How to pay ZERO taxes legally with Real Estate - Cardinal Investments

THE SELF STORAGE REPORT — EPISODE TRANSCRIPT Episode: How to pay ZERO taxes legally with Real Estate - Cardinal Investments Guest: Kyle Ransford — Founder and Managing Partner, Cardinal Investments Host: Chris Berg — Abernathey Development Recorded: March 13, 2025 Video: https://www.youtube.com/watch?v=3GdWnI1FgiQ Key topics: Real estate professional status and the 750-hour test; using $500,000 of real estate losses against W2 income; cost segregation studies; bonus depreciation on property with a life of 20 years or less; the 40-year building depreciation schedule and land/building allocation; a $1.2 million purchase with $300,000 down producing a $300,000 deduction; the government effectively returning 40% or $120,000; cash-out refinancing from a $900,000 loan to $1.2 million tax-free; 1031 exchange, basis and depreciation recapture; stepped-up basis at death; triple net exits into a Taco Bell; buy-borrow-die versus buy, reposition, refinance, hold; multifamily over ground-up development; LA rent-controlled apartments at $1,000 in place versus $2,000 market rent; targeting a stable monthly income number rather than portfolio size Note: Speaker attribution reconstructed from raw captions. Light cleanup of transcription errors only; wording preserved. Timestamps and YouTube chapter markers removed. Turns marked [attribution inferred] could not be attributed with certainty. Disclaimer: Educational discussion only, not tax or investment advice. ————————————————————————————— Chris Berg: Welcome to the commercial real estate report. Very excited for our guest and topic today. We're going to talk about how to legally eliminate your tax bill by investing in commercial real estate. Join us today Kyle Ransford. He is the founder and managing partner of Cardinal Investments, which I'm assuming, Kyle, was inspired by the Stanford Cardinal? Kyle Ransford: Yes. Well, you know, a few people think of it that way. It might have been, it might have actually been inspired by the Cardinal and Gold and a misspelled wine bottle. Chris Berg: Oh no, more than a misspelled wine bottle? [attribution inferred] Kyle Ransford: But you know, over the years people have certainly put that association with it, and generally speaking we're okay with that association as well. Chris Berg: Thank you. Now when you say Cardinal and Gold, is it the Cardinal and Gold of Southern California that you're suggesting? Because we don't want to say that out loud. Kyle Ransford: Well, you know, we might have to. So I actually did business school there, and one of my initial partners, Christian Heger, did undergraduate there, and we bought some stuff together, and then we went to formalize the company. And I was in Sun Valley and I said, oh, it's for Christmas, I'll buy him the bottle of wine. I went into this wine store, there's this beautiful bottle, just gold embossed, had Cardinal on it. And I had a friend that named his company after his favorite Scotch. I'm like, oh, this is great, we'll call it Cardinal, it kind of goes, it's a great name, everyone can remember it. Later I went to buy the bottle again. I went to the wine store and said, hey, I need the bottle, it's called Cardinal. And there's no, sir, there's no wine called Cardinal. I said yes there is, because I bought it. He says, oh, you mean Cardinale. And if anyone's ever gotten an email from me, they realize I can't, I can't spell or write, and so I misspelled the name of the company. But you know, it has two great universities associated with it, and you know, one might come out on top a little bit more than the other, but we'll leave that, we'll leave that to the field. Chris Berg: I was gonna say, either way man, you guys nailed it. So I'm excited, because we met through a mutual friend, Taylor Avakian, which by the way has a great pod called No Vacancy. That's where I saw you and we chatted. And you know, one of the things you do really, really well for family offices and individuals, you help them lower their tax. But then you said to me, hey Chris, I haven't paid taxes legally since I was 26. I was like, what, federal, state? You're like, no. I'm like, we need, we need to talk about this on the pod. So I want to get in that story, and I think it's really important sort of set the table why I feel this is such a great topic. Because as I shared with you, I was talking to some of my buddies I played with at Samper that ended up playing in the league, and I asked them, I said hey, do you guys know what it means to be deemed a real estate professional by the IRS? And they looked at me like I had eight eyes coming out of my head. So I think there's a really interesting conversation to be had here. And if you don't mind sharing how old you are, just to give people an idea. 26 to the day, like literally you've paid no federal or state income taxes legally because you've been investing in great assets? Kyle Ransford: Yes. Yes. I'm 53. You know, we've used the rules around depreciation and reinvestment, and you know, we've reinvested a lot of our capital, which is probably part why the laws exist in such forms, and you know, created a lot of jobs and so forth along, along the way. But the benefit, the benefit is you can dramatically reduce your tax bill. You can effectively take $500,000 in real estate oriented losses and use that against other active income, usually W2 income, somebody in the household. So if you have one of, one of the members of the household can qualify as a real estate professional, you know, legally, all above board. You know, we look, we work with a lot of families who are interested in taking that on as part of their building, you know, their family wealth and so forth. But having the, you know, reducing your tax bill by $500,000 a year effectively is giving you, you know, another 225 in cash every year. It's a really big number. Chris Berg: Well, and also, which what I want to dive into in a moment, is just, you know, you're buying great assets that are cash flowing, and starts to create this multiple and active flywheel if you will. So we'll get to that in a minute, the real estate professional. But just shortly about your story. Like one of the things I love about you is that it's so second nature to you now, that hey, this is what I do, I'm gonna invest in real estate and not pay taxes, that it just sort of rolls right out of you. A lot of people watching probably like, wait, what, how is he doing that? So walk us through some years and you're like, hey, I thought I was gonna have a big Uncle Sam bill and I didn't. Kyle Ransford: You know, so when I first got out of school in '94, I bought a duplex on 56th Street for $100,000 and fixed it up and refinanced it and took the depreciation losses and moved forward. You know, part of what I do that's different is we are building a long-term portfolio. I say it's great for the grandkids. It doesn't mean I'm selling and having giant windfalls at all times, but we're building a, you know, platform with stable cash flow assets that again I think is a right, we counsel our families, is a right part of your overall financial plan and business plan as a person. You know, athletes are a great example of, now starting to think more about how do I become in business for myself as I move forward, and what are some things that I can do to set that up. And in this case, you know, you can use the tax advantages to really help launch that piece of your ongoing career. And, you know, so the real estate for families, you know, athlete, for any family, having stable income coming off your real estate is the number one goal. Utilizing and making good investments that do that, utilizing the tax advantages along the way to help grow that, you know, is kind of what we specialize in. Chris Berg: I want to have you share some stories of clients that you've worked with before, though, because you hear so much out there in the media about California being such a high income tax state. So just for clarity, since 26, no California state income taxes either, correct? Kyle Ransford: Yeah, you know, and my world's a little bit different than a lot of our clients, in the fact that all my income has derived from real estate. You know, along the ways I've had a couple other businesses and a couple of times where I have had a W2 income that I was able to offset, you know, that half million dollars of income from W2. I started a bank and I started a food company, and at those points I was making a salary at those places and using the real estate depreciation to offset that salary so that I didn't pay tax there. So, you know, reducing those tax bills, generally speaking every state's different on its rules. Generally speaking these deductions are federal and not necessarily recognized in every state, to for some clarity. So again, then you start getting into what's your state, what's their tax position, and, you know, there's some nuances there that, consult your tax professional is what I always say. You know, again, most people don't know the questions to ask. And then most tax professionals, what most people view as a tax professional is really a tax preparer. You pay them for the time that they prepare your return, not pay them for their time where they help you plan to pay less taxes next year. And that's, you know, a really big piece. Chris Berg: I want to explain, because some people obviously, everyone's gonna have sort of a different knowledge and wherewithal around this concept, and so let's just share it so a lot of people can understand how it works. And you mentioned a couple terms here, refinancing, you talked about depreciation. So if you can just share with us, let's say I'm Caleb Williams, right, I just signed with the Bears last year, since you mentioned a Cardinal, signed with the Bears last year for $25 million. How would you work with me to help lower that tax bill by investing in great assets? Kyle Ransford: Yeah, so, I can't remember, I can't remember if Caleb is married or not, but generally speaking, Caleb is gonna have a harder time being a real estate professional. The basic criteria for real estate professional is you spend 750 hours a year, which an average of 15 hours a week can do it, anytime, nights, weekends, etc. You know, that's not generally the hardest part for somebody that's serious about it. The other part though is you can't make more money or spend more time doing something else. So in his case, obviously he's gonna spend more time playing football and his income derived from there. However, within his household, I can't remember if he's married or not, let's pretend for a second that he is married. So if he's married, his wife can qualify as a real estate professional. It's just someone within the household, and spend those amounts of time. It's not very hard once you own one or two assets to, you know, see reports, look at stuff, look at a few things, this and that. Often what I say to those families, you know, because you often hear like, oh well, I'm not sure if my wife is really interested in doing that. I said fair, and you got to decide in your household if somebody's interested in doing that or qualifies on those pieces. But if I said to you, hey, is your spouse interested in a part-time job where they work 15 hours a week whenever they kind of want to get it in, and the salary is $380,000 a year? Chris Berg: Yes, sign me up, sign me up, right? Like I'm like, I would like that part-time job. How do I get a part-time job that I can work 15 hours a week? [attribution inferred] Kyle Ransford: And you know, and then my answer is, you know, do all the things that are in the tax code that are there. Spend, spend your 15 hours a week, you know, look at, send up your emails, get knowledgeable, but educate yourself. You know, so we like partners that, you know, they really want to get smart about the real estate piece as well. I'm like, your goal should be one day to be able to do this without me. You know, and your goal should be, hey, to learn how to go do this and get capable on your own, and take your own financial future seriously, etc., and do that by having, you know, an amazing part-time job where you can learn something, become knowledgeable, grow yourself, grow your family. You know, at one point Caleb Williams will have to hang them up just like everybody else. We're hoping, you know, he's got a long and illustrious career. But you know, like, that's what happens especially for athletes, right, is you have this big earning power early in your year, and then you need something, you need to transition into something that's going to have a nice stability and future for your family. Learning about real estate investing, learning about doing it on your own, setting yourself up. So if you did this each year and you took those tax savings, those $200,000 in tax savings, over your 10 year career you have 10 buildings. Those buildings will pay, those buildings will pay for the rest of your life. You know, so you can take yourself seriously, just take the money that you otherwise would have saved paying taxes and invest it in real estate. Not saying, you know, go have it, go do your other, go do your other things, be it investing or spending your money in other ways, but take your tax side seriously. Chris Berg: Yeah, Roger Staubach did a great job, right? You know, played for the Cowboys, got into real estate, has done extraordinarily well. So, all right, so I'm Caleb, I'm married, I just, you know, signed for 25, again just for easy math, now I've got a tax bill for 12 and a half. I sit down with you and you're like, all right Caleb, here's some assets that we can invest in. And how, I guess the question that might be on people's minds is, so how am I giving you money and yet reducing my tax bill? Like I think that's the depreciation part you want to explain, but maybe you got some more nuance. Kyle Ransford: Yeah, no, that, that makes sense. So let's say, we're going to try to use some big round numbers to get there. There might be slight differences in the numbers, but just so the audience can have a good piece. Caleb says okay, we're gonna go buy a property for a million. We say, hey, we'll buy a property for a million dollars. What happens under the current rules that are about to go back in place with the president and what Congress is looking to pass is, you buy the building for a million dollars, we're going to say the land's, we're going to say we buy, sorry, we buy the building for a million two, the land is worth 200, the building is worth a million dollars. And so on your tax bill they always separate what the value of the land is and what the value of the building. So we have a million dollar building. The tax code allows you to say over 40 years that building needs to be replaced. It also allows you to do what they call segregate the cost of that. So it allows you to say, oh well, you know, the roof is going to last for 10 years, the carpets are going to last for 5 years, but the stucco is going to last for 30 years. And so you get a big, you pay somebody to do a big report that sort of segregates out what's going to last, how the length of time everything's going to last. The current tax code allows you to take anything that's not gonna last more than 20 years and have what they call deduction for that. So that a deduction means you can lower your income, lower your taxes. So generally speaking, on that million dollars you're going to get 25 to 30% of that as 20 year or younger property. So when we bought this building for a million two, we maybe put $300,000 down, but we just got a $300,000 deduction. So our 300,000 we still have, we own the building. The $300,000 deduction lowers our taxes by the amount we're going to pay taxes on, by that amount. And so roughly 40% of that, the government is effectively writing you a check back for $120,000 to go buy that building. You put down 300, right away the government gave you back 120. There's not a lot of investments where you get a third to a half. You know, we've, you know, in very, in certain circumstances we've done them where you get 100% of it back. But like, that's the basis for it. There's a few nuances to it, and then so it's trying to manage what's the right kind of real estate to own that still has the long-term potential. You don't want to just buy any real estate to get a deduction, you want to have a nice quality asset that's going to fit for you, the family, you know, on a go forward basis. Maybe it's in a community that you grew up in or know, etc., etc. But you know, if I go buy Apple stock tomorrow, the government's not going to pay for 40% of my Apple stock. Generally speaking in this environment the government's paying for 40% of your building. Chris Berg: That's powerful. I mean, it's really, really powerful. And then another term you use, again just to help people appreciate the power of real estate, is refinance. So can you walk us through, maybe it's one you've actually executed, or if you want again with simple math just to sort of a hypothetical, and maybe we continue with this million dollar set? Kyle Ransford: Yeah, so like, we'll stay with the same, the same situation. So we would look for something that, you know, you're going to go buy that building for 120,000. We generally look for stuff that you can add value to. So we'd say, hey, this building currently, income on this building is about 10 times, is an easy round number, so that means the rents are $120,000 a year, and so it's worth 1.2. We would look for a building that we could go in, we could paint it, we could, you know, maybe change the cabinets, change the flooring, and instead of renting it for 120 we could rent it for 150, and therefore the building is now worth not 1.2 but 1.5. Go back to the bank and say, hey Mr. Banker, before you gave me 75% which was 900, now give me 75% which is 1.2. That difference of the three. We owed 900, now we're borrowing 1.2, we get $300,000 back, all tax-free. So now the $300,000 that I put in I've gotten back, not paid any taxes on it, and I saved, you know, taxes on $300,000 that I otherwise would have. So the government's paid me $10. So now a year later on this investment I'm walking away with $120,000 more in my bank account than when I started a year ago. You know, so, and that's the general situation that, you know, we would advise people to look for, is find some real estate where you can do some simple things, you know, simple things to, you know, increase the potential rents to it. All real estate, you know, all assets, but especially real estate, is based on, can you grow the income. So, you know, those are the types of situations we encourage people to look for. Chris Berg: I feel like you're, you're like, you're on busman, and what I mean by that is this. So some people in their brains might be, well yeah, but now you've got a bigger loan, you still have to pay that back. And I think what people don't realize is it's the tenants that are paying down that mortgage. You just continue to refi another five years from now at let's say 2.5 million, pay off that loan, you've got a spread now of X, and now you've got more tax-free cash, correct? Kyle Ransford: Yeah, no, you can do that, and that's in fact what I've done over, you know, 25 years, is I've refinanced one to go buy another one, and refinanced one to get the money to go buy another one, and, you know, built a large portfolio out of that. A lot of our clients though, you know, we counsel and do that initial refinance, get your money back, now you have your 300, now you can buy another one and do the same thing each year. But that mortgage that we're talking about where, you know, people rightfully are concerned like, oh wait, now I owe more money. You know, part of that, you know, in our example we raised the income to 150, we raised the loan from 900 to 1.2. Part of every month's payment now, I get, you know, roughly 15,000 a month or 12,000 a month from the tenants, I pay 9,000 on the mortgage. Well, 6,000 goes to interest, 3,000 goes to take it from 1.2 to 1.197. And so every month you're paying that down. Often we consult people, refinance it once, get your initial principal out, and then just over time pay it down. And so every, every month you're paying that down. As a personal strategy of, not, I'm trying to build the biggest empire in real estate, but I'm trying to build towards 20, 10 grand a month, a certain dollar amount per month of stable income. Because the biggest benefit in this whole thing is the tax side, as you started and alluded, the taxes double the returns. So we often, you know, go get, go get your max tax benefit and build it up so you're not paying taxes in the future. Chris Berg: Well, I love what you said a while ago. Like again, let's say I'm Caleb and I'm married and all of a sudden I'm doing this, I've got a 10 year career, my wife is learning along the way. I mean within 10 years I built up a really nice portfolio, one, but also just the other thing that people maybe don't think about is the knowledge compounds, right? So now 10 years, just like you mentioned, hey Kyle, it's been great working with you, now I want to go do some of my own stuff, and I've got the skill set hopefully at that point to go do that. Kyle Ransford: Yes. Yeah, I mean, absolutely. You know, there's some athletes that are buying the Minnesota Timberwolves because they invested in real estate and executed a lot of what we're talking about, right? So there's some very real world examples out there of, both in the athletic world and of course in the private world, of people that have gained the knowledge, used the compounding and the real estate growth and value to really enhance their, you know, balance sheet, lives, etc., etc. So the knowledge, to your point, the knowledge is worth so much more. And I think, you know, I've transitioned, I've primarily been in real estate but I've had some career transitions as well. For athletes, like, your career ends when you're young, your 20s and your 30s. Having something that you've gained a knowledge base that you've gained that you can stand on to launch from is really valuable. It doesn't have to be real estate of course, but you know, and I think you're seeing more and more athletes realize, whether it's having a big social media, you know, that's going to be their future, etc. But real estate is a great opportunity for them to, you know, move forward, show that they've been successful in something, you know, have that piece to stand on. Chris Berg: I don't know if you've seen the recent videos with Floyd Mayweather? Have you seen this, where he's walking down the streets, and I think it's Brooklyn or New York, and he's doing it very soft, like, yeah, I own this whole building? Like he owns blocks, right. So he's done a nice job with transitioning real estate as well. Kyle Ransford: Yeah, you know, he's made a lot of money in real estate, and all kind of as not flashy real estate, but generally speaking buying, you know, simple working-class apartments and holding them for, you know, 10 years. And you know, that's kind of the big piece of real estate is, they just always go up a little bit, and sometimes they go up a lot, but they're headed up in general because of inflation. You know, effectively everyone living there is paying you 20 to 30% of their income to rent from you. And you know, so it's a great long-term asset too. Chris Berg: And it's not always about, you know, you know this term, what you make, but it's what you keep that really, really matters. So this is a great vehicle to help you keep more of that. If you don't mind, let's just touch on again to help people understand some terms out there, the 1031 exchange. Have you done that before, has it been successful, what's good about it? But I also hear, you know, there are some drawbacks about it as well. Kyle Ransford: Yeah, for sure. So 1031 exchange allows you, so all this tax that we've been postponing, you have what's called basis in your property. So as you get cash out, your basis goes down, and if you just sell it you have to pay on your profits. So in our example that we were using at 1.2, we took 300,000 in depreciation. If we sell that the next day, we have to pay back the tax money we just saved. So it's, so you got to be cautious of that piece. 1031 allows me to say I'm going to sell that asset, transfer my basis to another asset and avoid that tax. So we're, you know, obviously giant believers in buy, hold, get better cash flow, and in certain cases you may say, hey, we want to trade that asset for a different one. But you want to trade that asset, and then, you know, upon your family's passing your kids get what they call the stepped up basis. So all that tax for a whole lifetime, a whole generation, you avoid. And you know, those rules have helped multi-generational families keep dramatic amounts of their capital and grow it. And so, for, so you know, it's no secret that that is a significant strategy to avoid tax and get wealthy. I say to people, you know, your tax is basically half of your income. All your other expenses and combined don't usually equal what you pay in tax. But we spend a bunch of time like shopping for insurance to find a $100 savings, which we should, but how much time do you spend shopping and figuring out how do I lower my tax bill? There's no class in it, you know. So it's not that somebody wasn't paying attention in third period, no one ever sort of sits down with you and says here's some strategies, here's some ways to think about lowering your tax bill. But if you can find ways to lower, if you can stop paying taxes you double your income, right? Like it's really hard to walk into my boss and say, hey, you know what, I did such a great job yesterday, pay me double. But there are some strategies, real estate, otherwise, other things. You know, you do have to be careful that you are making, you're putting your money into good quality investments, not just things that get you deductions. And so that's another, you know, definite thing to be careful of and thoughtful of. And there's lots of kinds of real estate you can buy, just like there's lots of kinds of stocks and investments. We try to steer our families into multifamily, as we feel that's the far and away the safest place. As soon as you're building stuff, which we've done, the places I've lost money is building stuff. Like building stuff is hard, things go wrong, etc. There's a lot of things, as you well, as you well know, you're somebody that builds lots of stuff, there's a lot of moving parts there. That isn't really for, that's not a beginner's game, is the best way to say it. So like, we like to tell people, hey, come up through multifamily, if you have enough assets consider some commercial pieces later, but stick to nice safe investments and utilize tax to double your return. And if you can take an 8 and make it a 16, or a 10 and make it a 20, you're doing great. You don't have to try to take a lot of risk to get a 25, to turn it into something bigger. Use the tax savings to get to 25 on something that's safe is our, you know, advice. Chris Berg: Thank you for saying that, because you see guys sometimes that go out there and just say, oh, I'm gonna save on my tax bill here, some money, but it wasn't a sound investment, then it ends up biting them, you know, either very soon or years later. So I appreciate you saying that. As you're talking I keep going, you know, as an athlete I understand the concept of a coach and a team. And so you've mentioned some terms, NOI, again refinancing, for a lot of athletes they're like, I don't, I don't know those terms, what's going on here. So basically I could team up with you, you would act as my real estate coach if you will. You know, I give you some money to invest but you're going to coach me along the way and, hey, this is why we're making this investment, here's, you know, a cap rate for example, things of that nature. Is that how it works? Kyle Ransford: That's basically what we do. I like to say we're the quarterback for your real estate piece. You should have somebody else that's coaching you in stocks and bonds. You should make a decision of, okay, how much of my investable assets should be in real estate. We generally think it should be somewhat larger, but it should be somewhat larger than zero, which is where most things go, because your stock and bond people can't help you own direct ownership of real estate. Owning a REIT is very different than direct ownership of real estate. That's owning a company that owns real estate. And we, so I personally view direct ownership of real estate as the best long term investment, but that doesn't mean you should have all your eggs in that basket, right. You should have a dedicated piece. Our goal is to, you know, what we do is we're the real estate consultants for the families that we work with. We're often, you know, we'll get phone calls of like, hey, we're buying a vacation house here, what do you think? What do you think? We give that information for free, we're not participating in those types of things. We're trying to be the real estate coach, get somebody set up. They're going to invest some with us, and often we say, hey, you have five or 10 buildings with us, go think of some other things, if maybe you're in a place to do one on your own, maybe you're in a place to do some with someone else. You know, there's multiple people, you like anything, you got to make sure that the people that you're with are the people that you trust. Our goal though is really to set you up and provide the education of what's going on. And those are my favorite clients. Like, I was, unfortunately, a better coach than I was a player. I tried and I played as long as I could, you know, as all athletes. So I have it in me. But we super enjoy working with people that are interested in taking control of what they're doing, taking the information. We have no problem sharing the information, hey, go do this, if you can go do this on your own go do that on your own. Like, you know, the empowerment is, you know, a big piece. Chris Berg: Are you sitting down and kind of going, okay, you want to have a $10 million portfolio in 10 years, are you kind of walking them through start with the end in mind? Or is it, hey, let's just start with step one, get you some cash flow, see if you like this asset class? Or what's your strategy there? Kyle Ransford: Yeah, no, for sure. My first comment to, you know, and a lot of our business is non-athletes too. You know, a lot of people are, you know, somewhat our age, have saved some for retirement or have a nice stock and bond portfolio or some other pieces, but don't have any stabilized cash. And you know, I said, you know, I've found, no matter how many zeros you have after your number, like, you know, people with hundreds of millions, nobody feels comfortable when they start spending the principal. Nor should they. You should live off the income, not the principal. You know, a couple bad moves and the principal goes away fast. You know, there's plenty of stories, especially in the athlete world, of, you know, the principal going away, but there's plenty of stories in the entrepreneurial world too. It's athletes get the brunt of, I lost my money. There's plenty of business people that are constantly betting their money. So I start with, what's the amount of stable income where you could quit your job? So if I had $10,000 coming in a month, or $100,000 coming in a month, I feel like I could quit my job and enjoy life a little bit more. Okay, let's focus on what that number is for you and your family, and then let's talk about what are the ways to get there. What are you paying in taxes in the next five years? And so for most of our people, a lot of our people, we say, hey, just invest in real estate to the point that you're not paying taxes, and then wait and do that again next year. Just use this as a vehicle to, to use the opportunity to double the return by reducing the taxes. That's a quality real estate investment. Go make some other investments or spend some money, do other things in your life, right. But manage to the place where the government's helping you the most as a strategy. But then we'll kind of outlay that for someone and go like, hey, if we do this over the next five years, here's where we likely get to in stable income making nice safe investments. Is that where we want to be, or, you know, should we invest a little more, a little less? Like, you know, so that, but the end in mind is definitely the way we think of things. How do we have a goal, how do we march to that goal through, you know, through real estate investing. Chris Berg: Great stuff. Before we started I said, hey, let's do, you know, 25, 30 minutes, I want to be respectful of your time. Would love to have you back, I feel like there's a lot more to discuss here. But anything else you want to add or share that I haven't asked you that you think is important for people to know? Kyle Ransford: You know, I think the high points are, what's been really good for me and my family is long-term thinking, long term in real estate investing. Not getting excited about, we made some money, let's sell it, let's pay the tax and let's go do something. Allowing your investments to build long term, and then working in managing towards what your taxes would be otherwise as a vehicle to help enhance, enhance that growth. And, you know, take advantage of opportunities. There's so much education out there right now. When someone goes like, hey, I don't know what that is and I don't understand, and they throw up their hands and they quit, don't be that person. Be the person that asks the next three questions to understand. If I don't understand what NOI is, don't be scared of it. Nobody taught you that in school. Ask, find out, Google, you know, ChatGPT. Like, take control of your future. Don't, you know, although we're kind of a financial adviser, don't just trust every financial adviser and throw the money. Take, take, learn what's going on and make sure that you're with the right people that are taking care of you. But you know, take, take control. Like, all the education's available to you. Chris Berg: So good. I want to ask you one more question if you don't mind, because it did pop up. You talked about strategies. Are you familiar with the buy, borrow, die strategy, and if so do you want to share about that? Kyle Ransford: Yeah, you know, it's kind of funny, because with all the online stuff now everyone goes like, oh, you're a BRRRR or something, and I'm like, a BRRRR? I've never even heard of that, what are you talking about? Because we've just kind of been doing this as we've grown and figured it out. But you know, buy, so I don't know all the acronyms out there that are good on all these podcasts, etc. But you know, basically buy, reposition, refinance, hold, which is probably the die scenario. But that's what we counsel our people, is like, hey, you should get comfortable that the right strategy is to hold a real estate asset through your life. Like, we end our partnerships with people and we say, hey, 1031 exchange, just like we talked about, maybe you're at a point now, 1031 exchange into what they call a triple net deal, a Taco Bell that just pays and we don't have to ever get any phone calls and blah blah blah. That's fine, hand that off to your kids, and your kids can sell it day one if they choose to without paying tax. So again, our strategies are all really around the, man, if you manage for the tax you'll double the return. Make safe investments, use the tax to double the return, you get to returns that are so big that you look at these charts and they grow, they grow very significantly in your lifetime for you and your family. And, you know, that's again where we counsel them. Chris Berg: And I really appreciate the way you frame that. You know, sort of the theme of this show is building generational wealth with real estate, and I think we crushed that conversation today with, you know, what you shared. So here's their website, it's CardinalInvestments.com, go Stanford. And there's Kyle's email, so, you know, if people want to reach out to you, obviously here's your email. Just anything else you want to share about maybe some of the assets you're looking at right now or some opportunities for investors? Kyle Ransford: Yeah, we really, we like LA rent control situations, for which is another podcast on why we like rent control as a really safe asset. But you know, again, we're value investors, so we like to buy stuff that we think is cheaper then we can make it so. Chris Berg: Just because I have to ask, now I've never heard anybody say, hey, we like rent control. What's your investment thesis where you're like, yeah, we like rent control? Kyle Ransford: Well, our investment thesis is, you know, so very frequently in like in Los Angeles County right now you can buy an apartment that somebody's paying $1,000 a month in, the market value is $2,000 a month. They have the right to stay there, and if they stay there the rents go up generally by 3 or 4% a year dictated by the city, which is why people usually lose their mind. But it's really good business to either not have somebody move out, and they're not going to be late because they don't want to get evicted, you're not going to have to fix up the unit, etc., and it's going to raise at 3 or 4% a year, which is usually about a 15% return. And if for whatever reason they decide to move out, which most people, you know, at some point end up doing, your rent's going to go up to 2,000 and so you don't have any market risk. And you should have a nice stable operating asset. And over the long term that asset we think produces better, better returns and is incredibly safe because you're paying a lot less for it. Chris Berg: Wow. We can spend 30 minutes, we can spend 30 minutes on that, but yeah, let's have you back and have that conversation. Because personally as well, like, I'm long LA. I know a lot of people may not agree with that thesis right now but I definitely am, especially with all the great sporting events coming here and the infrastructure investments that are happening. So Kyle, I mean, great, great stuff, really, really appreciate the time and the insight. And again, check them out at CardinalInvestments.com. Kyle Ransford: You too. Thank, thanks for having us, Chris. — END OF TRANSCRIPT —