You often hear about the seemingly endless tax write-offs that exist in the world of real estate …

Some of these “ordinary and necessary” business expenses include:

  • Interest
  • Depreciation
  • Insurance
  • Legal Services
  • Home Repairs
  • Employees or Contractors
  • Personal Property
  • Pass-Through Tax Deduction
  • Travel Expenses
  • Home Office Usage

But have you ever wondered exactly how it’s done? How those who are invested in real estate can pay significantly less taxes — yet still make a profit by year-end?

One look at your tax bill for 2022 might give you the push to finish this newsletter and find out.

Let me start by explaining exactly what makes business owners and investors a cut above even the highest-paid employee … Yes, that includes even us doctors!

The ESBI Cashflow Quadrant by Robert Kiyosaki

In his book “Rich Dad Poor Dad“, Robert Kiyosaki introduces the concept of the E, S, B, I quadrants to explain the four different types of income earners in the world.

  1. The E Quadrant refers to employees who work for a salary or wage and have limited control over their income.
  2. The S Quadrant refers to the “self-employed” individuals who work for themselves and own their own jobs.
  3. The B Quadrant represents business owners who own a system that generates income and have more control over their earnings.
  4. Finally, the I Quadrant stands for investors who use their money to make more money and have the potential to earn passive income.

If you’re a physician like me, the S Quadrant is where you might be finding yourself at present …

Those in the S Quadrant are typically skilled professionals — such as doctors, lawyers, accountants, and consultants — who offer their services to clients and customers.

While they may earn more than employees in the E Quadrant, they face challenges such as long hours, inconsistent income, and difficulty scaling their businesses. In other words, they are their own bosses and have control over their work, but they are limited by their own time and effort.

Kiyosaki argues that individuals in the S Quadrant should strive to move towards the B Quadrant by creating systems and leveraging other people’s time and effort to build a business that can generate passive income and create greater wealth.

The B Quadrant offers greater control over income and the potential for unlimited earning potential. However, it also requires more responsibility, risk-taking, and financial management skills.

I found myself in this difficult position when I opened up my private practice …

According to Kiyosaki, understanding these quadrants and building assets in the B and I quadrants is key to achieving financial freedom and creating wealth.

Business owners in this quadrant must be able to create and manage systems, delegate tasks, hire and train employees, and navigate the market to stay competitive. This comes with its own complex challenges.


What Makes the I Quadrant Top-Tier

The I Quadrant on the other hand represents “investors” who use their money to make more money. Unlike the S Quadrant where individuals own a job, those in the I quadrant own assets that generate passive income, such as stocks, bonds, real estate, or businesses that generate profits without active involvement.

The key to success in the I quadrant is to acquire financial education and learn how to invest wisely. Investors in this quadrant aim to build a diversified portfolio of assets that can generate consistent returns and compound over time.

Kiyosaki emphasizes that the I quadrant offers the potential for unlimited income and financial freedom, but it requires discipline, patience, and a long-term investment mindset — which can be difficult to achieve on your own and probably why you’ve turned to Fortis Equity Group for guidance.

So whichever quadrant you might find yourself in at the moment …

Whether you’re a high-earning W-2 employee or a self-employed professional …

You may be asking yourself: how can I possibly get to my desired quadrant?

A Tax-Saving Strategy

To make the transition to the I quadrant and become an investor, one effective strategy is to start a business and run expenses through that business entity.

By doing this, your personal income may appear negative, which can lower your Adjusted Gross Income (AGI) and result in paying less taxes, even though the business is generating profits.

This strategy can be particularly effective for real estate investors who can create a Limited Liability Company (LLC) for their investments and run as many expenses as possible through this LLC.

This allows them to leverage tax benefits and deductions, minimize their tax liabilities, and reinvest more of their earnings into their businesses or other investment opportunities.

However, it’s important to note that this strategy requires careful financial management, compliance with tax laws, and self-driven accountability to build sustainable wealth over time.


Additionally, individuals should seek professional advice and education on how to set up and operate a business entity effectively. We are not financial advisors.

However, I do invite you to book a call with Fortis Equity Group!

Our team can provide you with the guidance you need to achieve your financial goals.

So, take action today toward your dream life of unlimited income and financial freedom!

If you are interested in learning more about the incredible Phoenix multifamily market or this last investment opportunity in 2022, sign up for our Advance Notice List and I will send you the investment offering as soon as it is finalized.

About Dr. Roderick Capelo

Dr. Roderick Capelo, is a pediatric orthopedic surgeon and seasoned real estate investor. He co-founded Pediatric Sports and Spine Associates in 2006, to provide his community with an option for Pediatric Orthopedics in a uniquely positive and personable environment, in which the focus was helping young patients and families during times of need, such as an injury or other orthopedic condition. As medicine evolved during his first decade in practice, it became clear to him and many other physician colleagues that the ever-changing landscape of medicine was entirely beyond his control.

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