I’ve known this man forever thank you so much for coming on the show today hey thanks so much for having me Howard it's just absolutely privileged every time all right buddy have a great day

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