Podcast 210. Due Diligence and the Importance of the Right Team with Alex Sonkin

Average Joe Finances:
0:00

Hey, Welcome back to the Average Joe Finances podcast. I'm your host, Mike Cavaggioni, and today's guest is Alex Sonkin. So Alex, super excited to have you on the show, especially with what we're gonna be talking about, welcome.

Alex Sonkin:
0:14

Thanks for having me, Mike. Really excited to be here.

Average Joe Finances:
0:16

Yeah, absolutely. I wanna start this off the same way I start every podcast episode. And me and the audience wanna know more about you. So if you could tell us a little bit about your story, tell us who you are. Who is Alex Sonkin?

Alex Sonkin:
0:30

Interesting question. Lots of ways to answer it. I'll try it this way. Graduated University of Michigan Business School back in 1994, became an options trader and was a member of the Chicago Board of Trade Chicago Merchantile Exchange. Chicago Board of Options Exchange. Worked for this French bank called Société Générale SocGen, and learned how to do arbitrage where we were buying options on one exchange at one price, and ideally selling the same or similar options at another exchange across the street. At the same time, at a higher price to create arbitrage strategies and along the way I realized that tax attorneys were creating arbitrage, riskless profit with tax planning and many things happened between then and now. But moved from Chicago to California. Came up with an idea. My wife now runs this company called Go Macro. They sell macro bars based on a diet that cured cancer for my aunt, my mother-in-law. My wife was a school teacher at the time. I came up with the idea and it was the last time she listened to me. It was about 20 years ago. It was starting this company with her mom. It's now the leading protein and energy bar company out there. But when I, we moved to California, we started setting up family offices. Started working really closely with CPA firms law firms, and realized that there was a huge disconnect between what CPAs biggest clients needed and wanted, and what the CPAs wanted to deliver to them, and what the CPAs actually had access to, we realized that CPAs were spread really thin, just trying to produce tax returns, financial statements. The tax codes constantly changing, constantly moving. They really don't have time to do proactive tax planning. They don't have time, they don't have the resources to do the due diligence on sophisticated tax planning strategies. We realize that only 18% of Fortune 500 companies are zeroing out their tax returns, which is a crazy number because 82%.

Average Joe Finances:
2:29

What was that percentage?

Alex Sonkin:
2:30

18%.

Average Joe Finances:
2:32

Wow.

Alex Sonkin:
2:33

Which is a crazy number, but the other crazy number is that 82% of the most profitable companies in the world, these Fortune 500 companies, who can hire the very best finest CPA firm's, finest law firms in the world. They don't know how to do what these 18% do every single year. And so what we realized is lots of companies and lots of family offices know how to make a lot of wealth, but of one less than one out of five really know how to keep that wealth. So we realized that tax planning, sophisticated tax planning was this unicorn. And what we decided to do was start putting on these events, advanced tax planning institutes, and. When we would invite all these CPA firms and specialty firms and tax attorneys and resources to the room to present, a lot of the magic happened in the hallways where these attorneys and CPAs would start talking and having conversations. What about, what if we did this? What if we did this? How does this work? How's the IRS look at that. And we realized that these CPAs were really thirsting for this knowledge and thirsting for these interactions. And we decided to create this facility called the Due Diligence Project called the Virtual Family Office Hub, where we would invite and have our membership where really all of our CPAs who are from all around the country introduce us to their favorite resources. And then we would introduce those resources to the rest of the community and then have, instead of having one or two CPAs comment on it, we would eventually have, now we, when we do a summit, we a couple weeks ago, we just did a due diligence project summit. We had 685 independent CBA firms participate in 2020. We had 847 firms participate, so a lot of these firms are former KPMG, Deloitte, PWC tax partners. When we have that many independent eyeballs, On a strategy, looking at a resource, asking a lot of questions, getting those questions hopefully answered. We really can go very deep and very wide in terms of the number of tax strategies that we rip apart, put back together and ultimately understand where's the weakest part of the strategy? Where's the IRS going to attack it? Why are CPA a firms either comfortable or uncomfortable defending that. Ultimately what we've been building is an ongoing living hierarchy of strategies and resources ranked and rated based on their ROI net of cost, net of risk. And we just never stopped doing this kind of activity because we realize this is the most valuable thing that CPA firms have access to cause they can look learn a new strategy in 10 times less time than it would take 'em to do a normal strategy. Cause we're sharing the notes with them. Then they're gonna want to do their independent peer due diligence, but we give 'em the notes, all the q and a that they've been compiled over the last 10, 15 years on the strategy. That saves 'em a lot of time when they go into the tax code. Start asking questions. Peers in our community, maybe some other tax attorneys in our community or outside our community, but now they're able to complete their due diligence in one 10th a time with 10 times more confidence. And that's really what we're doing is we're doing independent peer review with the largest independent peer review community of tax focused CPAs. Meaning we really don't care what financial advisors or estate planning attorneys or people, unless they have at least 10,000 hours of experience in audit, in tax court, their feedback on a tax strategy or the questions they ask. Are just far less meaningful than CPAs that have to sign the tax returns that are dealing in audits, dealing in tax court, and really understand what the IRS is looking at and how they look at tax strategies. And that's what we've really built. We built this due diligence project for the CPA community.

Average Joe Finances:
6:33

No, Alex that's awesome because you're providing a lot of value to other CPAs out there, but also you're providing access to something that not a lot of people generally have access to. So if you could just explain a little bit what a family office is and who would normally have access to a family office.

Alex Sonkin:
6:53

Yeah. Family offices, for many years no one really knew what the family office was cause it was really designed for families worth maybe a billion dollars, a quarter billion dollars. They would spend a million dollars a year, at least $250,000 a year hiring a team of people, maybe their cpa, an attorney, advisors or many more people to work in an office that just basically handles the family's finances. So the idea of a family office is instead of a, the business owner or patriarch or matriarch of the family making seven phone calls and getting seven different answers to a problem, and they're more confused, further away from the answer than when they made that first phone call. Which is what's happening right now is most people are running their own pseudo family office. Even though they're not trained, it's not organized, it's really a mess. So they hire a family office, so they build one and they hire W-2 employees to work inside their family office, and now they can make one phone, call it the family office, handles that phone call like a team, and they design a solution, handle the problem, and we're on our way. The challenge with that is, What type of people wanna work W-2 for a family and just handle their finances? Meaning does the best tax attorney on the planet want to work as a W-2 employee for a family worth? A half a billion dollars? Maybe not. I would say probably not. I would say the top tax attorney in the in their specialty wants to run their own shop and live wherever they want to live. And with technology we can find them anywhere and plug them into any virtual family office. And that's where we started this idea of instead of static single family offices or multifamily offices, we took this multifamily office idea. And said, we really want to make this a virtual family office model, but instead of a financial advisor or a money manager leading that family office, cause does someone who created 250 million or a billion dollars worth of wealth need an advisor to help them create more wealth? Maybe not.

Average Joe Finances:
9:04

Probably not. Not if they got there on their own right.

Alex Sonkin:
9:07

Exactly. Now, if it was passed down, if it was you know, inheritance, then all of a sudden you're dealing with people that maybe need a lot of help. But let's just say it's that patriarch or matriarch who created that wealth, that person mostly needs someone to help 'em keep that wealth. Which is who? Which is this technician, which is probably a CPA that they trust. That's an expert in tax mitigation, tax planning. But in our model, it's like we're building Wall Street, we're building investment banking infrastructure, but in our model, it's called a family office underneath the CPA, and then all those resources, including money management, financial advisory, estate, all those things. Our kind of more commodities, in our family office environment where the lead, the most elaborate part of that planning is the income tax, estate tax planning. That really flows into every other part of planning for that client's estate and asset management and asset protection and all those different efficiencies.

Average Joe Finances:
10:10

Yeah, no I love that and the and I appreciate your explanation too, because one of the things that I really like about this show is, we'll bring on people that are talking about some pretty complex stuff, and I wanna make sure that everyone in my audience, like if this is their first episode, it's not something that would turn them off, right? So they're, if they're listening right now is their first episode, they're like, oh, family office and people with, millions, maybe even a billion dollars. Oh my goodness, this is not for me. The way you explain it, Is, it makes it easier for people to digest. So I definitely appreciate that. Now, when it comes to having a virtual family office so you have this hub now that you built Who all now has access to this, because, typically with the family office, the standard is usually a hundred million net worth, right? You might have a shared family office with a 25 million net worth, but who has access to this virtual family office?

Alex Sonkin:
11:04

We built this, for the CPA community. We built this for the tax planning community primarily. Our membership in the due diligence project, I would say is 99% CPA firms.

Average Joe Finances:
11:14

And actually, real quick, wh why is that important?

Alex Sonkin:
11:18

Because we really need them. We want, we focused on, we started with sophisticated tax planning, due diligence, except we're doing due diligence on a lot of other things. But the area that really sets us apart is sophisticated tax planning. CPAs are supposed to do that work. But they are spread so thin. They don't have the time, they don't have the resources, but they're the ones who sign the tax returns. They're the ones who have experience in audit and tax court, and really tax planning should go through them. And what we're doing is really building teams. You win championships with teams, you can't win championships with everyone's out for their own self-interest and the traditional financial services model, which is built, on Wall Street. What are they doing over there? Goldman Sachs is not interested in showing their best clients what Morgan Stanley or JP Morgan is doing. They're just gonna say, Hey, we're Goldman Sachs, we're the best, we have a backroom full of products and services and m and a stuff. You can buy Goldman Sachs stuff and feel like you're getting the best products. Out there, but the current world is not, doesn't want that. What do we want? We want open source. Hey, what is Morgan Stanley doing? What's JP Morgan? What's everyone doing? Let's find the very best products, services, and let's have best in class peer reviewed. The financial service industry is not interested in best in class peer review. They want, they just want people to do business with them. So we're really the o, the first open source model to create this open source peer review. Kinda like Amazon came in and said, look, we're gonna house every book title in the world on amazon.com because Barnes and Noble cannot fit every book in a store and we're gonna win. And then the thing that made them really successful was we're gonna share the feedback from everyone who's read these books and go, five stars, four stars, three stars, and we're gonna show you, hey, this book got 4.9 stars and has 5,000 reviews. What does that do? It allows, that the guy who's got the Amazon app in his hand to do due diligence. In 10 seconds as opposed to driving to Barnes and Noble talking to the people at Barnes and have you ever read this book? Same thing with movies. We've done the same thing with sophisticated tax planning, except we, we needed to make this open source peer review and we're the Amazon in the middle and our membership is the tax geeks, right? And so I'm a tax geek right in there with everyone else. We love this stuff. We go deep, we go, why? We figure out, what's going on. That's the client base. And on the other side are all the best tax attorneys, all the best specialists, every, all these specialists. And these people can only be elite elite, maybe in one or two strategies. They can't be elite. They're like, specialized doctors and surgeons, a surgeon who knows how to, take apart, brain surgeon is probably not the world's best foot surgeon. So people going to their doctor, people, they expect to be, if it's really complicated, they're gonna be referred to a specialist. In a CPA world, we expect CPAs to know everything. We expect attorneys to know everything. The tax code is just so big and constantly changing. It really takes a team, and in our world, it takes the very, very best. Players in their positions to build the best in class peer review team. And the only way we know how to do it is to do it virtually cause these specialists are all over the world. And to have these tax focused CPAs do the vetting cause. Who should we trust? Should we trust financial advisors? I trust CPAs. They're not salesy. They're not there to make as much money as possible. They're there to help their client get a big thank you. For some reason these are technicians and engineering brain. We just trust them. And so in our model, we want them to be the superstar, and then we're gonna educate them and give 'em access to all this knowledge and have them recommend whatever they feel like is very best for their best clients. So our clients are CPA firms, yeah.

Average Joe Finances:
15:26

Yeah, that's fantastic because, when it comes to, and this is a problem that I hear a lot of people in the real estate space talking about is trying to find the right CPA, trying to find the right person that can specialize. In real estate or like specifically maybe like multifamily real estate, right? So like you said, when you're looking at like doctors and things like that was a great example. Like you have these different specialists, right? Same thing like lawyers, right? Not every lawyer can go be a criminal defense lawyer or environmental specialist lawyer, or a real estate lawyer, right there's different specializations that people focus on, right? What you've created here looks like a hub, and actually it's called a hub, right?

Alex Sonkin:
16:06

Yeah.

Average Joe Finances:
16:06

It's a hub where all of these professionals that are the best in their specialty can come impart their knowledge right. To other people that are looking for those answers. And like you said, you're cutting down that time that they're spending on this. It takes 'em now a 10th of the time to find the information that they need to find because the right people. Are feeding that information into this hub, right? That's right. So I think that's one of the most important things to look at here. Especially because, my, my listeners most of them are real estate investors, right? So they're like, okay, I need to figure out a good tax strategy. Because, you have these, this 18% of these Fortune 500 companies that, that zero out their tax returns. He's I feel like I'm part of this 82% that I'm still paying. I need to figure this out.

Alex Sonkin:
16:51

What's funny, mike. Is if, let's just say we showed one of your biggest clients a tax strategy. Yeah. Guess what they would do? Your biggest real estate investor, listener, right? What would they do with that? They would have no idea what the heck it is. Am I gonna go to jail? Is this legal? Is it not legal? What is that? No clue. What are they gonna do? They're gonna do exactly what we're doing. They're gonna start showing this strategy to CPAs and attorneys. How many are they gonna show it to before they're done? I don't know. Are they gonna show it to thousands of them? No. They're gonna show it to one or two or three. And they're, what are they really doing? They're recreating the due diligence project. We've shown our stuff that thousands of, independent CPA firms and law firms over the last 15 years we've been doing this. So anyone and everyone, the way they do due diligence is really the same way we're doing it. It's just we've just created this very large community just like Bezos, right? Anyone could do the same thing that Bezos did. Hey, read these books. Give me five stars, four stars, three stars. I'm gonna organize the information, share it with everyone else. Bezos did it first.

Average Joe Finances:
17:58

Right.

Alex Sonkin:
17:58

And he did it biggest and best. And then he had the delivery. So it's not rocket science, it's just no one else wants to play that game. They want to play that. I'm gonna protect my client from information game.

Average Joe Finances:
18:09

Yeah, and you already have the structure in place, right? So if you have a real estate investor and they're going to, a thousand CPAs, guess what I mean? They're paying for that time. Regardless for the most of the time. So you know you're trying to get all these opinions.

Alex Sonkin:
18:22

You can go to a thousand CPAs and those thousand CPAs, unless they're plugged into due diligence project or virtual family office hub, they're just those average CPAs that are servicing clients that are getting very average results. And when I look at a tax return, It's either a Picasso or a two year old made it and we just put it up on the refrigerator with, a magnet on there. Which one?

Average Joe Finances:
18:43

That was probably my last tax return cause I did it myself so.

Alex Sonkin:
18:47

I've never done my own tax return in my life. I would never do my own tax return because I want to have the best CPA in the country do the tax return and let them handle it because I just believe. That we're really good at a couple things. I want to just do the thing like if your real estate investors are really good at real estate investing, let them focus on that.

Average Joe Finances:
19:08

Yeah, no. That's I love that you said that because I got audited last year that was not fun. It turned out they owed me money when it was all said and done, because I guess there was some deductions that I didn't claim and that worked out, and I never thought that they would audit me and say, oh, we actually owe you money. You paid too much. Here's a check for some of this back. And I'm like, Huh. Okay. Yeah, I thought it was gonna be the opposite.

Alex Sonkin:
19:31

It's a lot of people, a lot of people are very successful in very, in different businesses. They make millions of dollars and then they want to become real estate developers or real estate investors, and they fail miserably cause they realize, guess what? It takes experience to make money in any field and you can't just jump into a field and just be amazing at it. Look, if you're good enough to be making money at something, make more money there. Find the very best a plus players and surround yourself with a and a plus player. And that's really the idea of a family office is you're really good at this thing. Keep doing that thing. Keep stacking paper and then surround yourself with the smartest, best in class peer-reviewed resources. Who and pay them fees. Think of it as an investment where you're getting massive ROI, and if you're not getting roi, just fire those people. That's really how to do it. Don't try to do everything yourself.

Average Joe Finances:
20:26

No I love that. I love that reality check too, because that is something that I've found recently myself that, I tried dipping my hands into a couple other things and I found myself failing pretty miserably at them. So I had one business that I started pretty recently. It's been nothing but a money pit for me. I've just been putting, just sinking all this money into it for marketing all this other stuff, and I just can't figure out the right strategy to make it work. So I am actually looking at walking away from that and sticking back to the things that I'm good at because I'm wasting time and money.

Alex Sonkin:
20:59

Yeah, as you get older, when you hit your fifties, I just turned whatever. I'm in my early fifties now.

Average Joe Finances:
21:05

Oh, you look younger than me, man. I just turned 39 last week. Geez.

Alex Sonkin:
21:09

You, when you look, when you get, when you hit 50, it's like, for some reason, It takes a while, and then when you hit your forties, those are like the money making years, in my opinion.

Average Joe Finances:
21:19

Oh good, I got year left.

Alex Sonkin:
21:20

Go making money until they're forties. That's like free money. That's you've already made a bunch of money that you probably shouldn't have made once you hit your forties. You've learned some things. You learn what not to do. In your twenties and thirties you try everything. You hit, you go there and you're like, wait a minute. I can't be, the best in everything and you don't wanna be the best in everything, but you gotta learn that lesson. Yep. And I've learned that lesson myself. But then you realize, just don't do a lot of other things. Focus on really what you're good at, and then outsource everything else. And you're gonna be happy and you're gonna be successful.

Average Joe Finances:
21:55

No. Awesome. Appreciate that. So now when it comes let's get back to let's get back on track here, right? With with what we were talking about. So with the family offices, right? Obviously what you've built is pretty big, right? You have, thousands of experts now involved in this project. You have these get togethers that the, what was it the summit that you were telling me about, right? The last one had 600 plus. The one before that had 800 plus.

Alex Sonkin:
22:18

The Due Diligence project Summit, right? The DDP.

Average Joe Finances:
22:20

Yeah. So you're bringing all the right people in. And I've gotta think that, this is shaping a little bit of what the future might look like. So this is like a twofold question, but what is, like the future or in your vision, the future CPA firm look like as well as what the family office of the future's gonna look like?

Alex Sonkin:
22:41

Yeah. The CPA a firm of the future, the virtual family office, of the future. They're happening right now. COVID has accelerated this process. What, New York, all these CPA a firms didn't, did not renew their leases, their 20 million leases in New York City. Everyone's working from home. Every, the world's become virtual very quickly, taking advantage of technology and, It's really this technological revolution the efficiency of meeting, like we're meeting right now virtually. So efficient, right? And so the idea here is that CPA can meet with how many clients sitting in front of their computer screen a day versus in-person meetings, all those different things, and ultimately bring in the very, very best resources from around the world to deliver value to those clients. Those clients appreciate that those clients now get to sit at home, connect with their CPA, give 'em their wishlist of Here's what I want, here's my perfect world building my perfect world. And that CPA goes, plugs in the due diligence project, says, here's my client situation. They've got this kind of income. They're selling this appreciated asset. They have these goals. This is what they're, this is what they really want to look like in five years. How do we get them there? And then we bring in the specialist and the resources to first design the income tax and estate tax plan, and then potentially introduce 'em to other. Other family offices that they can co-invest with so they can actually start doing some interesting, not stock market investments, but maybe real estate development or real estate investments that other families are involved in.

Average Joe Finances:
24:18

Yeah, different.

Alex Sonkin:
24:18

Alternative investments that are very, that maybe they're more interested in that they're, that they can't get through Goldman Sachs and JP Morgan or traditional advisory services. The idea of building a custom design virtual family office, with these Lego pieces, meaning every client will have a different setup, every client's setup is gonna be based on their goals and needs and wants and size of their income and estate. So some people are gonna want this full service, Hey, take care of my, write all my checks for me, pay all my bills for me, just, I don't, I just wanna play tennis. I wanna just, Give back to my church. I don't want to deal with anything. Other people are gonna be more active. Hey, I really like to review these deals, and I just want you to make every, I just wanna build this real estate portfolio, make my real estate portfolio efficient with my goals. With income tax mitigation, all these different things where I have other ways be mitigating taxes besides 10 31 depreciation and cost segregation. What else is there? Is there a way I can get a big pile of cash, do whatever I want with it? Yes. There is many ways.

Average Joe Finances:
25:26

That's, yeah that's awesome. So what you're saying is because of, covid accelerated things, but we're already living in what that future looks like. It's just getting a lot more. It's becoming a lot more real now, right? It's it's all actually coming to fruition now. Did you start working on this project pre covid?

Alex Sonkin:
25:46

Oh, yeah. We've been doing this for 15 years. We were virtual before we, the trend to virtual was around before Covid. It's just covid, just that you have to be virtual or you're going out of business. We were virtual because we. We just thought it was more efficient. It was, it's very difficult to get 50 CPA a firms, a hundred CPA firms, CPAs to fly out to a location to do an event just because their free time is so crazy. They have, they don't have a lot of free time between all their deadlines and they have families and they wanna take vacations and they wanna do all these different things and it's very expensive to travel and put on these live events. So in our world started to do these virtual events, that's when it started and we realized we could actually do everything virtually. And then Covid made it, that everyone just wanted to do everything virtually.

Average Joe Finances:
26:40

Yeah, it became mandatory at one point, right? So that, took you guys and skyrocketed you very quickly because it's now it's Hey, we've already established this. So now that everyone's being forced to do this It, at least in my eyes, looking at what you've built, especially if it's over the last 15 years when Covid happened, it was probably like, boom, you guys exploded because it was boom, you already had the processes in place.

Alex Sonkin:
27:04

It was boom. It was really, it was a scary time and we just decided, hey, when everything is, when everyone's scared, that's when you go big. And that's why we had 847 firms participate in our summit. We went big. That's awesome. The CPA firms needed a place to go. They needed a resource hub and we became that hub for them. And most of these firms, they're part of a lot of different associations. They joined a bunch of different groups. Cause it's not expensive to join a bunch of these groups. Some of these groups charge six figures a year. And the value they provide is a joke. Like it's really just, they really provide just a name. We're associated with association, but it's just a bunch of CPA firms paying a lot of money to be associated and there's nothing that's happening there. Nothing. It's crazy. They join our group, they're like, wow. And they're learning all these new strategies. They're asking millions of questions, completing their due diligence, bringing these ideas to their biggest clients. Good getting, we have. Billionaires going, oh my God, this is amazing. If I refer some of my other friends to you, can I get a referral commission? I'm going, does Deloitte, does KPMG have billionaire clients going, Hey, I'm gonna refer my friends to you. Will you pay me a referral commission? And I don't think they are, because I don't think they're doing anything that unique that would get a client to be that excited to refer anyone over there. We're doing stuff that's exciting, but it involves. Unless the CPA does the work, nothing's gonna happen, right? We aren't just digest, we're not like the big bird that's eating the food and chewing it up for them and putting it in the little baby bird's mouth all chewed up. We do 75%, 80% of the work for them. But they still have to do the last leg of the journey of due diligence on their own to get their own confidence level up to really under, and some of this stuff is so Mike. Have you ever read the tax code.

Average Joe Finances:
29:01

Personally? Pieces of it. Not the whole thing.

Alex Sonkin:
29:04

Just google any part of the tax code and just start reading and you're going, you gotta be.

Average Joe Finances:
29:09

No thank you.

Alex Sonkin:
29:11

You got to be, are you kidding me? This is really what, this is how our system works based on.

Average Joe Finances:
29:18

And it's so full of legalese.

Alex Sonkin:
29:20

It's insane. Yeah. It's an abs like if you were the king of the universe, And you said, Hey, scribe, go bring me a tax code. And they came back to you with this monster. You'd be like off with his head. You're like, this is insane. Th this is not designed to work nicely. And so people are complaining that why are some billionaires not paying taxes and other billionaires paying taxes because the tax goods so complex. That the army, now we go to battle, not with people, with armed with, clubs and arrows and we go to battle with tax attorneys and CPAs who understand the tax code. And if you, you either surrender cause you don't have that army or you build the best army in the world that's really focused on going deep and wide in terms of due diligence. And you go, you know what? We got it. Let's go.

Average Joe Finances:
30:13

No, Alex, that's a great point too, when, especially when you point out, you know how some billionaires pay zero in taxes and others pay more. And the thing is, it's cause they have the right people on their team, right? They have the right people doing their taxes. I remember, what was it, two years ago there was like this big thing because Trump paid $745 in taxes and everyone's all up in arms about this. And I'm like, Know you could be mad or hate the man for other things. Don't hate him for his real estate game. Because he did it the right way. And that's why.

Alex Sonkin:
30:47

I dunno, if people complain about taxes, he filed to do card. It's a legal document. Okay. If there's a problem with it, they can audit him and change what's in there, so this is something he's, it's not like he. Just paid that money and said, Hey, good luck.

Average Joe Finances:
31:03

This is all I'm paying. Bye.

Alex Sonkin:
31:05

This is, and he documented it. So the point is, when people are doing this, it's showing you that the tax code is designed. To be to maneuver through it just like that or not, but don't be crying about it. Don't be complaining that you're, cause you can do it too, everyone can do it.

Average Joe Finances:
31:23

Even the average Joe, right? If you're at a point in life and, even if you're a blue collar worker, white collar worker, whatever. And you're making a specific amount of money and you hit certain tax brackets and this is what you have to pay, depending on how you do your taxes. If you have, real estate, there's certain things you can deduct you can get past that standard deduction and deduct more if you have enough resources for that and you can get your tax burden down to zero effectively. And that's one of the things too I was able to claim a $47,000 loss. On my real estate this past year, and that's not even a lot compared to what other people claim. It's, there's so many different ways, and this was me doing it on my own. I'm sure if I had a CPA a doing it for me it, it would've been a lot better. And I probably wouldn't have paid any taxes this year. But I still wound up paying some taxes, but that's okay. It's not okay because it, again, I did it myself, but I do need to find a good cpa. So if there's any good CPAs out there listening and you wanna help me out, hit me up. But yeah, so that's the thing. Anybody can do this. If you have the right person on your team that knows the tax code, that knows how to maneuver through it, like you said, Alex, right? cause that's the biggest thing, right? You can know the tax code front to back, but if you don't know how to maneuver through it through specific areas of it. It's not gonna help you at all.

Alex Sonkin:
32:40

And we have programs for clients who have a 250, $300,000 adjusted gross income net income up to a million. There's a lot of things clients can do there. Once clients go above a million, there's all sorts of other strategies that become available based on their cost, the initial price point and. Costs and things and jumping through certain number of hoops. So you know, anyone who's got $250,000 of income, net income or more that they're paying taxes on after expensing can take advantage of what we're doing. Have your CPA plug into due diligence project info due diligence project.com. Join the community, have access to all sorts of strategies, and they'll bring it to your listeners and your listeners can pick and choose which one is right for them.

Average Joe Finances:
33:29

Absolutely. And that's the thing that's great about it. And that's the other thing that's awesome about it being virtual, right? It opens up accessibility to so many more people where it wouldn't be there before Now I just wanna ask you too about this, like for a cpa, cause there, there are definitely CPAs that listen to the show as well for a CPA that wants to get involved in the due diligence project And the virtual family office hub is. What? What does that process look like for someone that wants to like join or become a part of that community?

Alex Sonkin:
34:01

We have a big presence on LinkedIn. And do you know they visit due diligence project.com. They see us on LinkedIn, they connect with us, we wanna meet with them. We wanna make sure they're the right CPA for us, that they have the right goals, that what they're trying to accomplish with their own practice is a good fit for us. We meet with them. We have a quick conversation if it's a good fit, we explain what we do based on their feedback, based on kind of the kind of client base they have and their goals. They either. It's either a match or it's not. If it's a match they join and then they have access to live events that we do every month. Sometimes we do two live events a month. Everything is recorded. We do at least one or two summits a year. They can watch the recorded summits, they can connect with other members, other CPAs, they can connect with the specialists, the best tax attorneys in various specialties. They can offer their clients family offices. They can reduce their clients health insurance costs by 20 to 50%. So there's a lot of cost reduction. There's a lot of tax mitigation. And then, that's really where we focus on is cost and tax. And then there's other opportunities, investment opportunities that are we look at those more as secondary opportunities.

Average Joe Finances:
35:14

Awesome. Fantastic. All right, great. So Alex what I would like to do now is transition this into something that I call the final round. It's where I'm gonna ask you the same four questions I ask everybody that comes on this show, and it'll help give us a good idea of how you are when you're under pressure and which I think I know you're gonna do really awesome at this. So if you're ready to go we'll get that party started.

Alex Sonkin:
35:35

Let's do it.

Average Joe Finances:
35:36

Let's do it. Okay, Alex, so the first question of the final round is, What's the biggest mistake you've ever made in business?

Alex Sonkin:
35:46

Wow. I look at, mistakes are part of my, I've made a lot of mistakes. I've made a lot of mistakes. Every mistake I've made has led to doors closing and doors opening. And all those mistakes really allowed me to be where I'm at. And there's certain regrets that I've had. I've made some investments with people and I can, I know a lot of people have had this where money was just straight up stolen from me and investment due diligence I was trying to do real estate development project and I had people, when you have a very focused, goal oriented business owner trying to do a really elaborate project, we're just ripe for. Being taken advantage of, cause we're just, we're all in, right? We're all in. We want to do this, we want to do this. We have big goals and I'm in my twenties. So a lot of people stole a lot of money from me, who I trusted and you beat yourself up over it, but as long as you handle it properly and handle it the right way moving forward. And if there's money taken or investment money, it's all taken care of and return and things like that, I'm very proud of that. Obviously it's embarrassing. Making an investment with someone who's ultimately a criminal, and it ultimately led me to where I'm at today. It led me to create the due diligence project to eliminate risk, to eliminate due diligence, risk, not trusting myself completely with the due diligence on various things, realizing there's just information I'm not gonna get access to people are showing you the tip of the iceberg, so I think. Learning. At the end of the day, we're human beings and we want to trust other people. And those of you listening who've been scammed, Don't beat yourself up. Everyone. Everyone who's a very successful business owner that I know has been scammed at least once, maybe twice, maybe five times. Just because to be a successful business owner, you have to fail and you have to try a lot of different things. And part of it is just running into these people that are out there that are, it's unbelievable. Anyway, that's my biggest regret getting scammed.

Average Joe Finances:
38:02

No. I see. And it's, that's part of the good and the bad, right? When we talk about the pros and the cons of everything becoming more virtual now too, you start to see a lot more of that, a lot more of the scams because there. You don't have to put a face on anything so.

Alex Sonkin:
38:20

With this A.I. Stuff is super scary.

Average Joe Finances:
38:23

Yeah, absolutely.

Alex Sonkin:
38:24

And it's almost like you really, due diligence has become so critical.

Average Joe Finances:
38:31

That's what I was just gonna say, like that it makes due diligence that much more important. Because of the environment that we're in right now.

Alex Sonkin:
38:39

And a lot of the due diligence is, it comes from gut feel. So it's like utilizing these experienced CPAs who have seen a lot, and in utilizing resources that have gone into battle with the IRS and have gone to the tax court. And have had failures and have had successes, but had those experiences. It's like what we're seeing now is we're seeing a lot of young people becoming life coaches, business coaches, and I'm like, you have no experience. You're just too young. How are you coaching people when you have to do it yourself. Carry the bag, make those mistakes, get scammed, get burned, go out there and learn something, and then come back and then be a coach, start out being a coach, you're leading people down paths You've never even experienced yourself there's something, this experience, we were taught to respect our elders, but it's their experience that really is invaluable.

Average Joe Finances:
39:34

Yeah, no, definitely appreciate that. Okay, Alex, the next question this kind of ties into the first one is, what is something that you've learned that you wish you knew when you first started?

Alex Sonkin:
39:50

The value of relationships how important relationships are, how important, co college friends, relationships. It's tricky, right? You get married your spouse will want all of your time, all those, and you have to make some difficult choices, right? Investing in relationships and especially some, a lot of my college friend relationships, I wish I would've invested more in those relationships back then and over time, because everything's, you either invest in it or you don't invest in it. And if you stop investing in it, falls apart. It's anything else. And so investing in relationships, especially the ones that you consider special. I was so goal driven. I was just so driven to be successful in college. Every, everything was about I needed to get to these goals, these achieve these marks. But I think when you're young, to have someone say, listen, what you should do is have these balanced goals, right? Where. Part of your goal is to have these vibrant friendships and relationships. Part of your goal is to ha, give back to what's important to you, maybe your faith, to your community and have good health and all these other things. So just having the this balanced. Because I think a lot of times, people in our, my generation were just so focused on creating wealth that, that was really it. And they thought, Hey, if I create wealth, all these other things, I'm gonna get the girl, I'm gonna have all those other things. The good use is I did invest in my relationship with my wife and I've been married for I think, what, 24 years, so that worked. That's worked out so far pretty well. But I wish I made bigger investments in other relationships.

Average Joe Finances:
41:34

Yeah, no I appreciate the transparency there too, cause that, and I wrote that down too realizing the value of relationships because no matter what you do, even in business having the right relationship is important. Networking is one of the things that I preach about the most. But one of the things, so I did a presentation last month at the Real Estate Wealth Builders Conference. I was one of the speakers and, one of the things that I said that. It just came out. But I added it to my presentation now, but it's you can go from zero to hero just from having the right conversation, which is why relationships are so important.

Alex Sonkin:
42:10

Yeah. There it's critical. And, one of the other things I'd say is. College is a really interesting, for those people that have the benefit of going to university and those relationships are so magical and you take 'em for granted. Yeah. Cause from there it's a fresh start for everyone. Everyone's a freshman at the same time, you're building these amazing relationships. There's really no conflicts, it's just, These incredible relationships. And then you take it for granted thinking, oh, as I leave co I'm gonna build all these relationships down the road just like that. Yeah. It doesn't happen that way cause the real world is not like this college bubble. And so what I would say is the college bubble is a really fertile place and.

Average Joe Finances:
42:52

Yeah, no, I feel the same way too, but about the military, cause like I, I joined the military straight outta high school and it was the same thing like those formative years, right? That going from a teenager into your twenties, the relationships that you build with your peers in during that timeframe. And there's some, some people that I was on my first ship with, that I still stay in touch with that are amazing people. There's others I wish I would've stayed in better contact with. Like you said it's about building that relationship and it's it's super important to keep that because. We're talking about all aspects of life, right? Not just building wealth, but the friendship. That's a big part of your balance in life in general, right? So anyway, enough on that.

Alex Sonkin:
43:36

Enough on that.

Average Joe Finances:
43:37

We can keep going on that all day. The next question Alex, for you in the final round is, Do you have any tips or tricks that you would recommend to someone that is just getting started out today? So we'll say we'll put this in the perspective of a cpa. So new CPA, trying to figure out where they're going in life, what would you tell them?

Alex Sonkin:
43:57

First thing I would say is write down your goals and read them out loud and read 'em in the morning, read 'em at night, and then keep updating those goals. I think the CPA profession is an amazing place to be. I really do. And until they change the foundation of this country, it's a great place to be. There's a lot of money involved, there's a lot of differentiation involved. You can really become an elite CPA and become extremely valuable to a lot of people that want an elite CPA. So I would just say write down those goals and just do, something every day. To get to that goal, just something every day. As opposed to nothing. That's it.

Average Joe Finances:
44:39

Awesome. I love it. Okay. The final question for the final round, Alex, that I have for you is, do you have a favorite business investing or real estate related book or podcast or both? And we could also keep this on the tax side as well.

Alex Sonkin:
44:55

Interesting. No, I don't. No, I am, let's just say your podcast, the Average Joe podcast. My favorite podcast. Let's go with that.

Average Joe Finances:
45:05

I love it. There we go. It's simple. It's that simple. It's simple. Awesome. All right, Alex. No, I appreciate that. Okay that was fantastic. Now I have one more question for you. This is not part of the final round. We're done with that, but. For people that are listening right now that wanna learn more about you and the due Diligence project and the virtual family office hub, where can people find more information about you and those businesses that you have? Do you have a website, social media? I know you mentioned the website a little bit earlier, anything else like social media like that you could share with us today?

Alex Sonkin:
45:35

Yeah, we do a lot of work on our LinkedIn, so you can look up Alex Sonkin, SONKIN, on LinkedIn duediligenceproject.com. duediligenceproject.com. You can watch our podcast section on the due diligence project.com where we interview some of our members, some of our resources. I think that will give you a lot of information about who we are and how we operate. Yeah, due diligence project.com, virtual family office hub.com is another place to go. And if you wanna see our revolutionary health health insurance solution, go to vfo health.com. It's a very unique opportunity. We've opened up our private captive pool to our members and their select clients, and we're really revolutionary health insurance using the solution that we found. That has been adopted by Amazon, Keller Williams, FedEx, grant Cardone, and his a hundred of his companies that he invested in. And then Clifton Larson now and one of the largest CPA firms in the country has been offering this to their best clients for over a decade. So we've been working with this group. We're really proud of this solution. It allows for health insurance participants. If they don't use up their claims if they don't use up their premiums with their claims, they're gonna get a return of premium, which traditional insurance just does not offer. So there's actually a benefit to being healthy, having healthy employees. So vfo health.com, we're really proud of that. We've offered that is now available to all of our members, CPA firms, and they're able to make that available to their clients as well.

Average Joe Finances:
47:08

Awesome. Thank you so much for sharing that. I'll make sure all those links are in the show notes for our listeners. And hey, real quick too for my listeners, if you are listening and you want to go visit those sites, you can copy and paste or click away. Just please don't do it if you're driving right now. But hey Alex, again, I wanna thank you so much for taking the time to, to join me today and share and impart your knowledge on with us. You've dropped so many golden nuggets and just. So much value that you added to me and to my listeners and I again, want to thank you so much for joining me today.

Alex Sonkin:
47:42

Hey, Mike is a great chatting with you, great connecting with you. And thank you so much for having me. I really appreciate it.

Average Joe Finances:
47:48

Yeah, absolutely. And hey, I also wanna say thank you to all my listeners for joining me and our special guest, Alex Sonkin, on the Average Joe Finances Podcast. Go leave us a five star review and tell us what you liked about today's episode with Alex. Aloha from Hawaii and have a great rest of your day.