Real Estate Investment Strategies – Leveraging 1031 Exchanges for Financial Growth

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Welcome to the AMI podcast.

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Today we've got a special guest, dave Foster.

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Dave's going to help us navigate the world of 1031 exchanges.

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If you're not familiar with the 1031 exchange or what it is, don't worry, we've got you covered.

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This section of the US Tax Code allows you to defer taxes while selling investment properties and reinvesting the profits into new properties.

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Dave's going to share his expertise and help us understand how to execute a successful 1031 exchange, thank you.

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So, whether you're a seasoned investor or just starting out, this episode is packed with valuable insight and actionable advice to help you take your portfolio to the next level.

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So stick around as we explore all this and more, where we provide real estate investors with the tools to achieve generational wealth.

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Let's aim high together.

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This is episode 76.

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Hello and welcome to the Aim High podcast.

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I'm your host, bud Evans, and today we are going to jump down the rabbit hole of 1031 exchanges with Dave Foster.

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Hi, dave, how are you today?

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Hey?

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Bud, I am doing awesome.

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Ready to jump down that rabbit?

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hole with you.

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Hey.

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Anytime somebody says to me, hey, we can save money in taxes, I'm like let's go, let's go.

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Dave, could you do me a favor and give me a quick introduction?

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Yeah, I have, I guess, what you would call a frustrated serial real estate investor.

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I've never met a deal I didn't want to do, which, of course, the wise people will tell you.

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It's not the deals you don't get that kill you, it's the ones you do get that you shouldn't have.

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But regardless, I've spent a lifetime just living in real estate all different types and avenues of it, from rental to development, commercial.

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I just I've loved it all along the way.

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But at a point in my life, more years ago I want to admit I discovered that I was making a huge mistake by not taking advantage of this thing called the 1031 exchange.

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And my very first mistake 30 years ago with that cost me $30,000.

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Now that doesn't seem like such a big deal, right?

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That was $30,000 that I paid in tax 30 years ago, that I didn't have to, and everybody now knows I have to compound interest, right?

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What if I kept that $30,000?

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So that honks me to this day.

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But that's what I do.

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I invest in real estate.

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I help others and I love the 1031 exchange.

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Listen, I Can you just do me a favor and quickly go into what is IRS Code 1031?

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Yeah.

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Hey, it's this thing that nobody knows about, right, because the IRS is not going to advertise here.

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Do this and you'll save taxes.

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And, quite frankly, the people that do know about it, the ones like me, are these nerds.

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We like to go to my steep in a two-foot-wide crib.

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They're these nerds who we like to go to my.

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Steve in a two foot wide crib.

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So here's a hundred year old statue of the IRS that people today still don't get.

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In a nutshell, it allows you to sell investment real estate that you have either depreciated greatly or has profit that you made or will make, and you sell that and purchase new investment real estate that's positioned better for you Maybe it's bigger, smaller, more cash flowing.

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Whatever the reasons are that you want to go into it, by using the 1031 process you get to indefinitely defer paying that tax on the profit.

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So in my case that $30,000 would have gone to buying more real estate, which would have made more money for me, and then I would have made more money the money that I made by not paying taxes, so forth and so on, and I think that's really, in a nutshell, what it is.

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Bud, but it's that easy to understand.

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Now that's two sentences in a tax company and it's 8,000 pages of tax law.

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But that's the opportunity, that's there and we've taken advantage of it, like I said for all of our career.

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Ended up moving our portfolio from Colorado to Connecticut, to Florida along the way over the course of 10 years, because we had a dream of living on a sailboat.

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And I was a.

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Kansas farm boy and she was a Minneapolis city girl and there wasn't any ocean in Denver.

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So we said let's become real estate investors and get out of Dodge, and over the course of 10 years we managed to move an entire portfolio to Florida.

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We managed to buy a 53 foot sailboat with tax-free dollars and then we lived aboard and raised our four children living off our vacation rental portfolio.

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It was a beautiful time, all because of Section 1031.

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Great, I'm just going to ask you real quick if we could go through the process, if you don't mind.

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Let's say, hypothetically, I have 10 properties that I'm going to sell and I put them all together in a portfolio and I want to sell them to somebody.

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How does this process work?

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So you want to think of the 1031 exchanges backwards from what we normally think In real estate.

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We buy real estate because we're trying to get the best price.

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Then we go and sell it.

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The 1031 is the exact reverse.

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1031 is going to start with a sale of your old property.

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Now, in the case that you're talking about, where you've got multiple properties, maybe you're selling those as a portfolio altogether.

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You're going to be considering one property, so you're selling one property that consists of several.

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And you have to have.

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This is so critical.

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The qualified intermediary for your 1021 exchange has to be in place prior to the close of that sale.

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We have to document the exchange on both ends of the settlement statement and we have to hold your money.

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The IRS does not let you touch the money in between, so that one's critical Miss that first step.

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Your 1031 is done, but what?

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you're going to do is the sale's going to close, you start your 1031 exchange.

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You're now under two timelines You've got 45 days to identify your potential replacement property and you've got 180 days to close.

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Now, just like you can combine several properties into a portfolio to sell, you can buy different numbers of properties as well.

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So if each of those 10 sold as 10 individuals, that would be 10 individual 1031 exchanges.

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But you could still combine to purchase one larger property and a lot of times people will do some math on that.

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This is a side, but it's a good tip.

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People do some analysis and they'll realize that they can sell their properties as individuals at a higher price than just company have to take by selling a portfolio.

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And what's important to know about that with a 1031 is that's perfectly fine.

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You simply have to be able to meet the timelines with your replacement property for all the properties you sell.

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So the key then is just sell them all closely bunched together and then you can use the proceeds to go purchase your new property.

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So whether you sell as a portfolio or as individuals, you can still buy the larger property.

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You could sell one property and purchase multiple properties.

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The 1031 exchange only cares about the amount, and as long as you're purchasing at least as much as you sell and you're using all the proceeds from your sale in the purchase or purchases, you'll still defer all 10X.

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So you tend to see the opportunities there to stay in the demographic you love.

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Maybe that's lower end $200,000 houses.

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Sell a $400,000 house, buy two $400,000, or two $200,000 houses.

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That can be, again, a great way to use the 1031 exchange.

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So it's got to be investment real estate.

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You've got the two timing requirements.

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You have to use a qualified intermediary.

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We always have to make sure that the taxpayer from the old property stays the same, so you can't purchase in a new entity.

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Or if you're like a lot of people these days that you're wanting to go more passive and what you want to do is go into a syndication.

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Many times that's difficult because when people are purchasing into syndications, they're not buying actual real estate.

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They're buying a membership interest in an entity that owns real estate and that won't qualify for tip 31.

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So there's some special things that we might have to do in that instance, but as long as you pay attention to those six, as long as you've got a QI who's acting as your guide through the minds of Moria and this whole statute, then you'll pay indefinitely deferral tax and as long as you own that property, you'll never pay the tax.

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As long as anytime you sell that property into another 1031 exchange, you'll never pay the tax, even if you buy a property.

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Let's say it's a vacation rental.

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You'd like to use some for yourself.

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Where do you guys like to vacation by Any?

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particular place.

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Aruba yeah.

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Aruba.

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I love Aruba.

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Okay, you're right.

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Let's say Fort Lauderdale.

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There you go Some place in the United States, because that is something else.

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Here's the 1031's only US property for US property.

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So yeah, so Fort Lauderdale.

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Use some of your 1031 sales.

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Go buy a vacation rental in Fort Lauderdale.

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You're allowed to use it yourself.

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That's exactly what we did moving to Fort Myers.

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We lived on the boat, but whenever we came back to town, we just packed a double bag and went to one of our vacation rentals.

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As long as you continue to own those properties at 1031, you'll never pay the tax.

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And check this out.

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There's two things that I want to tell you that are so awesome.

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I've taken advantage of one of them.

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The other one's staring me in the face and I don't like it, but you can convert 1031 properties into your primary residence and that changes the

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whole book.

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If you're aware of it, the statute for your primary residence is section 121.

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That allows you to sell a piece of property you live in and if you've lived in it for two years out of the five prior to selling it, then you can take the first.

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If you're married, five hundred thousand dollars of profit, tax free, no need to reinvest, no, nothing tax rate.

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And you can do that.

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A lot of people don't know this.

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You can do that once every lot of people don't know this.

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You can do that once every two years.

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So guess what?

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The absolute, in spite of what some of these big gurus will tell you, guess what the absolute best investing strategy is for real estate Buy a house, move into it, live in it for at least two years and then sell it.

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Every penny of that is going to be tax-free and you can do that your entire life.

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Here's where 1031 and 08 kind of come to us.

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You sell.

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Say you're in Cincinnati, you're ready to retire, you bought all your rentals in Fort Lauderdale and you're ready to go.

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The last thing you do is you sell your house in Cincinnati.

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That money is tax-free.

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Where are you going to move Into one of your former rentals.

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As long as you own it you don't pay the tax.

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But now the clock is ticking and some of that gain is being converted from tax deferred into tax free every year.

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I have a client on Fort Honda, st Pete Beach, that bought three identical condos almost side by side in a 1031 exchange.

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He moved into the first, converted it Once he had lived in it for three years.

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After renting it for two years he sold it.

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He had owned it for five years, lived in it for three, so he got 60% of the gain tax-free.

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Where do you think you moved, bud?

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One of the other condos next door, oh yeah condos next door.

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Oh yeah, what an awesome strategy if you return to actually start to eliminate some of that tax.

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So I absolutely adore that strategy.

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Now, are you ready?

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This is the second best one, and you don't hear why?

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Because the second best strategy which I'm not interested, and that's because when you die, your real estate will go to your heirs at what is called a stepped-up basis.

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So you don't pay the tax, your estate doesn't pay the tax, your heirs don't pay the tax.

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It truly does get wiped out.

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So, simply by dying, you're handing your children or heirs, or the humane society, a tax-free legacy.

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How awesome is that?

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The only problem is what you've got to do to get there.

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Yeah, what is that?

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Die, you have to die, you have to die.

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So, dave, I got to ask you now what is the timeline on a 1031 exchange.

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If I want to sell my property and I, I come to you and I.

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Okay, this is what I'm doing.

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How much time do I have?

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Yeah, it's going to.

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The clock is going to start ticking with the date of the closing of sale.

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You have 45 days to identify your potential replacements, 180 days to close.

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That's it.

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Now the 180 is usually not so much of a problem.

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People get very freaked out over only having 45 days to buy their new property.

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There's a couple of easy answers to that.

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Number one, although it sounds scary.

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Number one although it sounds scary, the reality is.

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Even in the tightest market, a year or two ago, 93% of clients were completing their purchase exchanges.

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So it feels real scary, but it's not all that bad.

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Second thing, though, is that you only have to close your sale before closing your purchase.

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So a lot of our clients will counsel them to get their new property under contract before their old property closes.

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So that eliminates a lot of that risk.

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As soon as they get a contract for their sale, they're shopping, looking to get their new property.

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The other thing that that does is, by bunching your sale and your purchase close together, you're shortening the amount of time you're going without a paycheck, because the quicker you can get that second property into service.

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So most people will find that they'll have 60 to 90 days, and if you're doing something like moving into a sector like from single family to say, commercial it's very possible to do that because the commercial or multifamily due diligence timelines are usually much more extended, so you've got a lot more time to be able to get your 1031 put together and get that old property sold.

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Yeah, okay, yeah, that's great.

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And that brings up another question, because I've always been told that when you're doing your 1031, that there has to be a like kind, and I never really got that.

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What exactly does that mean?

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Yeah, that's one of use.

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Are the two terms Like?

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Kind simply means that it's real estate.

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That's it.

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It just has to be real estate.

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All real estate is like kind to other real estate commercial, residential, raw land, industrial, cell towers with a 30-year lease, oil and natural gas wells down here in Florida, boat docks that have been cut to mediumized our real estate.

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As long as it's real estate, that's a weird topic.

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It's like the other term, qualified use.

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That means real estate that you have owned with the intent of holding it for productive use in trade, business or for investment.

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So the two types of property that really don't qualify as qualified use your primary residence, because you're not holding that for investment Although, remember, the rules are much better for that one.

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And secondly, fix and flip properties or construction where you're the builder.

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If you're building something simply to sell it, if you're buying something to flip, it doesn't qualify for a 1031.

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Have a property you intended to buy and hold.

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Dave, I have a follow-up question about that because I know people that are.

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They're new.

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The new sexy is buying a lot of land and doing a ground-up development of a two-unit, three-unit or four-unit.

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And are you able to 1031 if you're doing a ground-up development with the purpose of rent, renting those units out?

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Yeah, absolutely.

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Now the issues there are that you cannot exchange into improvements on property you own.

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But you could certainly use the 1031 exchange to sell the property that you built for investment and buy the land.

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Or there is a now we're going to get into deep weeds for a quick second but there's a process called the reverse exchange, where we would take title to the lot and, while we are entitled to the lot, you then are improving it.

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Okay.

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But we can only hold that lot for 180 days.

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So for construction it's pretty tough to get done, yeah, but a lot of people that are buying.

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One of the other things that's very popular is to find those multifamilies that need value add.

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So let's say you're selling your property for $500,000 and there's a $300,000 multifamily you want to buy that needs a couple hundred thousand dollars of improvement.

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We get to a reverse exchange where we take title to that property and while we're holding it, you put $200,000 more into it improvements.

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Now, what's it worth?

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500,000.

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That's what it's worth on paper.

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By adding that $200,000, you probably boosted it up to $700,000 or $800,000, right.

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So you sell your property for $500,000.

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You're buying this property that you were able to improve for $500,000.

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That's literally worth $700,000 or $800,000 the day you take title to it.

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Best of all, you never paid a penny in tax.

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That's amazing.

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Okay, yeah, now what about?

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Let's talk about where people screw up, because we want to make sure that we're adding, not only providing, the value.

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Hey, we got dave foster, who's later on.

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We're going to give your information out so they can reach out to you, but what are the things that you see?

00:20:19,339 --> 00:20:23,695
What are the pitfalls that people jump into and screw up the process?

00:20:26,539 --> 00:20:32,630
I would say the very first thing that'll get you is by not planning sooner rather than later.

00:20:33,775 --> 00:20:41,809
Just like every other life decision, you're going to benefit from more time to make it.

00:20:41,809 --> 00:20:46,162
So you don't, although people do.

00:20:46,162 --> 00:20:48,487
Every day they call me up and say I'm closing tomorrow.

00:20:48,487 --> 00:20:49,028
Can you do it?

00:20:49,028 --> 00:20:51,099
Yes, we can do it, but it's better for you to call me up and say I'm closing tomorrow.

00:20:51,099 --> 00:20:51,128
Can you do it?

00:20:51,128 --> 00:21:04,695
Yes, we can do it, but it's better for you to call me three months before and start planning, because it's going to help you to define your parameters, where you're looking, what you're wanting to do, make sure your strategy in place.

00:21:04,695 --> 00:21:09,924
So not giving yourself enough time to plan is huge.

00:21:09,924 --> 00:21:16,121
I get calls every month from people who tell me I just closed on my property last week.

00:21:16,121 --> 00:21:18,265
The money's at the title company.

00:21:18,265 --> 00:21:20,458
I want to do a 1031 exchange.

00:21:20,458 --> 00:21:21,823
Well, that's great.

00:21:21,823 --> 00:21:28,468
You want to, but you're not gonna because the qualified Airbnb has to be in place before your sale.

00:21:28,488 --> 00:21:29,372
There's just no give on that.

00:21:29,412 --> 00:21:30,295
It has to be in place before your sale.

00:21:30,295 --> 00:21:33,650
There's just no give on that.

00:21:33,650 --> 00:21:47,865
So another practical thing the folks that I see fail usually almost always will fail only because they were not focused enough on their strategy and it was too broad.

00:21:47,865 --> 00:22:10,965
Instead of thinking I want to look at the Oklahoma City area for a multifamily property at this price range, they're telling me things like I'm thinking about maybe condos in San Diego or a two unit in New York, and really I'm not opposed to vacation rentals as well.

00:22:10,965 --> 00:22:12,213
I'm thinking multi-townersals as well, I think in both.

00:22:12,233 --> 00:22:15,961
That's how they're all over the map In 45 days.

00:22:15,961 --> 00:22:19,961
They are never going to find the right property because there's too much analysis.

00:22:19,961 --> 00:22:21,987
Got it?

00:22:21,987 --> 00:22:24,362
So those are the big keys.

00:22:24,362 --> 00:22:30,883
My greatest advice when people are scared of this is to remember two things.

00:22:30,883 --> 00:22:40,455
Number one the 1031 exchange exists to let you compound using the government's dollars to make money for yourself.

00:22:40,455 --> 00:22:49,601
So, whether it's two days or whether it's 30 years, every which you can get with that compounding is a benefit to you.

00:22:49,601 --> 00:22:52,435
So people will say I don't want to start my account.

00:22:52,435 --> 00:22:54,721
Told me not to do it because it's complicated.

00:22:54,721 --> 00:22:58,800
You're going to have to pay the tax anyways, like you and I just showed.

00:22:58,800 --> 00:23:00,924
No, you don't have to pay anyways.

00:23:00,924 --> 00:23:14,749
And I'm sorry, I am an accountant and I got no sympathy for a CPA that feels that filling out one form on one tax return is a hard complication for them.

00:23:14,749 --> 00:23:15,971
That's all it takes.

00:23:16,530 --> 00:23:27,430
Yeah, but here's the deal the backside of that is never, ever, do a 1031 exchange if you're not buying the right property.

00:23:27,430 --> 00:23:32,315
We have people that will start 1031s.

00:23:32,315 --> 00:23:41,965
They have every intent of doing it, but if they can't find the right property, don't buy a bad property, let it go.

00:23:41,965 --> 00:23:50,757
You'll lose the compounding at that moment, but you're not going to lose money, because nobody ever went broke paying tax on profit.

00:23:50,757 --> 00:23:52,182
It just feels like.

00:23:52,182 --> 00:23:57,588
So, if it's not right, don't finish the 1031 and let it go.

00:23:57,588 --> 00:23:59,936
Start over again with your next property.

00:23:59,936 --> 00:24:01,645
You don't have to force a deal.

00:24:01,645 --> 00:24:06,741
As a matter of fact, there's no penalty for starting and not completing that exchange.

00:24:07,943 --> 00:24:12,615
If you don't complete it, you get your money back that exchange.

00:24:12,615 --> 00:24:14,118
If you don't complete it, you get your money back.

00:24:14,118 --> 00:24:17,527
You pay the same tax that you would have at the same time you would have For a small price of an exchange.

00:24:17,527 --> 00:24:22,340
Generally, it makes a lot of sense to go ahead and attempt it at 31.

00:24:25,285 --> 00:24:28,230
All right, dave, thank you very much.

00:24:28,230 --> 00:24:29,096
I appreciate all that.

00:24:29,096 --> 00:24:31,596
Listen, I'm going to ask you a few questions.

00:24:31,596 --> 00:24:34,700
I'm going to ask you one question, then we're going to go into the soaring.

00:24:34,700 --> 00:24:36,661
Four, which is the same four questions I ask every guest.

00:24:36,661 --> 00:24:45,788
But as your wealth increased, what is one thing that you learned.

00:24:48,710 --> 00:24:52,132
We've made and lost several fortunes, and you just have to understand.

00:24:52,132 --> 00:24:56,781
It's not forever, so you plan accordingly, because wealth doesn't last forever.

00:24:56,781 --> 00:25:02,310
I can also tell you this the second million is a lot easier to make than the first million.

00:25:02,310 --> 00:25:07,260
So for those of you who are working on that first one, hang in there, you're going to get there.

00:25:07,260 --> 00:25:11,878
For those of you that are working on your second million, I refer back to the first one.

00:25:11,878 --> 00:25:15,027
Remember it ain't forever, so plan accordingly.

00:25:16,958 --> 00:25:17,440
Yeah, excellent.

00:25:17,440 --> 00:25:19,992
All right, dave, we're going to go into this for four.

00:25:19,992 --> 00:25:24,096
These are the same four questions that I ask every guest who can help someone who's just starting out achieving invites.

00:25:24,096 --> 00:25:33,684
First one is what do you use to keep you motivated helping?

00:25:33,744 --> 00:25:35,962
others my motivation.

00:25:35,962 --> 00:25:39,923
Now we've actually converted our whole business model.

00:25:39,923 --> 00:25:45,421
We're doing the 1031s for other people, of course, but we're also investing with our younger relatives.

00:25:45,421 --> 00:25:51,583
I am so appalled at the level of financial education that children are getting today.

00:25:51,583 --> 00:25:55,617
It's just so sad they're coming out of it.

00:25:55,617 --> 00:26:00,583
They're moving to the land of the sharks, where we all know what we're doing and they don't.

00:26:00,583 --> 00:26:02,247
How could we expect them to succeed?

00:26:02,247 --> 00:26:30,977
So we're starting to develop programs where we're working with our younger friends, relatives, young people that we know to develop financial literacy, help them start to become real estate investors themselves, and that's all about giving back, and the satisfaction that I get when I see someone else succeeding because I helped them is way more than I ever again watching a check deposited to my bank account yeah.

00:26:32,538 --> 00:26:33,117
That's awesome.

00:26:33,117 --> 00:26:50,627
I fully agree that the lack of financial training that our kids are getting, not only at school but a lot of them at home, it's a travesty what you did.

00:26:50,667 --> 00:26:51,989
I said yeah.

00:26:51,989 --> 00:26:54,529
I said none of these kids even know how to write a check.

00:26:54,529 --> 00:26:59,353
Yeah, and then I had to stop and realize wait a minute, nobody writes checks anymore.

00:27:07,674 --> 00:27:08,116
I've already dated it.

00:27:08,116 --> 00:27:08,759
Then mow our cash out.

00:27:08,759 --> 00:27:09,320
That's it right.

00:27:09,320 --> 00:27:10,806
Nobody even balances a checkbook anymore.

00:27:10,806 --> 00:27:11,248
It's automatic.

00:27:11,248 --> 00:27:13,095
So what is one thing you learned that changed your mindset.

00:27:13,095 --> 00:27:16,546
So what is?

00:27:16,586 --> 00:27:18,070
one thing you learned that changed your mindset.

00:27:18,070 --> 00:27:25,087
The day we had our first child, we had been all about growing our careers, living the pressure cooker life.

00:27:25,087 --> 00:27:29,625
The day I had my first child, I realized two things.

00:27:29,625 --> 00:27:37,829
Number one I wanted to spend the rest of my life, every moment could, with my children, my family and my friends.

00:27:37,829 --> 00:27:40,342
Work became very secondary.

00:27:40,342 --> 00:27:54,287
And secondly, along with that, I realized that time is my most valuable commodity, and it's not about making more dollars, it's about maximizing that time to do what's important to you with.

00:27:57,661 --> 00:27:58,544
Yeah, thank you for that.

00:27:58,544 --> 00:28:05,144
That is probably the most brutal, brutally honest answer that anyone's ever given in 75 episodes.

00:28:05,144 --> 00:28:07,701
That's absolutely true.

00:28:07,701 --> 00:28:12,044
What are some tools that you use to keep yourself on track?

00:28:15,777 --> 00:28:32,236
I as far as the tip 31 goes, what I've loved is how we've been able to incorporate things like Calendly automatic schedulers, because everybody's going 50 different directions so fast and I see the chains Every time.

00:28:32,236 --> 00:28:33,402
I can get together.

00:28:33,402 --> 00:28:34,539
When would you like to get together?

00:28:34,954 --> 00:28:36,682
I get together anytime, when would you like to?

00:28:36,682 --> 00:28:45,876
And instead of being able to provide people automated tools where, with one click, they could set the appointment, they could see what's available, set the appointment?

00:28:45,876 --> 00:29:03,321
Same thing's true with calculators that we've tried to provide to let people do as much resource work as they can before we get involved, Because I guarantee you there's a lot of people you and I are probably a couple of them as well where it's two o'clock in the morning.

00:29:03,321 --> 00:29:05,820
You wake up thinking did I run the analysis?

00:29:05,820 --> 00:29:08,080
Hey, did you jump on the computer?

00:29:08,080 --> 00:29:11,724
Well, how nice to be able to have some of our tools to be able to do that.

00:29:11,724 --> 00:29:21,299
So, although, as we were joking, I'm a real Luddite and I'm so technologically incapable, I love learning it and using it.

00:29:21,299 --> 00:29:24,208
Yeah, Great.

00:29:25,037 --> 00:29:28,884
And then one last question what is one thing that you would change if you had to start all over?

00:29:32,355 --> 00:29:33,520
I buried my wife earlier.

00:29:33,520 --> 00:29:36,301
We've been married for 34 years.

00:29:36,301 --> 00:29:42,058
She's the amazing Vicki Foster, for a reason, and I would just again.

00:29:42,058 --> 00:29:43,544
That goes back to time, doesn't it?

00:29:43,544 --> 00:29:47,143
There's no amount of time that will ever be enough with my wife.

00:29:48,086 --> 00:29:50,862
Yeah, yeah, fully agree with that one.

00:29:50,862 --> 00:29:52,461
I couldn't go back any earlier.

00:29:52,461 --> 00:29:53,734
I met my wife when I was 17.

00:29:53,734 --> 00:29:54,615
So we've been together ever since.

00:29:54,615 --> 00:29:55,546
For a't go back any earlier.

00:29:55,546 --> 00:29:55,758
I met my wife when I was 17.

00:29:55,758 --> 00:29:57,767
So we've been together ever since.

00:29:57,787 --> 00:29:58,406
For a year and a while.

00:29:59,008 --> 00:30:03,511
Yeah Right, dave, listen, you are an Amazon bestselling author.

00:30:03,511 --> 00:30:07,843
You're an intermediary and save people a lot of money.

00:30:07,843 --> 00:30:08,444
I really do.

00:30:08,444 --> 00:30:09,426
Thank you for your time.

00:30:09,426 --> 00:30:10,159
I know that you're busy.

00:30:10,159 --> 00:30:11,406
If somebody wanted to reach out to you, how would they do that?

00:30:11,406 --> 00:30:15,097
If somebody wanted to reach out to you, how would?

00:30:15,117 --> 00:30:15,377
they do that.

00:30:15,377 --> 00:30:20,288
Yeah, the best way is to go to our website, the1031investorcom.

00:30:20,288 --> 00:30:32,861
Everything you need to get in touch with us, to prepare you, to educate you it's all right there and I think you're going to put the link to the book of the show links All the stuff we talked about today.

00:30:32,861 --> 00:30:35,284
The strategies, are all in that book.

00:30:35,284 --> 00:30:37,958
It's not just nuts, nuts and bolts.

00:30:37,958 --> 00:30:38,298
That's boring.

00:30:38,298 --> 00:30:42,147
It's how to use it to get to where your dreams lie.

00:30:43,518 --> 00:30:46,085
Yep, tax codes like 1200 and something pages.

00:30:46,085 --> 00:30:54,383
The first 600 pages, or how much tax you're supposed to pay, and the other the other 11 400 pages.

00:30:54,383 --> 00:30:56,026
I'm not to pay the first 600 pages.

00:30:56,026 --> 00:30:58,150
Ain't that the truth?

00:30:58,695 --> 00:31:01,535
What's really interesting, though, Biden, we've got a couple of minutes.

00:31:01,535 --> 00:31:04,582
I'm going to jab at this because it's really groundbreaking.

00:31:04,582 --> 00:31:11,163
A bidder once told me stop thinking about the tax code as the government's way to get your money.

00:31:11,163 --> 00:31:22,202
Start thinking of it as a behavior incentivizing factor where, if you behave in a certain way, the government will reward you.

00:31:22,202 --> 00:31:48,083
Now I put that in perspective of 1031 in my head rule up, but it makes total sense, because when 1031 came into play, we were just starting to grow our nation's agribusiness and there were a lot of farmers that had their little 160-acre homesteads, but they could not buy a bigger farm because if they sold their first one, they had to pay too much tax and couldn't afford the bigger one.

00:31:48,835 --> 00:32:05,221
That's why 1031 was put into place to give people the opportunity to buy bigger, buy more, because not only did that let them grow, but all of those people that wanted to get into farming now had an entry-level farm that they could buy.

00:32:05,221 --> 00:32:11,247
231 Exchange does the exact same thing with real estate investors.

00:32:11,247 --> 00:32:19,279
It lets investors grow, it lets new investors come in, and that's so key.

00:32:19,279 --> 00:32:21,086
And what's the incentive?

00:32:21,086 --> 00:32:27,095
The government lets you keep the tax dollars to make for yourself, isn't?

00:32:27,115 --> 00:32:34,864
that an interesting way of thinking about it yeah, and the reason why it's so key is right now, president Biden.

00:32:35,494 --> 00:32:40,768
I'm not sure when this is going to air, but we're now in late winter, early spring.

00:32:40,768 --> 00:32:47,209
President Biden just gave out his annual budget, once again going to eliminate 1031.

00:32:47,209 --> 00:32:58,660
Now they failed every time they've tried it before and the reason is they want to catch all that capital gains tax because they think it's a rich person that's gained, but it's not.

00:32:58,660 --> 00:33:03,287
The average TIP31 exchange is a little under $400,000.

00:33:03,287 --> 00:33:06,140
That sounds like you and I doesn't it.

00:33:06,401 --> 00:33:08,185
Yeah, mainstream America.

00:33:08,185 --> 00:33:32,528
But also, what they don't realize is that for every dollar of capital gain that they're going to get the tax on which is a lower rate gain that they're going to get the tax on which is lower rate, that they're going to lose the tax on two real estate commissions, two title company closings, two real estate attorneys two painters happy to prepare the houses for sale and purchase.

00:33:33,236 --> 00:33:41,166
They're going to lose far more dollars in tax, and that's taxed at a higher rate than capital gains.

00:33:41,166 --> 00:33:47,528
So the loss in actual tax revenue is much greater if you get rid of 1031.

00:33:47,528 --> 00:33:57,279
Let's not even start to think about all those people that depend on a healthy real estate economy to live at certain.

00:33:58,303 --> 00:34:00,488
Yeah, that's a great point.

00:34:00,488 --> 00:34:11,644
It's that we employ so many people when we're, when we have these rental properties, property managers who are paying maintenance, guys who are in all of the wage tax, that it's.

00:34:11,644 --> 00:34:15,264
We pay so much in taxes.

00:34:15,264 --> 00:34:22,838
It's absolutely silly and at the end of the year we don't pay as much income tax, but that's because we're paying everyone else's tax.

00:34:24,099 --> 00:34:25,943
Oh, right, yeah, yeah.

00:34:25,963 --> 00:34:26,364
We pay.

00:34:26,364 --> 00:34:30,269
Yeah exactly Dave.

00:34:30,269 --> 00:34:31,440
Thank you very much for your time.

00:34:31,440 --> 00:34:35,963
I appreciate the extra effort and I will hopefully talk to you very soon.

00:34:35,963 --> 00:34:38,907
Sounds great.

00:34:38,907 --> 00:34:39,710
Thanks for having me today.