Latest news with #Asakura
Business Insider
a day ago
- Business
- Business Insider
Doctors turned real estate investors share the strategy they used to 'zero out' income taxes for 7 years
Letizia Alto and Kenji Asakura started buying real estate to supplement, and eventually fully replace, their incomes as doctors. They wanted to reduce their hospital shifts so they could spend more time together and with their kids. Since buying their first investment property in 2015, they've expanded to more than 100 units that bring in six-figure rental cash flow. They both scaled back in the hospital and consider themselves "semi-retired," as they still work on their real estate portfolio and financial literary company, Semi-Retired MD. Over the last decade of investing, the couple has learned that "there are six ways you make money in real estate," Alto told Business Insider, one of which is often overlooked: the tax benefits. "The tax code is essentially a series of incentives to encourage certain behavior that the government wants," said Asakura. They've spent years understanding how to use it to their advantage and, thanks to one strategy in particular, said they managed to "zero out" their income taxes for seven years. Sheltering their clinical income with Real Estate Professional Status (REPS) The couple's main real estate-specific tax strategy is one that allows qualifying individuals to shelter their income using an IRS designation known as "real estate professional status," or REPS. Typically, rental real estate losses are considered passive and can only offset passive income. For example, if you're working as an accountant and invest in real estate on the side, then the losses from your real estate business offset your rental income, but you can't take that loss and offset your accountant income. That's because they're two unrelated activities. However, if you're considered a real estate professional, it all becomes one big activity, and you can fully deduct rental losses against active forms of income, including W2 and 1099 earnings. In Alto and Asakura's case, they've used the status to offset their physician incomes. The couple provides an example on their blog: Say you earn $250,000 as a doctor, and you and your spouse run a real estate business that generates $150,000 in losses. If neither of you qualifies for REPS, you're taxed on all $250,000. However, if one spouse claims REPS, you can deduct $150,000 from your $250,0000 income, meaning you'll only be taxed on $100,000, which can result in a significant difference in tax liability. Note that you must generate a loss to get the tax benefit. It's fairly common in real estate to generate positive cash flow while showing a loss on your tax returns, they explained. That's because of deductions like depreciation — the IRS assumes buildings wear out over time and allows you to deduct a portion of your property's value each year as an expense — and expenses like renovations. In 2015, the first year Asakura qualified for REPS, "we did a lot of rehabbing to create our losses," explained Alto. "When we rehabbed, we would be increasing the value of the property and increasing cash flow of the property, but the rehab was a write-off, which was insane. I hope people understand that rehabbing is such an incredible thing to do because it is tax beneficial, but you get to keep all the upside of it." Qualifying for REPS To qualify, real estate has to be your primary job. Being a real-estate agent automatically deems you a professional, but if you don't have that license, you may qualify if you meet certain requirements. The two main stipulations are: 1. You must spend more than 750 hours a year on real-estate activities. 2. More than half your working hours must be in real estate. Asakura transitioned to a part-time hospitalist in 2015 so he could qualify for the status. Only one spouse needs to qualify, meaning Alto could continue working and deduct the real estate losses from her clinical income. CPA Kristel Espinosa told BI that REPS is often abused and emphasized the importance of documenting everything, from how you spend your working hours to the mileage you drove to visit properties. "You can have other jobs, but you just have to be able to show that to the IRS if ever audited that the real-estate business really is your main thing," she said. If you meet the requirements, "Then, of course, designate yourself as a real-estate professional. It obviously has huge benefits. But then also be aware that this is a highly scrutinized area by the IRS, too, so that's why you want to have your documentation in place." Asakura keeps track of his hours in a Google calendar and includes detailed notes. If you spend a substantial amount of time on your portfolio, REPS is worth looking into — and don't assume your CPA knows about the status. "We'll run into people who have large real estate portfolios and they've never claimed it," said Alto. "They have all these losses that are just sitting there as passive losses because their CPA didn't know they were active, and they could have saved so much in taxes."
Business Insider
6 days ago
- Business
- Business Insider
A couple started buying real estate to free themselves from 80-hour workweeks. After scaling to more than 100 units, they work part-time and travel half the year.
At the height of their medical careers, Letizia Alto and Kenji Asakura had to block off time on their calendars if they wanted to see each other. "We would schedule out a month in advance, days that we could spend together because it was so busy," Alto told Business Insider. "And this was without us having kids together." They were both working more than full-time as hospitalists, logging 80-hour weeks. When they took a step back and considered what they wanted their future to look like, the grueling workweeks didn't fit in. "Kenji asked me, 'What do you really want for your life? Presume there are no limits. What would you want to do?'" recalled Alto. Her answer was specific: She wanted to spend months out of the year in Italy, producing olive oil and hosting friends. "And that was obviously very different than the path we were on." It was an interesting thought experiment that ultimately shifted their mindset. About six months later, while traveling in a camper van through New Zealand on their honeymoon, they passed the nights reading what Alto had recently downloaded to her Kindle — " Rich Dad Poor Dad" — and resonated with some of the author's core themes. "It was really powerful. We were like, 'Oh, my gosh, this is it: We're employees, we trade our time for money, we're never going to be able to be in Italy for three months at a time because we're always going to have to be working,'" said Alto. "This future that I had kind of visualized six months before didn't work. The only way it works is if we have another source of income, outside medicine, that can replace part of our salaries so that we can have the freedom to take time off." The couple decided right then and there that when they returned home to Seattle, they'd start investing in real estate. Putting off a primary residence in order to buy investment properties Creating additional income by investing in real estate made sense for Alto and Asakura for a few reasons. One, Asakura already had experience. His parents were investors and, as a kid, "I remember going to rental properties, picking up checks, seeing my dad talk to tenants, things like that," he said. "I grew up with real estate, and pretty much as soon as I had money, I started investing." That came after medical school, when he worked as a management consultant for McKinsey & Company for a few years before completing his residency. Using savings from his salaried job, he and a friend started building a joint portfolio in the early 2000s and, like most property investors at the time, made a lot of money. "Real estate just appreciated like crazy, all the way up to around 2006, 2007, when things started slowing down," said Asakura, who was mainly buying and flipping land. "I'd buy a piece of land for like $100,000 and, six months later, I would sell it for $300,000. It was that crazy. It was just like the Big Short." When the recession hit, "my properties didn't cash flow, and I got stuck with a lot of mortgages, insurance payments, and property taxes. I was pretty much upside down on my properties," he said. The experience didn't deter him from re-entering the real estate world years later alongside Alto. "I wasn't scared. If anything, I had confidence just because we had a plan. Mistakes are an expensive education, but it's the best education." In addition to Asakura's experience, the couple had the capital to invest in property. They'd planned to buy a primary home together and had already set aside cash for the down payment. But, after returning from the New Zealand trip in early 2015, they asked their agent to switch gears and help them find a rental property. They had a new, clear vision. "We wrote down our portfolio goal," said Alto. "We were like, we're going to own this many units and we're going to make this much cash flow." Buying and holding cash-flowing properties When Alto and Asakura started purchasing investment properties, their strategy revolved around two main principles: cash flow and forced appreciation. They use a cash-on-cash calculator that allows them to input metrics such as purchase price, expenses, and projected rents to predict a property's performance. They're less interested in how it's performing under the current owner. "What's really more important is knowing how it's going to run after you're done with it," said Alto. "We regularly buy properties that are negative or have really low cash-on-cash returns with the current owners. What we see is the potential for what it can become." They learned from Asakura's early investing days to never rely on market appreciation. They'd rather force appreciation on the property through improvements and upgrades, which isn't dissimilar to a flip, he said: "The difference is, a flipper sells, whereas we're holding. The other difference is that a flipper typically buys a property that'll never cash flow, whereas we're buying properties that are good flip projects but also cash flow." In 2015, using their down payment savings, they bought two duplexes outside Seattle, filled the units with tenants, and started generating rental income. They continued buying small, undervalued multi-family properties, used tax strategies to shield their income from taxes, and rolled their rental income, savings, and tax refunds into more properties. By 2017, they said they were bringing in over six figures of rental cash flow. The next year, they started their blog, Semi-Retired MD, which would evolve into an online course specifically geared at doctors and high-income earners looking to invest in real estate. By 2021, they owned over 150 personal units and over 400 syndicated doors. BI confirmed their property ownership, which includes multi-family properties, commercial properties, and a handful of syndication deals, by reviewing deeds and operating agreements. The couple were tenants themselves up until 2022, when they moved to Puerto Rico and bought their first primary residence together. They were never chasing big cash flow goals to sit on the beach all day. "Our goal was to buy ourselves time-freedom and to continue to contribute to the world and have purpose," said Alto, who worked in the hospital up until 2020 and now spends a chunk of her days running Semi-Retired MD. Asakura, who scaled back to part-time in the hospital in 2015 to focus on real estate, spends his days managing their portfolio, and they both have more time to dedicate to each other and their kids. "I think about what my life could have been right now: Driving to work, spending 12 hours away, and coming home late at night when the kids are asleep," said Asakura. "That's not how our lives are." Alto added, "We have our kids homeschooled. We travel six months a year as a family. We hang out with our kids in the mornings, we see them for lunch, and we see them for dinner every night. We never would have had any of that freedom."
USA Today
27-05-2025
- Sport
- USA Today
Kai Asakura returns at UFC 319 vs. Tim Elliott
Kai Asakura returns at UFC 319 vs. Tim Elliott Former RIZIN superstar Kai Asakura has the opportunity to bounce back. At UFC 319, Asakura (21-5 MMA, 0-1 UFC) will make his second promotional appearance vs. Tim Elliott (20-13-1 MMA, 9-11 UFC) in a three-round flyweight bout. The event takes place Aug. 16 at United Center in Chicago and is headlined by Dricus Du Plessis vs. Khamzat Chimaev. Both fighters recently announced the booking on social media. The fight was first reported by X user @realkevin. Asakura, 31, signed with the UFC in 2024 and debuted in a title fight vs. champion Alexandre Pantoja, which he lost by second-round submission. Prior to his UFC onboarding, however, Asakura built his brand in his home country of Japan as one of its biggest stars. His only losses prior to Pantoja were to Kyoji Horiguchi, Manel Kape, and Hiromasa Ougikubo. All three of those fighters Asakura also holds wins over. Elliott, 38, hasn't competed since a December 2023 submission win over Su Mudaerji. The victory was his third in four fights. Elliott was scheduled to compete vs. Tatsuro Taira in May 2024 but withdrew. With the addition, the UFC 319 lineup now includes:
