How You Can LEGALLY Pay Zero in Taxes through Multifamily Apartment Investing with The Kitti Sisters, Palmy and Nancy Kitti

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. Brought to you by the HubSpot. podcast network with great shows like Marketing Against the Grain. Today, we'll be breaking down how you can legally pay zero in taxes through multi-family apartment investing. To drop these value bombs, I am brought to Palmy and Nancy Kitty, the Kitty Sisters, and the EO Fire Studios. Palmy and Nancy are apartment syndication experts, entrepreneurs, real estate investors, and unshakable optimists who are obsessed with all things passive income, tax savings, and living the life they love.

0:35And today, Fire Nation, we'll talk about death and taxes. Dun, dun, dun. And we'll also talk about how there's an easier way than either hustling or skimping to save money. And we'll talk about how to turbocharge your wealth, getting rich quick, and so much more. And a big thank you for sponsoring today's episode goes to Palmy, Nancy, and our sponsors. One of my favorite conferences to attend each year is HubSpot's annual Inbound Conference and is coming up fast. Join us in Boston from September 5th to the 8th, 2023 for an event like no other. Inbound brings together leaders across the business space, including sales, marketing, customer success, and operations teams.

1:17The goal at Inbound, to help you discover all the latest trends and tactics you can implement in your business right now. Learn, be inspired, and walk away with practical tips to help you tackle your next challenge, supercharge your sales and marketing, and ignite your customer service. Inbound is featuring many must-see speakers this year, including Reese Witherspoon, Guy Raz, and Neil Patel, just to name a few. Whether you choose a general admission ticket or go the VIP route, you're sure to leave Boston feeling on fire. Visit inbound.com to get your tickets today. All right, we have the Kitty Sisters here, Fire Nation.

1:58both Palmy and Nancy. And Nancy, why don't you start by saying what's up to Fire Nation and sharing something that you believe about becoming successful that most people disagree with? Well, guys, as entrepreneurs, we learn how to make great income. But what we didn't learn is how to keep morbid, right? So we're happy to just make money, trading time for a lot of money, but we didn't know how to build wealth for ourselves. So all the money that we ever made was just go back to the business or our favorite, not so favorite, Uncle Sam, because we didn't know the other way. Yeah, so basically the point Fire Nation is like, we're really, our culture is really, we're like, make more money, make more money.

2:38But like the problem with that is no one really consider like how to actually hold onto more of that wealth. And that's the most important part to actually being wealthy. Well, I love this topic. And I know that the title of the episode has really caught the eyes of a lot of our listeners. It's how you can legally pay zero in taxes through multifamily apartment investing. So, Palmi, let's start off with a bang. Are death and taxes the only two guarantees in life? Yeah, that's a really great question. It actually comes from our favorite quote by Benjamin Franklin, right? He says, nothing is certain except death and taxes.

3:14Unfortunately for Ben, he didn't know the kiddie sisters. So, he thought that was reality. In fact, most people actually think tax laws are there to collect money from us, what they fail to realize is that most of the tax codes are actually an instruction guide on how to actually reduce taxes. Well, Fire Nation, that's why we brought the Kitty Sisters on the mic today. Nancy, what do you want to add to this topic? Yes. Well, first of all, we want to say a full disclosure. We're not CPA, as always. Consult your team of professional. But what I want to add is that the government know that, hey, you don't like to pay taxes, right?

3:50So what they say is like, I'm going to give you a little incentive and say, what about, hey, if I give you a tax rate, maybe you'll do something that we want you to do, like buying a house, like, you know, buying a house, sending your kids to college, adopting a child, buying an electric car. So again, tax law is a series of incentives. And it's clearly, it's not an incentive for, if you guys read like the cash, the cash quadrant, which that poor dad is not as incentive for the E and S, which is the employees and the small business quadrant, but it's incentive for the producer, which is the B and the I quadrant, which is the businesses.

4:26So if you're stuck investors, so if you're stuck on the left side of the quadrant, which are the employees or the self-employed businesses, you're paying the most amount in taxes, where if you move over to the right and not coincidentally the right side of the quadrant, you're going to pay substantially less in taxes. And so like you just have to know the game. Yes. And you learn how to create or invest in an asset class that produce cash flow for you, even when you're sleeping. Nancy, usually people are hustling to earn more money. They're waking up and they're just go, go, go all day long. Or then you have the other side of the fence where people are just skimping to save more money.

5:03They're obsessed with clipping coupons and getting 49 cents off a gallon of milk or something. You believe that there's not just an easier way, but an easier and better way. tell us more yes definitely and um you know like again it goes back to people think that hey you have to hustle you have to trade time for money but people don't know it's actually much easier to not do that right like palm like yeah just plug the hole essentially if you don't do if you don't you're not tax efficient you're working like six months of the year to pay to working for the irs essentially right because you're giving that much of money away now i have a quick um uh little little exercise for us to do together to really illustrate this.

5:46So let's say if you have a dollar and it doubles every single day for the next 20 years, John Lee, how much money do you think that will equate to in 20 years? Well, just because I know that compound is crazy town, I'm going to say it's just millions and billions and trillions of dollars. That's pretty close. So it's like a million 48 ,000. Okay. Now that's a lot of money if it's doubling one to two to four to eight. However, if you're taxed on that at 33 % per year, guess how much you're going to have after 20 years? Ouch. It's going to be probably like, is it even over$100 ,000? It's less than that.

6:22So after 20 years, it's actually around$28 ,000. That's a million dollar difference. So you're hustling, you're skimping on that latte, you're like working more hours, but because you're not tax efficient, you lost a million dollars. I refuse to live that way. I need my latte fire nation. And I think that Nancy and Palmy have things that they don't want to give up in their life easier. So Palmy, what do you want to add to this topic all around the hustle culture, the skimping culture? Talk to us. I think it's like, unfortunately, it's like an insidious thing that our entire society is really built upon.

7:02And if you look at the amount of people who actually are not able to retire, the statistic says at least 40 to 50 % of the people in the United States today are not prepared for retirement. What that really shows is that this mentality of grind it out is not the answer because if it was, 40 to 50 % of the people who live and work hard today will not be in that situation. So there's definitely something wrong and broken about it. And it's essential that we all learn the different tools necessary to break out of that system. So Palmi, let's stay with you because let's say that we figured out this tax piece.

7:33Like we understand what you're sharing about the quadrants and we've kind of like understood that factor. Now it's time to use real estate to turbocharge our wealth. What does that process look like? Yeah, that's a really great question because first we plug the hole. So we're now 40%, maybe save up 30 to 40 % more money, right? Now what next? Because you don't want to throw this into something super risky like crypto or like FTX and all that scam stuff, right? Like that's bad. What you need to look for is an investment that will grow in value without a lot of your effort. But essentially, the other more important component is it has to have an asymmetric risk profile.

8:11What does that mean? Meaning high upside, low downside risk, and a combination of tax savings plus that kind of profile only exists in multifamily apartments. Yes, that typically yield return around 20 % annualized average. As a passive investor, you make money through cash flow, mailbox money, appreciation, tax saving, and capital preservation. So now those two things work hand in hand. You're saving way more money. Now you have ample room to use that money instead of giving it to Uncle Sam. Now you have that to invest in real estate. But what type of real estate? For us, we believe multifamily is the best vehicle because the average return is like you're going to double your money in five years.

8:48So I think that's a pretty sweet deal. What is mailbox money? Yeah. So mailbox money essentially means that you're sitting back on your couch, sipping your Mai Tai on a Friday afternoon after, you know, a relaxing day. And all of a sudden, boom, I mean, now it's a digital version. So basically, essentially, it means like, you're not doing anything. And that money just comes into your mailbox. Oh, that actually just happened to me before the interview, I just got a notification that Airbnb just paid me out because somebody just moved into my place today for the next week. And I was just about to call you guys.

9:19So that's kind of like mailbox money. That's exactly the same thing. You didn't do anything. And then that money just came and it comes consistently. And it's like, and you love that, that notification, right? That's probably that. And when you get your return on the entire investment, those are probably the two most gratifying pings on your phone. I love that. Well, Fire Nation, we have a lot to talk about around this topic. So much details around some things that you can take action on today when we get back from thanking our sponsors. The Product Boss, hosted by Jacqueline Snyder and Mina Kulo Ctep, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals.

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12:28Again, that's ziprecruiter.com slash F-I-R-E. Zip Recruiter, the smartest way to hire. Nancy, let's dive in with you right now because you believe that everyone should strive to get rich quick. What does that mean? Absolutely. You know, a lot of time you talk about millionaire fast and people automatically think scam, but what they should think scam in our opinion is when somebody makes you believe that it's okay to be grown and broke, right? You see, here's what grown and broke equals to ABS. What does that mean? Already been scammed. So our our objective is to help entrepreneurs figure out how to get rich, right?

13:10And how to get rich faster. So some people may think like, hey, are you talking about the get rich quick scheme? And our only answer to this is you better hope so. Right. Because you don't you're not going to be here long enough to get rich slowly. Yeah. So basically, like what we talk about here is that wealth isn't really measured in money. It's measured in time. And so it's important for us all to get rich quickly because essentially another example is if you make a million dollars, are you considered rich? John Lee, what do you think? A million dollars, are you considered rich? Not in today's day and age, unfortunately.

13:44That's a great answer, right? So the answer is it depends. So why it depends, right? Well, if you work for 40 years and you make$25 ,000 a year and you multiply that and it equals to$1 million, right? Are you rich? you're not rich right why too slow so what if you make the same million dollars in one year now are you rich well you're rich but you're not a bill gate rich right so here's the research that we found right we were reading this morning it said 86 percent of businesses in u.s do less than a hundred thousand dollar a year in revenue and there are 33 million dollars 33 million businesses Right.

14:24Like what? So, yeah, exactly. Right. Having a job and making less than one hundred thousand dollars a year, we get that. But owning a business is way too hard to make less than one hundred thousand dollars a year. So that's why it's important to ask yourself this question. What is one of the reasons you're not rich? Because you have been programmed your whole life to think there's something wrong with getting rich quick. So they make you aware that it's wrong to get, you know, getting rich quick, but they haven't made you aware of what's wrong with staying broke for the rest of your life. Fire Nation, this is powerful words.

14:56And it actually really made me think about the reality that when I became quote unquote quote, rich at 33 years old, I didn't just say, you know what, now I'm going to like scrimp and save and like, you know, try to like get even like richer down the line. Like I wanted to A, make investments, but B, like live a rich life as well. So when I moved to Puerto Rico, you know, Kate and I, and this was just now seven years ago, bought this, you know, amazing home on the ocean. Every day I walk out onto my kitchen terrace with my coffee and I'm sipping this cup of coffee, looking at the Caribbean and like just this home and the backyard and the view and the beauty.

15:35Like this made me happy every single day for the past seven years. And, you know, this was in my thirties. And so a lot of people, you know, they are just scrimping and saving from the time they graduate high school until their sixties and seventies. And like, man, now they're going to go and do something and enjoy it. I mean, that's too late fire nation. That's too slow. Like you want to get rich now. You want to enjoy life now because it's going to go by fast either way. So it might as well go by while you're rich. So Pomi, let's talk about that most valuable leverage in life. OPT, other people's time.

16:15Yeah, that's a really strong one. Basically, we already told you earlier that wealth is measured in time, not in money. And so therefore, you actually have to like business owners the reason you guys got wealthy wasn't because you were doing everything yourself you had a team supporting you and actually that exponentially propel you to grow faster and that's the same thing with with what we're saying is like who are you using you're going to use your cpa to help figure out the most efficient tax strategy you're going to use your investment partners to help grow your investment you're going to use a whole bunch of other people use their time and expertise so that you can then have time to you know relax in Puerto Rico with your wife and enjoy the beautiful day, 80 degrees weather every single day and have a beautiful pool right outside your house.

17:01All those things are possible and should be what we strive for. So maximize your time by allowing you to leverage other people's time to grow even faster. I love that because Fire Nation, I can tell you right now that I love going to sleep every night because when I go to sleep, I know that I have three people, two in the Philippines and one person in Pakistan, they are working. They are improving my business. They are spreading the word. They are putting in the time while I'm sleeping. And I love that feeling. Like it feels so great to know that my business is growing while I am sleeping. So Nancy, anything else you wanna add on this topic?

17:37Well, basically like we're all about, you know, like leveraging other people's time. And in apartment investing world, it's even better if you learn how to leverage other people's money, right? And the expertise, because in multifamily apartments, like what we do is like, you don't just have to have millions of dollars to invest. No, it's not about that. It's basically coming together and then collectively tackle like apartment buildings together. So definitely learning how to leverage people's time, expertise, team, and also tax efficiency. That would be amazing. That is amazing. Yeah. That's so cool.

18:14And Fire Nation, I'll give you guys a little insight to our pre-interview chat that I had with the Kitty Sisters here. Because whenever I have three people on a one, so myself and two other people, I'm always a little bit like, you know, if I just throw a question out there, then usually there's some silence because one person talks over each other or they're afraid they don't know who's going to answer first. I'm like, let's like assign a person for every single answer here. And they're just like, oh, no. Like, we're like, we just flow. We just flow. And you can just tell that these ladies have done this before.

18:42They know each other. They flow so well. with this topic. And we have been talking all day about how you can legally pay zero in taxes through multifamily apartment investing. So bring it home for us. And I'm going to let whoever wants to start can start because you guys know how to kind of give each other the wink and the nod here. So what is the one takeaway you really want to make sure that we get from our entire conversation? And then let's have both of you answer one after the other. The most important takeaway is that in order for us to be wealthy, have time and financial freedom, you must learn how to disconnect your income generation from your time.

19:22Until you do that, you're going to be working around the clock nonstop. And it's going to feel overwhelming. It's going to feel like at some point you're going to burn out. It doesn't matter how much money you make. We know that for a fact. People who are earning a lot of money are still feeling that burnout because they're still trading their time for money. And so for us, like that's our core mission. One of our core mission is to help people understand that it is possible to have that separation. We've done it. We've done that with other people. We've helped a lot of people do that. And if you can do that, I think you're going to have a much more impactful and fulfilled life.

19:54I was just listening to a poem like that is beautifully said, right? So again, it goes back to the value of what is success to your life, right? It's not always going to be measured in like monetary value only. It's always about, you know, that taking that back, your precious time spending your family, right? Being there for your kids, sending your kids to a basketball game or being at their graduation. Because we were once those children who our parents were just too busy making money, providing life for us. So for us, it's all about that not only financial freedom, but the time freedom. Yeah.

20:32If we all can step away from this, knowing that like the phrase, I don't have time, would never become part of the vocabulary anymore. It'll be a beautiful thing because the family bond, the unity, those times spent together, you cannot get it back. And no matter how much money you have, those moments are gone and it's gone forever. So let's do our best to have the most intentional time together as possible. Ladies, let's end with a bang. Where can Fire Nation connect with you? What call to action do you have for our listeners today? Yeah, if you guys love saving money on taxes and are interested in even apartment investing and want to learn more, we definitely want to invite you to come along on our journey with us.

21:14Go to, yeah, to discover how to double your wealth while legally paying the least amount of taxes this year. All you have to do is go to jumpstartapartments.com. Again, it's jumpstartapartment.com. So jumpstartapartments.com. Nice. I love how you finish that off there with a bang and Fire Nation. You're the average of the five people you spend the most time with. You've been hanging out with P.K., N.K., and J.L. Dizzo today. So keep up the heat. If you have any direct questions, go to eofire.com. Type either Palmy, P-A-L-M-Y, or Nancy, or K-I-T-T-I for Kitty, into the search bar and the show notes page will pop right up with links to everything, with chats about everything.

21:58Ladies, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you both and we'll catch you on the flip side. Thank you, everyone. Hey, Fire Nation, a huge thank you to our sponsors and Palmy and Nancy for sponsoring today's episode. And Fire Nation, what can 3 ,000 of the world's most successful entrepreneurs teach you? How about how to achieve financial freedom and fulfillment? My first traditionally published book, The Common Path to Uncommon Success, is a revolutionary 17-step roadmap that will lead you to the lifestyle that you've been dreaming about.

22:33This book took me 10 years of accumulating the genius of the world's top entrepreneurs, and you can get it all in one place when you visit UncommonSuccessBook.com. I'll catch you there or on the flip side. One of my favorite conferences to attend each year is HubSpot's annual inbound conference and is coming up fast. Join us in Boston from September 5th to the 8th, 2023 for an event like no other. Inbound brings together leaders across the business space, including sales, marketing, customer success, and operations teams. The goal at Inbound to help you discover all the latest trends and tactics you can implement in your business right now.

23:15Learn, be inspired, and walk away with practical tips to help you tackle your next challenge, supercharge your sales and marketing and ignite your customer service. Inbound is featuring many must-see speakers this year, including Reese Witherspoon, Guy Raz, and Neil Patel, just to name a few. Whether you choose a general admission ticket or go the VIP route, you're sure to leave Boston feeling on fire. Visit inbound.com to get your tickets today.