Larry Pendleton on Saving Taxes Legally and Building Cash Flow

Larry Pendleton (00:00)

Yep, well, we haven’t really touched much on the tax perspective. Just be mindful of any tax strategy that is out there is going to cost you time, money, and or debt. And I try to be as blunt and straightforward about that so that there’s no, you just stand over here, you get a tax benefit. No, there’s work to be done, but there are opportunities are there.

Scott Bursey (01:56)

Welcome back to the Real Estate Pros Podcast. I’m your host Scott Bursey. And today we have a distinguished guest who bridges high level investment strategy with comprehensive financial expertise. We’re sitting down with Larry Pendleton, a leader at PC Financial Services. Larry, welcome to the show.

Larry Pendleton (02:17)

Thanks for having me, Scott.

Scott Bursey (02:20)

It is just wonderful having you here. Just, just outstanding. And before we dive into the how, I want to talk about the who for those just meeting you, tell us about the path that led you to real estate and your core mission that drives you today.

Larry Pendleton (02:39)

My core mission is to help people, business owners and investors, ⁓ improve their cash flow and save on taxes through ⁓ fractional CFO services and tax strategies. I’ve been doing this for over two decades now. Started my accounting career with a question of a high school teacher and it of got me to…

Then I realized what accounting was and it felt right. then as I got to college and all that, I didn’t realize, okay, there’s a big need for the world. And then started investing myself for about a decade ago. Syndications, rental properties, short-term rentals, flips, new construction, mortgage notes, and so forth and so forth. But kind of done the gamut of those and trying to find the right paths of, okay, like I said, once again, aligning both that cashflow mantra that I have.

and sharing the experience with my clients because that’s who we primarily serve at that point.

Scott Bursey (03:41)

Larry, I think you have found the right path. And let’s dive in. PC financial services suggest a focus on comprehensive financial planning. Larry, what is the single most critical factor for investors to assess when evaluating long-term portfolio growth and stability in today’s global economy as you see it?

Larry Pendleton (04:11)

Yeah, it’s the aspect of me one knowing what are your what is your strengths and weaknesses in regards to the type of work that’s going to be needed to operate that property, whether you’re doing it yourself or you have a management team. ⁓ OK, what type of innovations that need to get done and especially as prices and costs of everything is starting to go up. ⁓ Are you leaving yourself enough meat on the bone?

to actually be profitable at that point. Because a lot of times, mean, lot of investors, especially starting off or even the seasoned ones, they pretty much go for $100 to $300 net per door. But is that really enough to really run a business per se when the HVAC goes out or the roof needs to be replaced?

So it’s really just understanding of, okay, here’s what the costs are. Is there enough ⁓ Jews, is enough profit being made where you can put some money in your pocket ⁓ as well as ⁓ have your reserves aside as well because you just can’t take all the money out. So you have to make sure you’re breaking off reserves. Is there enough equity to pull out and so you can reinvest? ⁓ How you raising your capital, whether this is from private money or traditional financing, what those interest rates looking like?

Do you need to run lean in order to pay the debt off sooner? So I could keep going on and on, but a lot of different factors that have to be taken into account when you’re looking at the financial stability of a portfolio.

Scott Bursey (06:37)

You hit home on the key insights, the major ones. Sorting long-term risk assessment and tax efficiency over short-term market noise is fundamentally the way to build wealth through legacy building. And Larry, interested to know, as a leader in wealth management, you work with high net worth clients.

What is one non-negotiable strategy every financial advisor must adapt when managing high value client portfolios?

Larry Pendleton (07:14)

⁓ The books have to be in order. Like that is a non-negotiable at that point for both sides because if the books aren’t in order, the next financial steps cannot be properly assessed at that point because it could just be a lot more coming in that no one’s expecting or there’s not enough coming in. So if the books aren’t in order, the bookkeeping is not the sexiest thing.

But it’s a necessary evil, it’s the foundation of the company itself. Once we have that in place, then we can start to kind of figure out, okay, what are the next steps at that point.

Scott Bursey (07:51)

Absolutely. Moving beyond transaction based relationships to providing continuous, let’s say discrete advisory services is how you secure that high end business. Couldn’t agree anymore. And Larry.

Larry Pendleton (08:07)

Yeah. Yeah, we gotta

have the relationship in place. Sorry, go ahead.

Scott Bursey (08:13)

Yes, the relationships are so critical and I think that you wanted to add a little bit as far as that goes. The relationships is just critical. Did you have a little bit to expand on that?

Larry Pendleton (08:27)

Yes, because there’s no once as fits all. ⁓ You really have to, like I as I say, my clients are the CEO of their business and their portfolios. They’re bringing me in as their CFO. But like I said, but they’re also probably operating as their CEO as well. But I have to understand what they’re willing to do as a business owner, as an investor. So I’m just not throwing out random advice. Like it has to be aligned with what they’re willing and capable of doing.

what their team is capable of doing as well. it’s just understanding having those one-on-one conversations, having those difficult conversations ⁓ so that we know what to do at the high level so that, okay, we then discuss what to do in the weeks with those team members at that point.

Scott Bursey (09:11)

You hit it right in the head. It’s not the sexiest conversations to have, but it’s really where you make progress. Couldn’t agree with you anymore. In today’s rapidly changing environment, how can a financial service firm effectively build it and maintain a legacy brand that withstands market volatility and competition in your eyes, Larry?

Larry Pendleton (09:37)

There is the aspect of, as we discussed before, ⁓ automation, elimination, and delegation of certain tasks that ⁓ you can leverage AI or bring in more staff members so that you can spend more because your higher net worth or any type of ⁓ clientele wants that personal relationship. Even though everyone’s leveraging AI, it’s that personal connection that we cannot lose track of.

but you have to do beyond just data entry at that point. And so you have to really build out the teams, build out ⁓ the processes and systems ⁓ to help mitigate the mundane task and make sure those are done correctly, make sure you got proper oversight and then still having those personal discussions and financial discussions with your clients.

Scott Bursey (11:02)

Larry how much have you integrated AI in your business over let’s say the last 10 years or thereabouts?

Larry Pendleton (11:13)

Not as much as I would like. Probably just, probably more than just scratching the surface, but I feel like there’s a lot more that we can be doing to implement it there. But in our world, because of the sense of information that we’re dealing with, I do have to be cautious of, okay, which AI we’re going to implement in because we don’t want that to get out into the public as well. we got, so it’s a little slower than other industries because like I said, we’re dealing with.

personal bank accounts, socials, EIN numbers, all the different things that people do not want public. So we just can’t implement just any AI type of ⁓ system in place if it’s not properly secure. But we’re definitely working and doing due diligence on that in there.

Scott Bursey (11:59)

That is some excellent insight. And Larry, interested to know for investors looking to optimize their capital share perhaps this year, what specific alternative asset class beyond traditional stocks and bonds are you seeing the most opportunity in?

Larry Pendleton (12:21)

So there is a lot of opportunities in the conversion space of office space into apartments. We’ve seen a lot of that going on. Now, obviously, there’s the solar farms, the data centers that people are investing into now. You’re now seeing more pushback at the government level of that. So just be mindful of which locality and which state that you’re dealing with. Oil and gas.

find the right operators in that space like that one because the country still has to fuel itself. So the oil and gas space is still popular as well. you’ll see a lot of that as you’re a turn of separate from stocks and bonds, your oil and gas, your real estate in the sense of apartment buildings and even tiny homes are starting to become more more and popular with the new age generation and people wanting to downsize but not.

still be able to attain some type of home ownership there.

Scott Bursey (13:21)

That’s a sharp pivot, Larry. Specialized sectors like private credit or digital infrastructure often provide the necessary cushion in uncertain times. And on that note, what markets are you serving, geographically?

Larry Pendleton (13:41)

I’m. Oh, well, we have clients in 27 states now, so we’re across the refueling across the US. Every state has a little quirks when it comes to like the state state tax strategies and whatnot and and we have to check for financial purposes. But but we’re very flexible and who we’re working with.

Scott Bursey (14:02)

Larry, if you could walk us through, based on your advisory experience, what is the one habit or system that top performing financial professionals implement that separates them from the rest?

Larry Pendleton (14:18)

Mmm, good question. ⁓

me is a solid is kind of like CRM system where they’re like say they’re keeping up with their, um, with their, their, their streamline of deal flow, how they communicate back to their investors. Um, and, and, uh, so forth. I guess a solid CRM system is kind of one I’ve been seeing the successful ones take, uh, take advantage of to take a stay on top of the communications. Cause everything’s kind of like front of mind. So you’re not, so you’re not losing. Um,

⁓ losing that connection to people that you want to work with or raising money from, so forth and so forth.

Scott Bursey (14:58)

Perfect advice. It sounds to me like that daily discipline around ⁓ managing time is a limited resource, especially through rigorous scheduling and protecting deep work blocks drives the highest results.

Larry Pendleton (15:56)

Yeah, definitely, definitely. it’s remain disciplined to say the communications, your investment strategy, your financial strategy, and not chase the shiny object, which is easy to do. But you really have to kind of align yourself with what your main principle core is and then really branch off of that and not stray away from that guiding star there.

Scott Bursey (16:19)

And we would be remiss if we didn’t ask you this, Larry. ⁓ What type of advice can you give the listeners today? A golden nugget or two if you would care to elaborate.

Larry Pendleton (16:32)

Yep, well, we haven’t really touched much on the tax perspective. Just be mindful of any tax strategy that is out there is going to cost you time, money, and or debt. And I try to be as blunt and straightforward about that so that there’s no, you just stand over here, you get a tax benefit. No, there’s work to be done, but there are opportunities are there.

The tax code itself is really much a roadmap.

of how to save on taxes if you’re doing what the government wants. So in order to make sure you’re maximizing that, let’s say you’re having the books in order knowing what you can afford to do, and then start to kind of strategize, like, hey, if I want to do this, I may have to bring some people in or make this type of investment so that I’m not hit with this potential tax bill, which is why a tax advisory is really all year round. So you know where you want to…

put your time and your money into and actually see not just a tax benefit, but actually a good return on your investment as well.

Scott Bursey (17:36)

Larry, would you agree, maybe you could take us down this road and elaborate a little bit, that for our listeners, just be forthcoming. Don’t try to do, hide things, just be forthcoming. Can you take us down that road and guide us a little bit for some advice along those lines, Larry?

Larry Pendleton (17:57)

Yeah, I know people like to try to like find different ways to not report income is like a tax evasion isn’t really the way to do it. there you still reduce your taxes while still reporting all the money that you’re that you’re earning as well. Let’s say that those that goes with proper entity structure, how you reinvesting back into your business, back into your people, how you investing from there. So there’s no reason to really

hide the money if you know how to really invest it back and keep the economy, keep the money flowing to the economy, which is what the government wants. They want the money flowing through the economy. And the more you’re doing that, the more you have the tax savings strategies in place without having to underreport your income.

Scott Bursey (18:48)

Absolutely. The government has that roadmap in place and there’s plenty of ways that ⁓ you can capitalize on that very roadmap.

Larry Pendleton (19:00)

Exactly.

Scott Bursey (19:01)

Absolutely Larry. Well Larry, we’ve covered a lot of ground here today and I know people are going to want to definitely tap into your brain. For the listeners who want to build with you or follow your play-by-play perhaps, ⁓ what’s the best way for them to reach you?

Larry Pendleton (19:18)

Yeah, they can go check out my landing page at theinvestorcpa.com. They can see different projects that we’re working on, learn more about me, ⁓ book a meeting, an intro call, or a consultation session. And they said, I’m looking forward to connecting with others and seeing how we can be of value. I’m on the different social media platforms, pretty much around Larry Pendleton, CPA Made myself kind of easy to find at that point.

But no, like I said, grateful for the opportunity to add value where I can.

Scott Bursey (19:50)

Larry Pendleton everybody and Larry, you have added a tremendous amount of value here today. Thank you for being on the show.

Larry Pendleton (20:01)

Thanks, guys.

Scott Bursey (20:02)

And for our listeners, we appreciate you. If you got value out of today’s episode, please subscribe. We have more conversations coming up with exceptional operators, just like Larry. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.