1 00:00:00,120 --> 00:00:04,000 And Kevin's for the US tax code, because there's this thing 2 00:00:04,000 --> 00:00:07,960 called the 1031 exchange, which allows you to sell investment 3 00:00:07,960 --> 00:00:12,960 real estate, take the profits and that tax and invest it for 4 00:00:12,960 --> 00:00:16,720 yourself into real estate. And when you do that, you don't 5 00:00:16,720 --> 00:00:18,680 have to pay the tax. Now I think that would what that 6 00:00:18,680 --> 00:00:20,280 would have meant for me 30 years ago. 7 00:00:20,600 --> 00:00:24,240 I know you know how to compound interest or the rule of 72. 8 00:00:24,320 --> 00:00:29,320 It allows you to take that tax and use that to purchase the new 9 00:00:29,320 --> 00:00:31,840 property. So I could buy more property. 10 00:00:31,960 --> 00:00:34,840 Welcome to the King Dems Podcast, where business 11 00:00:34,840 --> 00:00:38,480 leadership meets growth mindset mastery and smart financial 12 00:00:38,480 --> 00:00:40,440 strategies for growth and success. 13 00:00:41,400 --> 00:00:43,760 We're live, ladies and gentlemen, you once again 14 00:00:43,760 --> 00:00:48,680 welcome to the Kingdoms podcast and diarrhea for CFO today 15 00:00:48,680 --> 00:00:53,360 fighting out of a recorder. We've got with me fighting out 16 00:00:53,360 --> 00:00:59,400 of Florida, United States of America Mcwalken, Dave, the 17 00:00:59,400 --> 00:01:07,080 founder and CEO of the 10th 31 Investor Forester. 18 00:01:07,080 --> 00:01:09,560 How are you today, Dave? I'm doing awesome. 19 00:01:09,560 --> 00:01:12,240 It's great to be here. As you well know, since I'm in 20 00:01:12,240 --> 00:01:14,920 Florida, the air conditioning's turned up. 21 00:01:15,120 --> 00:01:17,600 It is. What it is, well, it is what it 22 00:01:17,680 --> 00:01:19,360 is. And of course, yeah, as you all 23 00:01:19,360 --> 00:01:23,760 know, I'm in London, England, and it's hot, it's summer, it's 24 00:01:23,760 --> 00:01:25,440 summer, we're meant to be outside. 25 00:01:25,440 --> 00:01:29,240 But because of a very special human being, I'm inside today. 26 00:01:29,240 --> 00:01:33,160 And of course I'm recording a very, very special guest. 27 00:01:33,360 --> 00:01:35,120 I love to speak in present tense. 28 00:01:35,120 --> 00:01:38,280 I love to give people their flowers while they are alive. 29 00:01:38,400 --> 00:01:41,160 And of course I've prepared. I'm really interested 30 00:01:41,720 --> 00:01:46,280 introduction for Dave Foster. Dave, you sit, relax and let me 31 00:01:46,720 --> 00:01:48,000 read your. Introduction. 32 00:01:49,080 --> 00:01:51,800 So ladies and gentlemen, once again today we are joined by 33 00:01:51,800 --> 00:01:56,400 Dave Foster, Founder and CEO of the 1031 Investor. 34 00:01:56,720 --> 00:02:00,480 Dave is a seasoned accountant, real estate investor, and tax 35 00:02:00,520 --> 00:02:04,800 strategist with over 2 decades of experience helping thousands 36 00:02:04,920 --> 00:02:10,080 of investors legally defer taxes and maximize their returns 37 00:02:10,479 --> 00:02:15,640 through the power of 1031 exchanges and Section 121 38 00:02:15,640 --> 00:02:18,840 exemptions. Not not only has he mastered 39 00:02:18,840 --> 00:02:22,480 these strategies, but he also used them to achieve his own 40 00:02:22,480 --> 00:02:25,040 dream lifestyle. I'll see the American dream 41 00:02:25,080 --> 00:02:29,800 raising four boys while leaving a bird sailboat and building a 42 00:02:29,800 --> 00:02:34,080 thriving real estate portfolio. Eve is here to share practical 43 00:02:34,080 --> 00:02:37,800 insights that will help entrepreneurs, investors and 44 00:02:37,800 --> 00:02:41,160 business leaders keep their money working for them while 45 00:02:41,160 --> 00:02:44,960 navigating complex tax laws. Once again, big welcome. 46 00:02:44,960 --> 00:02:46,760 The man, the myth and the legend. 47 00:02:46,760 --> 00:02:48,560 Dave Foster, thank. You. 48 00:02:48,720 --> 00:02:52,040 We're also Dave, a lot of people want to be like you. 49 00:02:52,080 --> 00:02:56,320 You know, you, you, you. You might not do it, but I say 50 00:02:56,320 --> 00:02:59,840 intentionally for you. You are leaving the dream of 51 00:02:59,840 --> 00:03:04,640 many people. And of course, you are a role 52 00:03:04,640 --> 00:03:06,680 model. What can you take us back to the 53 00:03:06,680 --> 00:03:10,840 moment when you realize that almost 40% of your profits were 54 00:03:10,840 --> 00:03:15,240 going to the IRS and how that's part of your journey into 55 00:03:15,240 --> 00:03:17,800 mastery in the 10th 31 exchanges? 56 00:03:17,800 --> 00:03:21,160 You know what you're taking me back to James is the worst 57 00:03:21,160 --> 00:03:24,560 mistake I ever made. You're gonna make me relive 58 00:03:24,560 --> 00:03:25,680 that? Are you OK? 59 00:03:27,480 --> 00:03:30,560 It was about 30 years ago when I was just getting started. 60 00:03:30,560 --> 00:03:34,040 My wife and I were in fairly high profile careers, but we 61 00:03:34,040 --> 00:03:36,600 were getting burned out. You know it happens at that 62 00:03:36,600 --> 00:03:38,480 pressure. That's the that's the thing, a 63 00:03:38,480 --> 00:03:42,600 bit of professional, you know, the grind. 64 00:03:42,720 --> 00:03:45,240 We had this remarkable event. We had our first child. 65 00:03:45,360 --> 00:03:49,120 And all of a sudden, we realized that there was this tension 66 00:03:49,240 --> 00:03:53,720 between wanting to do nothing but hang out with our child and 67 00:03:53,720 --> 00:03:56,200 the pressures of work. And so we decided, you know, we 68 00:03:56,200 --> 00:04:00,080 need to figure something out. So somehow, two people who had 69 00:04:00,080 --> 00:04:03,200 never been in the ocean at all decided that it'd be a good 70 00:04:03,200 --> 00:04:05,080 thing to buy a sailboat and sail away. 71 00:04:05,280 --> 00:04:07,880 And the way we're going to do that was let's become real 72 00:04:07,880 --> 00:04:10,080 estate investors. It's got to be easy, right? 73 00:04:10,280 --> 00:04:14,200 Anyone can do it. So my nickname, you know, yours 74 00:04:14,200 --> 00:04:17,680 is King James. My nickname is Ready, Fire Aim 75 00:04:17,839 --> 00:04:19,279 Dave. Ready, Fire. 76 00:04:19,279 --> 00:04:21,800 Aim. So I just went on, said yeah, 77 00:04:21,800 --> 00:04:24,120 let's do this. So I bought a duplex in Denver, 78 00:04:24,120 --> 00:04:27,680 fixed it up, rented it out, then got ready to sell it and 79 00:04:27,680 --> 00:04:30,440 thought, how was king of the walk that I've done really, 80 00:04:30,440 --> 00:04:35,040 really well until my accountant told me that I had to stroke a 81 00:04:35,040 --> 00:04:39,000 check for $30,000. Now this was 30 years ago. 82 00:04:39,240 --> 00:04:41,200 That was real money then, it's real money today. 83 00:04:41,480 --> 00:04:44,040 It's still real money today. It's a lot of what it's day. 84 00:04:44,440 --> 00:04:48,640 That was not part of the plan because we had set very 85 00:04:48,640 --> 00:04:52,760 intentional goals that were ten years in the making, and if I 86 00:04:52,760 --> 00:04:55,280 was going to have to do that to the government every time, just 87 00:04:55,280 --> 00:04:57,840 was not going to work. As a matter of fact, today that 88 00:04:57,840 --> 00:05:02,920 still haunts me and it's why I always remind people that do not 89 00:05:02,920 --> 00:05:06,720 ever forget that when you're investing in real estate, and I 90 00:05:06,720 --> 00:05:09,120 know it's true in the US, it's probably true everywhere. 91 00:05:09,440 --> 00:05:13,160 You have a silent partner, and in America it's called Uncle 92 00:05:13,160 --> 00:05:14,800 Sam. It's the government. 93 00:05:14,920 --> 00:05:18,120 They are your partner whether you like it or not, and they are 94 00:05:18,120 --> 00:05:20,200 going to take their fair share. And. 95 00:05:20,800 --> 00:05:24,080 Kevin's for the US tax code, because there's this thing 96 00:05:24,080 --> 00:05:28,040 called a 1031 exchange which allows you to sell investment 97 00:05:28,040 --> 00:05:33,000 real estate, take the profits and that tax and invest it for 98 00:05:33,000 --> 00:05:36,800 yourself in new real estate. And when you do that, you don't 99 00:05:36,800 --> 00:05:38,800 have to pay the tax. And I think that would what that 100 00:05:38,800 --> 00:05:40,360 would have meant for me 30 years ago. 101 00:05:40,680 --> 00:05:44,200 I know you know how to compound interest or the rule of 72. 102 00:05:44,280 --> 00:05:47,960 Is one of the world. Yeah, and if I was making 10% a 103 00:05:47,960 --> 00:05:53,240 year on that $30,000 thirty years ago, how much would I have 104 00:05:53,240 --> 00:05:56,240 right now instead of writing a check to the government? 105 00:05:56,320 --> 00:06:01,640 Almost $1,000,000 is what I'd have from one mistake. 106 00:06:01,840 --> 00:06:03,560 So yeah, it keeps me up still at night. 107 00:06:04,080 --> 00:06:07,520 But we've done OK because we discovered the 1031. 108 00:06:07,520 --> 00:06:11,240 And since that time, that's been my mission, both for myself and 109 00:06:11,240 --> 00:06:14,760 for clients. So, so for those people who are 110 00:06:14,760 --> 00:06:21,080 new to this right, what exactly is a 10/31 exchange and why is 111 00:06:21,080 --> 00:06:25,920 it considered such a very, very powerful tool for real estate 112 00:06:26,000 --> 00:06:28,160 investors? Well, let's just imagine that. 113 00:06:28,360 --> 00:06:32,560 We'll stay with my example. Let's say that after my profits 114 00:06:32,560 --> 00:06:37,840 and after tax, I had $80,000 to invest in a new property. 115 00:06:38,000 --> 00:06:42,200 If I put 20% down on that property, I can buy a $400,000 116 00:06:42,200 --> 00:06:45,760 property, right? Well, what if I had that plus 117 00:06:45,760 --> 00:06:48,040 the tax? Let's say the tax is only 118 00:06:48,040 --> 00:06:52,760 20,000. Now I've got $100,000 to 119 00:06:52,760 --> 00:06:56,480 purchase new real estate with. Because I'm not paying the tax, 120 00:06:56,760 --> 00:07:02,200 that means that I can buy a $500,000 piece of real estate. 121 00:07:02,400 --> 00:07:05,880 So if I pay the tax, I can only buy a $400,000 piece. 122 00:07:06,080 --> 00:07:10,880 If I don't pay the tax and do a 1031 exchange, I can buy a 123 00:07:10,880 --> 00:07:14,360 $500,000 piece of property. Now over time, over five years, 124 00:07:14,360 --> 00:07:17,960 let's say, even if those two properties appreciate at the 125 00:07:17,960 --> 00:07:22,040 exact same rate, if I was able to buy a $500,000 property to 126 00:07:22,040 --> 00:07:28,400 start, I'm going to be selling that for quite a bit more then 127 00:07:28,440 --> 00:07:30,720 if I could only buy a $400,000 property. 128 00:07:31,280 --> 00:07:32,960 And that's what the 1031 exchange does. 129 00:07:33,200 --> 00:07:38,200 It allows you to take that tax and use that to purchase the new 130 00:07:38,200 --> 00:07:41,320 property. So I can buy more property, I 131 00:07:41,320 --> 00:07:44,000 can generate more income. And that's the compounding 132 00:07:44,000 --> 00:07:48,000 effect that Albert Einstein loved so much, is it allows us 133 00:07:48,000 --> 00:07:49,400 to use the tax to make our money. 134 00:07:49,720 --> 00:07:54,520 So are you able to do like a walk through right for the key 135 00:07:54,520 --> 00:07:59,560 requirement that every investor has to meet in order to have a 136 00:07:59,720 --> 00:08:02,800 successful exchange and the compliance? 137 00:08:03,240 --> 00:08:05,400 Yeah, absolutely. Because that's where the that's 138 00:08:05,400 --> 00:08:09,120 really where the rubber hits the road because the IRS lost a 139 00:08:09,120 --> 00:08:12,800 lawsuit about 25 years ago. And when the government loses A 140 00:08:12,800 --> 00:08:17,200 lawsuit, they're never happy. So they had to let us do these, 141 00:08:17,400 --> 00:08:18,800 but they didn't have to make it easy. 142 00:08:19,120 --> 00:08:21,120 So there are some very stranger requirements. 143 00:08:21,320 --> 00:08:24,800 The first thing is you want to think about this in an order of 144 00:08:24,800 --> 00:08:27,560 sell, then buy. And I know that's totally 145 00:08:27,640 --> 00:08:30,640 different from regular. We always think of a real estate 146 00:08:30,640 --> 00:08:33,159 as starting when I buy a piece of property. 147 00:08:33,280 --> 00:08:35,640 And as a matter of fact, are you familiar with the old proverb, 148 00:08:35,799 --> 00:08:40,760 you make money in real estate when you buy it? 149 00:08:40,960 --> 00:08:43,880 Because the idea is that everybody's looking for 150 00:08:43,880 --> 00:08:46,600 bargains. So I want to find that cheap 151 00:08:46,600 --> 00:08:50,480 piece of real estate that's undervalued, that someone 152 00:08:50,480 --> 00:08:54,080 doesn't know what it's worth, and I'm going to go buy it and 153 00:08:54,080 --> 00:08:55,520 then I'm going to make money when I sell it. 154 00:08:55,960 --> 00:08:58,280 The 1031 exchange is the exact opposite. 155 00:08:58,400 --> 00:09:04,480 The 1031 exchange starts with when you sell a piece of 156 00:09:04,480 --> 00:09:07,040 property. So it has to be investment real 157 00:09:07,040 --> 00:09:11,400 estate that you sell and then you replace that with new 158 00:09:11,520 --> 00:09:14,560 investment real estate. That's all of it qualifies for, 159 00:09:14,600 --> 00:09:18,440 but it can't be any type of investment real estate anywhere 160 00:09:18,760 --> 00:09:21,640 in the United States. If your property you sold is in 161 00:09:21,640 --> 00:09:24,920 the United States, then there's a couple timing requirements. 162 00:09:25,360 --> 00:09:28,400 You only have 45 days to find your new property and you only 163 00:09:28,400 --> 00:09:31,520 have 180 days to close on it. So you don't have a lot of time. 164 00:09:31,520 --> 00:09:35,120 You got to be pretty focused. Now the same taxpayer is going 165 00:09:35,120 --> 00:09:37,960 to sell, it's going to buy, and you have to use. 166 00:09:37,960 --> 00:09:40,680 This is the key. You have to use what's called a 167 00:09:40,680 --> 00:09:43,320 qualified intermediary to do this. 168 00:09:43,440 --> 00:09:47,160 You cannot do it yourself and then just report it on your tax 169 00:09:47,160 --> 00:09:49,680 return. The qualified intermediary has 170 00:09:49,680 --> 00:09:54,520 to be involved prior to closing your sale, which starts the 1031 171 00:09:55,000 --> 00:09:57,840 and they're actually your guide through the whole process. 172 00:09:57,840 --> 00:10:03,440 So all of these other requirements are you're LED 173 00:10:03,440 --> 00:10:05,800 through them by your qualified intermediary. 174 00:10:06,080 --> 00:10:10,080 But if at the end of the day you have followed those and you have 175 00:10:10,080 --> 00:10:14,320 purchased at least as much real estate as you sold, you get to 176 00:10:14,320 --> 00:10:19,040 definitely defer pay all of that tax or depreciation recapture. 177 00:10:19,960 --> 00:10:24,200 So how does the 10th and one exchange compared to paying 178 00:10:24,200 --> 00:10:27,640 taxes upfront? Like what's the portfolio impact 179 00:10:27,640 --> 00:10:32,760 over, say, over a period of time that is more than 10 years? 180 00:10:32,760 --> 00:10:35,520 Got a boy, I wish I had my my screen pulled up. 181 00:10:35,520 --> 00:10:40,360 We've got some examples that we show people where over 4 182 00:10:40,360 --> 00:10:42,600 transactions. That's all just four. 183 00:10:42,720 --> 00:10:45,880 Every five years they sold a piece of property. 184 00:10:46,160 --> 00:10:52,880 They started with $100,000 for the investor that does the 1031. 185 00:10:52,960 --> 00:10:58,040 The investor that paid the taxes they went starts with $80,000 so 186 00:10:58,040 --> 00:11:00,520 their ferries. Their second purchase. 187 00:11:00,520 --> 00:11:03,320 The investor that does 1031 is able to buy 500,000. 188 00:11:03,640 --> 00:11:06,200 The investor that pays the tax could only buy 400,000. 189 00:11:06,720 --> 00:11:12,320 At the end of 20 years and four transactions, the investor doing 190 00:11:12,320 --> 00:11:16,760 the 1031 exchange will have, with everything else, stay the 191 00:11:16,760 --> 00:11:22,160 same $11.8 million of real estate that they own and 192 00:11:22,160 --> 00:11:24,480 control. The investor that simply paid 193 00:11:24,480 --> 00:11:29,720 the tax as they went has about four and a half million. 194 00:11:30,040 --> 00:11:34,160 What's the difference? The deferred tax from the 1031 195 00:11:34,160 --> 00:11:37,720 exchange went to buy more real estate. 196 00:11:37,920 --> 00:11:41,760 Now, at the end of that 20 years, that investor still owes 197 00:11:41,760 --> 00:11:45,800 almost $500,000 in taxes, but as long as they owe the real 198 00:11:45,800 --> 00:11:47,000 estate, they never have to pay it. 199 00:11:47,560 --> 00:11:49,480 So I don't know, James, what would you rather be? 200 00:11:50,120 --> 00:11:54,000 Own four and a half million but don't owe any taxes or owe $12 201 00:11:54,000 --> 00:11:56,400 million and a half a million of taxes waiting for you. 202 00:11:57,520 --> 00:12:00,040 As long as you can't, you can keep deferring it, you know? 203 00:12:00,800 --> 00:12:02,800 Yeah, you're hot fee. That's exactly right. 204 00:12:03,120 --> 00:12:07,360 Well, and think about this too. If I'm making 10% a year, which 205 00:12:07,360 --> 00:12:10,840 is not that hard to do on my real estate portfolio, how much 206 00:12:10,840 --> 00:12:14,680 I've been making each year on 12 million, I'm making 1.2 million 207 00:12:14,680 --> 00:12:16,680 a year, 600,000 every six months. 208 00:12:16,840 --> 00:12:19,800 I could just put away enough to pay those taxes into a bank 209 00:12:19,800 --> 00:12:21,920 account with five months worth of income. 210 00:12:22,000 --> 00:12:25,000 And at the end of that, I still have $12 million in real estate. 211 00:12:25,520 --> 00:12:28,400 So that's the power. Smart strategy. 212 00:12:28,400 --> 00:12:31,560 One exchange. Smart that that's pretty much 213 00:12:31,560 --> 00:12:34,120 smart. And of course, if you if you dot 214 00:12:34,120 --> 00:12:37,240 your eyes are probably of course you cross your T's your 215 00:12:37,240 --> 00:12:40,840 compliance. You may never even have to pay 216 00:12:41,000 --> 00:12:43,080 those taxes in your own lifetime. 217 00:12:43,480 --> 00:12:47,960 But like, what are some of the advanced strategies like reverse 218 00:12:47,960 --> 00:12:50,920 exchanges and of course construction exchanges? 219 00:12:50,920 --> 00:12:55,200 And what should an investor consider when you know making 220 00:12:55,280 --> 00:12:57,040 these strategic decisions? Right. 221 00:12:57,040 --> 00:13:01,320 So reverse exchanges are really one big bucket that would 222 00:13:01,320 --> 00:13:04,480 include a regular reverse exchange, a construction 223 00:13:04,480 --> 00:13:07,160 exchange, an improvement exchange. 224 00:13:07,360 --> 00:13:10,120 Those are all just types of a reverse exchange. 225 00:13:10,600 --> 00:13:14,880 And what they're designed to do is to be a workaround from the 226 00:13:14,880 --> 00:13:21,200 tight time constraints because by law, you cannot take title to 227 00:13:21,200 --> 00:13:25,040 your new property until after your old property sells. 228 00:13:25,040 --> 00:13:28,720 But what if you find the perfect property that you want to buy? 229 00:13:28,920 --> 00:13:32,640 Well, you could do a reverse exchange, which does not change 230 00:13:32,640 --> 00:13:34,440 the order. But what happens is the 231 00:13:34,440 --> 00:13:38,600 qualified intermediary takes title to that new property, and 232 00:13:38,600 --> 00:13:42,960 then we can hold it for up to 180 days while you get your 233 00:13:43,080 --> 00:13:47,000 other properties sold so that you extend your timeline. 234 00:13:47,080 --> 00:13:50,920 Proven exchanges are really neat because when we're buying, we 235 00:13:50,920 --> 00:13:53,480 always like to buy bigger and better. 236 00:13:53,760 --> 00:13:57,560 But what if I sold a property fixed up, multi family property 237 00:13:57,560 --> 00:14:03,800 say for $500,000, but I found a really neat value add 238 00:14:03,800 --> 00:14:05,960 opportunity. There was a multi family that I 239 00:14:05,960 --> 00:14:12,760 could buy for 300,000 and put $200,000 in and have it be worth 240 00:14:12,760 --> 00:14:16,600 a billion. That's what's that I said. 241 00:14:16,600 --> 00:14:20,120 That is like an overhauling. You're basically overhauling 242 00:14:20,120 --> 00:14:23,720 that particular property and it improves the value. 243 00:14:23,720 --> 00:14:25,680 Exactly. And that's what we would do in 244 00:14:25,680 --> 00:14:29,720 an improving exchange because remember, you sold for 500, so 245 00:14:29,720 --> 00:14:33,440 you have to buy for 500. But what you're really doing is 246 00:14:33,440 --> 00:14:36,440 we're buying the property for 300 and then you're putting the 247 00:14:36,440 --> 00:14:39,840 improvements in it so that it works for your 1031 exchange. 248 00:14:40,520 --> 00:14:43,640 But instead of at the end of the day, you get a property that 249 00:14:43,640 --> 00:14:46,160 still needs improvements, you get basically a brand new 250 00:14:46,160 --> 00:14:49,400 property ready to go. So those reverse type exchanges 251 00:14:49,480 --> 00:14:52,600 can't be really, really welcome. You know, I love how you talked 252 00:14:52,600 --> 00:14:55,280 about deferring the tax throughout your lifetime if 253 00:14:55,280 --> 00:14:57,480 you're smart and then you immediately ask me about 254 00:14:57,480 --> 00:14:59,800 advanced strategies. Here's the most advanced 255 00:14:59,800 --> 00:15:01,600 strategy you can get. Die. 256 00:15:01,640 --> 00:15:03,680 That's it. Die while you're owning your 257 00:15:03,680 --> 00:15:05,480 real estate. I know you wouldn't think of 258 00:15:05,480 --> 00:15:06,400 that, would you? The. 259 00:15:06,400 --> 00:15:08,320 Definitely. You know, I always tell people 260 00:15:08,320 --> 00:15:12,600 that the only two things that are sure in life are death and 261 00:15:12,600 --> 00:15:15,560 taxes. If you die right, you're still 262 00:15:15,560 --> 00:15:20,200 going to cheat the taxes because under U.S. tax code, when you 263 00:15:20,200 --> 00:15:24,680 die owning real estate, your heirs inherit that property with 264 00:15:24,680 --> 00:15:26,880 what is called a step up in basis. 265 00:15:26,960 --> 00:15:31,200 So they inherit the property as if they paid market value for it 266 00:15:31,360 --> 00:15:33,960 on the day you died. Which means would they inherit 267 00:15:33,960 --> 00:15:38,360 it if it's worth $500,000? They inherit it as if they paid 268 00:15:38,920 --> 00:15:43,160 $500,000 worth. All of that tax that you 269 00:15:43,160 --> 00:15:47,520 deferred in your 1031 exchanges throughout the years is gone. 270 00:15:47,760 --> 00:15:50,760 You never paid it. Your estate never paid it. 271 00:15:51,000 --> 00:15:54,360 The air is never paid it. That's why the mantra of the 272 00:15:54,360 --> 00:15:59,240 1031 exchange dams is defer, defer, defer and they die. 273 00:15:59,720 --> 00:16:01,440 So. So when the hair is actually 274 00:16:01,440 --> 00:16:02,840 inherited, how about the capital? 275 00:16:03,000 --> 00:16:05,520 The capital gains tax. That all disappears. 276 00:16:05,640 --> 00:16:10,200 It's gone when you inherit it. So when they inherit, they 277 00:16:10,200 --> 00:16:15,440 inherit at the market value. About what does the US tax lower 278 00:16:15,440 --> 00:16:20,040 demand of the hairs? Are they meant to pay any form 279 00:16:20,040 --> 00:16:23,240 of taxes if they are to sell the property? 280 00:16:23,640 --> 00:16:27,240 If they sell the property the day they inherit it, no tax. 281 00:16:27,400 --> 00:16:30,600 Now if they hang on to the property and say that property 282 00:16:30,600 --> 00:16:34,400 appreciates another $100,000 from that date, then they're 283 00:16:34,400 --> 00:16:36,280 going to pay tax on that $100,000. 284 00:16:36,680 --> 00:16:38,760 So that funds their own capital gains. 285 00:16:38,760 --> 00:16:42,120 Unless they do what Dave's. They they, they, they die as 286 00:16:42,120 --> 00:16:44,560 well. Or they do 1031 exchange. 287 00:16:45,080 --> 00:16:46,480 Yeah, they, they keep, they keep. 288 00:16:46,560 --> 00:16:51,040 Converted. I have one family of clients 289 00:16:51,080 --> 00:16:56,280 where we started doing 1031 exchanges for the grandfather 25 290 00:16:56,280 --> 00:16:59,120 years ago. He passed away after 5 or 6 291 00:16:59,120 --> 00:17:02,920 years and his son inherited all of the real estate. 292 00:17:03,160 --> 00:17:07,359 Now because he inherited it tax free, we did not see the son for 293 00:17:07,359 --> 00:17:12,319 a few years but then he started after a while doing his own 1030 294 00:17:12,319 --> 00:17:13,800 ones because they had appreciated. 295 00:17:14,000 --> 00:17:16,560 He passed away about six years ago. 296 00:17:16,880 --> 00:17:21,839 His children inherited the property and we're starting to 297 00:17:21,839 --> 00:17:26,640 see them again just now doing their own 1030 exchanges. 298 00:17:27,359 --> 00:17:32,720 So through process of 1031 exchanges of death, we've seen 3 299 00:17:32,800 --> 00:17:34,880 generations. Generations. 300 00:17:35,120 --> 00:17:38,040 Never pay a penny. Yeah, real estate hates tax. 301 00:17:38,240 --> 00:17:42,200 Come on. That is 3 smart generations. 302 00:17:42,200 --> 00:17:46,440 That's really, really wild. But what would you say the 303 00:17:46,440 --> 00:17:50,120 common mistakes that you have seen investors bake while trying 304 00:17:50,120 --> 00:17:55,080 to execute 1/10 at one exchange? And how can they possibly avoid 305 00:17:55,080 --> 00:17:57,400 those music? Yeah, The first exchange is 306 00:17:57,480 --> 00:18:01,880 simply not knowing that you have to have a Qi at place prior to 307 00:18:01,880 --> 00:18:04,880 selling the property. I get calls still every month 308 00:18:05,160 --> 00:18:08,800 and it'll say, Dave, I sold my property last week, the bodies 309 00:18:08,800 --> 00:18:12,320 at the escrow company ready to do it to 31 exchange. 310 00:18:12,480 --> 00:18:15,640 And I have to say, well, unfortunately you can't because 311 00:18:15,640 --> 00:18:18,000 it wasn't documented on the settlement statements. 312 00:18:18,120 --> 00:18:21,080 And more importantly, according to the IRS, even though you 313 00:18:21,080 --> 00:18:24,040 haven't got the money in your account, you have constructive 314 00:18:24,040 --> 00:18:27,640 receipt on it and so your opportunity to exchange is done. 315 00:18:27,880 --> 00:18:32,920 So not planning ahead and having the Qi in place is a big 316 00:18:32,920 --> 00:18:37,120 mistake. The second one that I see is not 317 00:18:37,840 --> 00:18:41,400 researching and planning ahead of time. 318 00:18:41,560 --> 00:18:43,840 Everything in life is so much better if you do it 319 00:18:43,840 --> 00:18:46,400 intentionally. And intentionality involves 320 00:18:46,400 --> 00:18:51,960 planning so ahead of time. If you sell your property and we 321 00:18:51,960 --> 00:18:55,640 start the exchange that day and you're still you're telling me 322 00:18:55,640 --> 00:18:59,680 that that next week, Dave, I'm looking at commercial properties 323 00:18:59,680 --> 00:19:02,960 in New York and vacation rentals in Las Vegas. 324 00:19:03,480 --> 00:19:06,120 And I'm not sure if I may want to do it in San Diego. 325 00:19:06,120 --> 00:19:08,240 And I'm still trying to figure out where I want to go and what 326 00:19:08,240 --> 00:19:10,760 I want to buy. I could just about guarantee 327 00:19:10,920 --> 00:19:14,240 your exchange is going to fail because you're not going to be 328 00:19:14,240 --> 00:19:19,040 able to be focused to find the properties you want in the 329 00:19:19,280 --> 00:19:23,400 demographic and sector that you want and underwrite that those 330 00:19:23,400 --> 00:19:25,560 in time. You just aren't going to be able 331 00:19:25,560 --> 00:19:27,720 to do it within that 45 day period. 332 00:19:27,760 --> 00:19:31,440 So planning way ahead to figure out what you want to invest in 333 00:19:31,440 --> 00:19:34,640 next and where you want to invest next. 334 00:19:34,760 --> 00:19:38,200 And that's one of the biggest strengths of the 1031 anyways, 335 00:19:38,480 --> 00:19:42,440 is that you could react to whatever the market is telling 336 00:19:42,480 --> 00:19:45,320 you. So if you were one of our 337 00:19:45,320 --> 00:19:50,760 clients in San Francisco in 2013, 2014 Silicon Valley was 338 00:19:50,760 --> 00:19:54,240 blowing up and it was just going crazy. 339 00:19:54,440 --> 00:19:59,240 Well, as rents got controlled, people were making less and less 340 00:19:59,240 --> 00:20:02,720 money off rents. So even though the appreciation 341 00:20:02,720 --> 00:20:04,880 was great, wasn't such a good investment anymore. 342 00:20:05,120 --> 00:20:09,360 But because a lot of our clients were following the market, they 343 00:20:09,640 --> 00:20:14,120 watched and saw this guy named Elon go down and buy a couple 344 00:20:14,120 --> 00:20:16,200 $1,000,000 of Austin real estate. 345 00:20:16,560 --> 00:20:19,520 And so they sold their San Francisco investment properties 346 00:20:20,160 --> 00:20:24,400 and did 1031 exchanges to go buy West Texas land near the mega 347 00:20:24,400 --> 00:20:27,720 factory. And that's how they use the 1031 348 00:20:27,720 --> 00:20:30,800 exchange to really ramp up their portfolios. 349 00:20:31,000 --> 00:20:34,520 But the only way they could do that was by planning and 350 00:20:35,160 --> 00:20:38,280 anticipating where the market was going next and then 351 00:20:38,280 --> 00:20:40,880 obviously doing their research. So I would say those are two big 352 00:20:40,880 --> 00:20:44,000 things, not starting early enough and about doing enough 353 00:20:44,080 --> 00:20:49,040 advanced planning. So like you asked me prior to 354 00:20:49,760 --> 00:20:54,560 Stutton dessert episode, it's very important for us to know 355 00:20:54,560 --> 00:20:58,160 the composition of the audience, right? 356 00:20:58,200 --> 00:21:04,240 And the the data at the back end on Spotify, YouTube purchaser 357 00:21:04,240 --> 00:21:09,800 tells us that over 75% of our audience are persons between the 358 00:21:09,800 --> 00:21:17,240 ages of 28 to 45 years old and the mostly professionals, right? 359 00:21:17,320 --> 00:21:22,480 And more than 40% of the people that watch or lease into this 360 00:21:22,480 --> 00:21:26,280 podcast have a university degree or higher. 361 00:21:26,280 --> 00:21:30,120 And most of them are professionals and entrepreneurs 362 00:21:30,120 --> 00:21:35,560 first before investors second. So how can these people 363 00:21:35,720 --> 00:21:39,840 integrate tax strategies, you know, like the 1031 exchange 364 00:21:39,880 --> 00:21:43,080 into their overall wealth building plants? 365 00:21:43,080 --> 00:21:47,040 Of course, if you don't plan, or would we say if you fail to 366 00:21:47,040 --> 00:21:49,080 plan, it means you plan to fail you? 367 00:21:49,120 --> 00:21:50,640 Plan to fail. I love that. 368 00:21:50,640 --> 00:21:56,000 Yeah, that is the greatest softball question ever, because 369 00:21:56,000 --> 00:21:57,880 let's talk about that demographic games. 370 00:21:58,160 --> 00:22:01,800 So the first thing we know is we're dealing with professionals 371 00:22:02,000 --> 00:22:05,640 that have less time, but probably more money. 372 00:22:05,760 --> 00:22:08,760 So the first thing I would say is don't delay. 373 00:22:08,760 --> 00:22:13,480 Start now #1 because real estate investing in general, as with 374 00:22:13,480 --> 00:22:16,640 any other type of investing, is not a Sprint. 375 00:22:16,800 --> 00:22:20,560 It's going to generate momentum as it goes. 376 00:22:20,600 --> 00:22:24,840 The longer you're able to keep the taxes deferred, the more 377 00:22:24,840 --> 00:22:27,920 income you're going to generate, whether it's two years or 20 378 00:22:27,920 --> 00:22:30,240 years. But if you could structure your 379 00:22:30,240 --> 00:22:34,360 life to start investing now, you're more likely to get 20 380 00:22:34,360 --> 00:22:36,920 years of tax deferral and appreciation. 381 00:22:37,120 --> 00:22:39,680 So it's that much more gained for you. 382 00:22:39,800 --> 00:22:43,120 So start now. It's the perfect time. 383 00:22:43,680 --> 00:22:47,320 Here's the prototype investor that you just described. 384 00:22:47,360 --> 00:22:49,800 They're what I call the accidental investor. 385 00:22:49,920 --> 00:22:52,520 Then to. Now I say that because the 386 00:22:52,520 --> 00:22:56,520 average buried age, you know, generally happens after college, 387 00:22:56,520 --> 00:22:59,400 and 28 seems like it's fairly normal. 388 00:22:59,600 --> 00:23:04,520 Well, if 28 and post college means that I already have a 389 00:23:04,520 --> 00:23:08,360 career, when I get married I probably already own a house 390 00:23:08,520 --> 00:23:09,800 because I bought a house to live in. 391 00:23:10,040 --> 00:23:13,120 Well, when I get married, they've got a house because we 392 00:23:13,120 --> 00:23:16,520 typically marry people like us, so they've got a house as well. 393 00:23:16,920 --> 00:23:19,680 They're 28. They're a professional with a 394 00:23:19,680 --> 00:23:21,280 career. Well, we're only going to live 395 00:23:21,280 --> 00:23:22,880 in one house, right? Exactly. 396 00:23:23,440 --> 00:23:24,840 By the way, do you know which one you move into? 397 00:23:25,360 --> 00:23:27,160 Well, it's likely. It was likely. 398 00:23:27,400 --> 00:23:30,680 Let's let's, let's not talk about that because we were going 399 00:23:30,680 --> 00:23:34,120 to be causing some gender sensitivity. 400 00:23:35,560 --> 00:23:37,080 Oh yeah, the risk of being cancelled. 401 00:23:37,360 --> 00:23:39,320 We're not going to talk is going to be the swab. 402 00:23:39,320 --> 00:23:40,560 You got it. OK. 403 00:23:40,920 --> 00:23:44,280 So you move into one of those properties, you just became a 404 00:23:44,280 --> 00:23:48,320 real estate investor because you have a property over here you 405 00:23:48,320 --> 00:23:51,840 have to rent. A couple years goes by, all of a 406 00:23:51,880 --> 00:23:54,240 sudden you're a little addicted to that rent, right? 407 00:23:54,360 --> 00:23:57,720 You just like that sugar taste, you know that? 408 00:23:57,840 --> 00:24:00,160 Carbohydrates. Yeah, exactly baby. 409 00:24:00,480 --> 00:24:02,800 That rent check every month is awesomely nice it. 410 00:24:03,080 --> 00:24:05,320 Was awesome. And so then you start to think 411 00:24:05,320 --> 00:24:08,920 about expanding that, hey, wouldn't it be cool if we sold 412 00:24:08,920 --> 00:24:12,800 this and bought 2 using the proceeds as a down payment and 413 00:24:12,800 --> 00:24:14,720 your spouse agrees and so off you go. 414 00:24:14,800 --> 00:24:18,920 You do a 10/30 one exchange. All of that profit is deferred. 415 00:24:19,120 --> 00:24:22,400 You go buy 2 new properties and a few years later you sell 416 00:24:22,400 --> 00:24:24,120 those. You buy 4. 417 00:24:24,120 --> 00:24:27,480 Or you decide be kind of fun to move into multifamily, let's go 418 00:24:27,480 --> 00:24:30,680 buy a duplex. Or it's time for us to shift 419 00:24:30,680 --> 00:24:34,120 into commercial properties. Maybe we buy a vacation rental 420 00:24:34,400 --> 00:24:37,320 because now we're having kids and we want to start building 421 00:24:37,320 --> 00:24:39,840 family memories as well as generating income. 422 00:24:39,960 --> 00:24:43,960 Those are all examples of what our clients have done throughout 423 00:24:43,960 --> 00:24:47,160 their years as real estate investors, all starting to 424 00:24:47,160 --> 00:24:49,520 remember as accidental investors. 425 00:24:49,520 --> 00:24:51,960 And in one day games, they wake up and they're tired. 426 00:24:52,200 --> 00:24:55,240 You know why? Because they went from 1:00 to 427 00:24:55,240 --> 00:24:59,280 2:00 to 4:00 to 8:00, they got 16 properties and they've all 428 00:24:59,280 --> 00:25:04,240 got plumbing issues and angry. Tenants, it's it's difficult to 429 00:25:04,240 --> 00:25:09,760 deal with, very difficult. So what they do is they sell 4 430 00:25:09,760 --> 00:25:15,080 properties for $100,000, you know it's just called $100,000 431 00:25:15,080 --> 00:25:19,120 each and they go buy one property for $400,000. 432 00:25:19,600 --> 00:25:23,280 So they start to consolidate their portfolio. 433 00:25:23,560 --> 00:25:27,520 That reduces effort, could increase income, but it also 434 00:25:27,520 --> 00:25:30,160 starts to set them up for retirement when they can move 435 00:25:30,160 --> 00:25:33,640 from active investing to passive investing and then finally, of 436 00:25:33,640 --> 00:25:35,400 course, back to the whole dye thing. 437 00:25:35,600 --> 00:25:36,920 They die out of their real estate. 438 00:25:37,600 --> 00:25:41,040 But one of the greatest hacks that very few people know of is 439 00:25:41,040 --> 00:25:43,240 that you can tip them in a vacation rental. 440 00:25:43,440 --> 00:25:46,960 You love to ski. You want to ski in Colorado. 441 00:25:47,280 --> 00:25:48,560 You're not your retirement years. 442 00:25:48,760 --> 00:25:51,640 So you buy vacation rental and they when you're ready to 443 00:25:51,640 --> 00:25:56,760 retire, you can't convert that property from investment real 444 00:25:56,760 --> 00:26:01,040 estate to your primary residence without having to pay tax 445 00:26:01,160 --> 00:26:05,040 because the only thing that triggers the tax event is 446 00:26:05,040 --> 00:26:07,880 selling the real estate. So if you simply change the use 447 00:26:07,880 --> 00:26:11,320 of it, it changes where it's reported on your tax return, but 448 00:26:11,320 --> 00:26:13,720 you don't pay the tax. So you could actually set 449 00:26:13,720 --> 00:26:18,240 yourself up to retire in a beautiful vacation rental tax 450 00:26:18,240 --> 00:26:20,760 free. Interest in strategic planning 451 00:26:20,760 --> 00:26:25,240 is very, very, very important. But you know, at some point the 452 00:26:25,240 --> 00:26:29,760 the active investors want to transition into like a more 453 00:26:29,880 --> 00:26:34,840 passive approach, right? So how can the 1031 exchanges 454 00:26:34,840 --> 00:26:38,840 help investors see from active management to that passive 455 00:26:39,120 --> 00:26:40,200 income stream? Yeah. 456 00:26:40,600 --> 00:26:44,200 Well, you know, first of all, just in general, the next step, 457 00:26:44,360 --> 00:26:45,800 let's think of this as a spectrum. 458 00:26:46,000 --> 00:26:49,840 So on one end, we've got active taking all the calls, fixing all 459 00:26:49,840 --> 00:26:53,160 the repairs, doing everything. On the opposite end, never touch 460 00:26:53,160 --> 00:26:54,800 it. Go to the mailbox and get a 461 00:26:54,800 --> 00:26:57,040 check. Hey, I want that spectrum. 462 00:26:57,200 --> 00:26:59,960 The first thing you could do is hire a management company to 463 00:26:59,960 --> 00:27:03,960 manage your properties. We get mixed reviews on that for 464 00:27:03,960 --> 00:27:07,480 people because you still have to manage the managers right? 465 00:27:07,640 --> 00:27:08,880 So you got to watch out for that. 466 00:27:09,160 --> 00:27:14,200 The next thing down would be to transition from single family 467 00:27:14,200 --> 00:27:18,320 properties into larger multi family properties. 468 00:27:18,400 --> 00:27:21,000 Dollar three or four single family rentals and buy a 12 469 00:27:21,000 --> 00:27:24,400 Plex. Maybe one of those units you can 470 00:27:24,400 --> 00:27:27,920 hire, you can give to a manager in lieu of management fees. 471 00:27:28,000 --> 00:27:32,680 So you're concentrating and reducing the effort there while 472 00:27:32,680 --> 00:27:35,160 at the same time hopefully generating more income. 473 00:27:35,280 --> 00:27:38,160 So that's the next step down towards passive. 474 00:27:38,360 --> 00:27:42,360 The move from commercial into commercial real estate and 475 00:27:42,360 --> 00:27:45,160 what's called triple net commercial can be really 476 00:27:45,160 --> 00:27:48,800 beneficial here because triple deck commercial simply means 477 00:27:48,800 --> 00:27:52,200 that you have one piece of property, you own it, and the 478 00:27:52,200 --> 00:27:57,880 tenant is responsible for taxes, insurance and maintenance. 479 00:27:58,040 --> 00:28:03,600 Now, you may have a small building that a National 480 00:28:03,600 --> 00:28:08,320 Insurance Company has their offices in or a regional tire 481 00:28:08,320 --> 00:28:13,000 company, but all you're responsible for is is the lease 482 00:28:13,000 --> 00:28:15,680 itself. They're responsible for 483 00:28:15,680 --> 00:28:18,920 everything else, and usually the leases of triple that. 484 00:28:18,920 --> 00:28:22,200 Commercial properties are 15 to 25 years. 485 00:28:22,240 --> 00:28:24,160 So it's a lot less work, isn't it? 486 00:28:24,480 --> 00:28:27,520 That would be the next step. The furthest you can get on the 487 00:28:27,520 --> 00:28:32,040 passive end would be probably a product called a Delaware 488 00:28:32,040 --> 00:28:34,840 Statutory Trust. Now, these are fractional 489 00:28:34,840 --> 00:28:38,880 ownership of actual real estate, but because the IRS has blessed 490 00:28:38,880 --> 00:28:43,800 them officially for 10:31, you can buy that fractional 491 00:28:43,800 --> 00:28:47,560 interest. So you might buy 1% of an Amazon 492 00:28:47,560 --> 00:28:53,040 distribution center and you do nothing other than give them 493 00:28:53,040 --> 00:28:56,440 your money and you sign the membership agreements. 494 00:28:56,680 --> 00:29:00,520 And from that moment on, you walk to the mailbox every month 495 00:29:00,640 --> 00:29:03,360 to pick up a check. Every five to seven years that 496 00:29:03,360 --> 00:29:07,840 company will sell that asset and you'll do another 1031 exchange 497 00:29:08,120 --> 00:29:12,200 that's as passive as a kids so. You know, The Kingdom's podcast 498 00:29:12,200 --> 00:29:16,600 is about growth mindsets, leadership and business 499 00:29:16,600 --> 00:29:19,240 insights. And I very much appreciate the 500 00:29:19,240 --> 00:29:25,320 fact that you are a guest that aligns with the three major 501 00:29:25,320 --> 00:29:29,880 themes that we have set out on the podcast. 502 00:29:29,880 --> 00:29:33,920 And also when you look at the diary of a CFO, right? 503 00:29:34,160 --> 00:29:40,040 So the diary of a CFO actually sets out to provide, you know, 504 00:29:40,040 --> 00:29:44,600 smart financial strategies for business growth. 505 00:29:44,760 --> 00:29:48,160 So it's very important that we have those financial strategies 506 00:29:48,160 --> 00:29:50,920 to help us to achieve smart business growth. 507 00:29:51,320 --> 00:29:55,600 So with that said, I know that you've seen with your wealth of 508 00:29:55,600 --> 00:30:00,440 experience, when I see thousands and millions of businessmen, 509 00:30:00,440 --> 00:30:04,240 entrepreneurs, professionals that have succeeded. 510 00:30:04,480 --> 00:30:07,720 And of course, you have seen those ones that have also 511 00:30:07,720 --> 00:30:10,320 failed. And the difference can be 512 00:30:10,320 --> 00:30:12,720 attributed to one thing, which is mindset. 513 00:30:12,920 --> 00:30:16,280 So what would you say is the mindset that separates, you 514 00:30:16,280 --> 00:30:21,360 know, the good from the great, right and that mindset that 515 00:30:21,360 --> 00:30:25,040 helps to build lasting wealth, you know, over time. 516 00:30:25,040 --> 00:30:27,000 Wow. We can do a whole podcast just 517 00:30:27,000 --> 00:30:32,760 on that, you know. Well, I would say there's, 518 00:30:32,760 --> 00:30:35,600 there's, there's three things we've already talked about. 519 00:30:35,720 --> 00:30:37,960 The first one, which is intentionality. 520 00:30:37,960 --> 00:30:41,920 Success doesn't just happen accidentally to most people. 521 00:30:42,040 --> 00:30:44,720 Sometimes, yes, but you better not count on it. 522 00:30:44,840 --> 00:30:48,400 I couldn't count on it. Intentionality and planning is 523 00:30:48,400 --> 00:30:50,840 so huge. Pick a goal and then start 524 00:30:50,840 --> 00:30:54,240 working backwards from them. The second thing is true 525 00:30:54,240 --> 00:30:56,840 success. And man, I know this is not the 526 00:30:56,840 --> 00:31:00,880 mantra that the TikTok generation is promoting, but 527 00:31:00,880 --> 00:31:05,360 success is a slow cooker. It's a crock pot, not a 528 00:31:05,360 --> 00:31:08,800 microwave. So you've got to be patient. 529 00:31:08,800 --> 00:31:11,400 You know, if you heard the phrase, it's not timing the 530 00:31:11,400 --> 00:31:16,400 market, it's time in the market that determines your success. 531 00:31:16,960 --> 00:31:19,840 So, and then the third thing, I think it, this is going to be 532 00:31:19,840 --> 00:31:23,120 very counterintuitive. Although we read the story of 533 00:31:23,120 --> 00:31:27,400 self-made millionaires and billionaires, I think the 534 00:31:27,440 --> 00:31:30,640 greatest mindset you can have is that of giving. 535 00:31:30,760 --> 00:31:34,160 And I really believe that with all my heart because for the 536 00:31:34,400 --> 00:31:38,480 compared to the few people who can make it all on their own, 537 00:31:38,680 --> 00:31:43,160 there are so many more people that achieved success because 538 00:31:43,160 --> 00:31:48,920 they shared their dream, they shared their success with others 539 00:31:48,920 --> 00:31:51,600 and that simply propelled them further. 540 00:31:51,640 --> 00:31:55,400 And sharing your success, having a sharing mindset is going to 541 00:31:55,400 --> 00:31:57,320 make a lot more successful people. 542 00:31:58,120 --> 00:32:01,280 You know what I'm just about? There's an African proverb, does 543 00:32:01,280 --> 00:32:06,200 it come from Nigeria that says if you want to go fast, go by 544 00:32:06,200 --> 00:32:09,680 yourself, If you want to go far, take a village. 545 00:32:09,880 --> 00:32:12,320 Yeah, well, we we have scenes like that. 546 00:32:12,320 --> 00:32:15,400 Similar. Yeah, we, they, they, they say 547 00:32:16,320 --> 00:32:19,840 where I come from in Yorba land, they say Iggy called Daboshi, 548 00:32:19,840 --> 00:32:23,080 meaning one, she doesn't make a forest so. 549 00:32:24,600 --> 00:32:26,440 Yeah, exactly. I can't. 550 00:32:26,440 --> 00:32:30,440 That's the people that have helped to spur my success. 551 00:32:30,440 --> 00:32:33,640 We're already successful and it's up to me to pay that 552 00:32:33,800 --> 00:32:36,400 forwards to help others become successful. 553 00:32:36,960 --> 00:32:39,840 And then when we become successful, we continue to be 554 00:32:39,840 --> 00:32:42,960 blessings to those who have helped us. 555 00:32:44,480 --> 00:32:46,600 That's that's what's going to make the world a better place. 556 00:32:46,760 --> 00:32:50,720 Yeah, you know that that also reminds me of another proverb 557 00:32:50,720 --> 00:32:54,720 from Nigeria. They say Karen Kapoor, meaning 558 00:32:54,800 --> 00:32:59,560 like when we walk in company, when we walk in groups, right, 559 00:32:59,560 --> 00:33:02,760 It brings honor to us as a people, right? 560 00:33:02,800 --> 00:33:05,600 Yeah. So basically you, you, you move 561 00:33:05,600 --> 00:33:08,880 together and of course you achieve success together. 562 00:33:09,160 --> 00:33:14,040 But a lot of people have that individualistic mindset and it 563 00:33:14,040 --> 00:33:18,520 baffles me because, yeah, the the, the as, as human beings, 564 00:33:18,520 --> 00:33:20,920 right? Our instinct is self 565 00:33:20,920 --> 00:33:23,360 preservation, right? Yeah. 566 00:33:23,400 --> 00:33:27,160 And it's counter intuitive. And for the lack of a better 567 00:33:27,160 --> 00:33:30,240 word, in, in some sense, it's sort of foolish if you think 568 00:33:30,240 --> 00:33:33,920 about just yourself and think, oh, you, you want to be greedy. 569 00:33:33,920 --> 00:33:37,400 And you can achieve a lot by being greedy or being of 570 00:33:37,400 --> 00:33:41,360 personal hearts right? Like you can't go far that way 571 00:33:42,040 --> 00:33:44,480 because you will definitely need people. 572 00:33:44,480 --> 00:33:48,720 And I don't personally do not like the idea of a self-made 573 00:33:48,720 --> 00:33:52,480 whatever self-made millionaire self-made billionaire because it 574 00:33:52,480 --> 00:33:55,400 is a fallacy. Are you telling me that nobody 575 00:33:55,400 --> 00:33:58,600 ever helped you on the way up? Like I've never seen that one 576 00:33:58,600 --> 00:34:02,680 person that did not need the help of anybody to achieve 577 00:34:02,680 --> 00:34:04,240 whatever it is that they've achieved. 578 00:34:04,480 --> 00:34:08,920 So I wonder why people like to promote the concept of being a 579 00:34:08,920 --> 00:34:11,719 self-made millionaire or self-made billionaire. 580 00:34:12,280 --> 00:34:15,480 Come on, some somebody along the way helped you. 581 00:34:15,679 --> 00:34:17,960 Did you just drop from heaven or something? 582 00:34:18,120 --> 00:34:22,239 Like growing up you had parents, you had uncles, guidance, 583 00:34:22,239 --> 00:34:26,639 aunties that took care of you that make sure you did not die 584 00:34:26,639 --> 00:34:29,679 as a child right? You went to school or you were 585 00:34:29,679 --> 00:34:35,800 taught a trade by people. So how come the concept of being 586 00:34:35,800 --> 00:34:38,280 self-made? I don't understand. 587 00:34:38,280 --> 00:34:41,840 I stand to be corrected, but to be honest I don't understand the 588 00:34:41,840 --> 00:34:44,840 concept. OK, here's what you're going to. 589 00:34:44,840 --> 00:34:47,800 This is going to resonate with you, my friend. 590 00:34:47,960 --> 00:34:50,880 Even a lion by himself can't be killed. 591 00:34:51,159 --> 00:34:54,400 Yeah, you see. The lions you see, the lions of 592 00:34:54,400 --> 00:34:57,240 my home. Where he is surrounded by his 593 00:34:57,240 --> 00:34:58,440 pride. Yeah. 594 00:34:58,800 --> 00:35:01,120 Nothing can touch him. Yeah. 595 00:35:01,160 --> 00:35:04,960 So I very much love that. And you know, I very, very much 596 00:35:04,960 --> 00:35:07,800 appreciate you. And there's something I always 597 00:35:07,800 --> 00:35:11,840 see that an attitude of gratitude is good attitude. 598 00:35:12,280 --> 00:35:14,720 And when a person shares their time with you, they share their 599 00:35:14,720 --> 00:35:16,800 life with you. Of course, the SI unit for 600 00:35:16,800 --> 00:35:20,320 measure and life is time. So for me to you to love and 601 00:35:20,360 --> 00:35:23,400 respect, you know, for, you know, joining us on the podcast 602 00:35:23,400 --> 00:35:25,520 today. But I will not let you go 603 00:35:25,520 --> 00:35:28,880 without putting you through the Pacific Ring of Fire. 604 00:35:28,880 --> 00:35:31,040 It's like you say, hurricane season. 605 00:35:31,040 --> 00:35:32,480 Let's have the quick fire around. 606 00:35:33,040 --> 00:35:36,280 Thank you. Ask you 5 questions that give me 607 00:35:36,440 --> 00:35:38,400 the first answer that comes to your mind. 608 00:35:38,400 --> 00:35:41,960 Are you ready to rumble? All right, let's do this. 609 00:35:42,680 --> 00:35:47,040 OK, So what is one book on wealth or strategy that changed 610 00:35:47,040 --> 00:35:49,080 your life? Whatever happened to penny 611 00:35:49,080 --> 00:35:50,800 candy? Interested in it? 612 00:35:51,280 --> 00:35:54,320 Now I know it's a book by Richard Marbury written for 14 613 00:35:54,320 --> 00:35:57,840 year olds, but it's the best primer on inflation and 614 00:35:57,840 --> 00:36:00,280 inflationary monetary policy you've ever read. 615 00:36:00,280 --> 00:36:05,360 Well ET say everything for 40 years 40 year olds in my country 616 00:36:05,360 --> 00:36:08,200 in Nigeria this there's a popular say in the city full of 617 00:36:08,200 --> 00:36:11,360 40s a fool forever. Well, I'm a four year old that 618 00:36:11,360 --> 00:36:15,440 appreciates 14 year olds. So the second one, what is the 619 00:36:15,440 --> 00:36:19,160 biggest myth about taxes or 1031 exchanges? 620 00:36:19,320 --> 00:36:25,920 Biggest myth about 1031 exchanges is going to be that 621 00:36:26,000 --> 00:36:29,280 you could simply sell a piece of property and without planning, 622 00:36:29,280 --> 00:36:31,800 make it succeed. That goes back to our old. 623 00:36:32,480 --> 00:36:34,440 Game. This whole thing, yeah. 624 00:36:34,440 --> 00:36:36,400 And if you feel to plan, you plan to fail. 625 00:36:36,600 --> 00:36:39,080 Think about it. Link to Plan is even a plan on 626 00:36:39,080 --> 00:36:41,120 its own because it means your plan to fail. 627 00:36:41,200 --> 00:36:43,520 So don't blame people who fail to plan. 628 00:36:43,680 --> 00:36:46,600 Well, you'll be a success at least just a way. 629 00:36:47,560 --> 00:36:51,760 A reverse engineering world. It's a What's your dream 630 00:36:51,760 --> 00:36:54,400 destination you'd love to sail to next? 631 00:36:54,400 --> 00:36:59,800 I would love to sail to Georgetown in the Bahamas every 632 00:36:59,800 --> 00:37:01,960 week. Wow 600 bucks I. 633 00:37:01,960 --> 00:37:04,440 Had that on my mind. Do you read my mind? 634 00:37:06,360 --> 00:37:09,920 Yeah, 600,000 boats congregate there all winter. 635 00:37:10,320 --> 00:37:12,040 Yeah. They, yeah, they have a great 636 00:37:12,040 --> 00:37:13,720 time. Would not want to go there this 637 00:37:13,720 --> 00:37:17,040 week with that hurricane out there, but yeah. 638 00:37:17,600 --> 00:37:22,440 Well, you read my mind because the Bahamas is 1 a fantastic 639 00:37:22,560 --> 00:37:26,160 coastal island that that I've always appreciated and of 640 00:37:26,160 --> 00:37:29,720 course, God rest his soul. There's this guy who was very 641 00:37:29,720 --> 00:37:32,560 popular from Bahamas, Miles Monroe. 642 00:37:32,760 --> 00:37:36,800 Yes, I had the opportunity to meet him before his demise. 643 00:37:36,880 --> 00:37:40,760 Very great guy, you know, highly, highly resourceful and 644 00:37:40,840 --> 00:37:44,200 loaded. Wow, so of 1D habit that keeps 645 00:37:44,200 --> 00:37:47,200 you financially shocked. That keeps me financially 646 00:37:47,200 --> 00:37:48,440 shocked. OK, this what's 647 00:37:48,440 --> 00:37:50,840 counterintuitive. I make the bed every day. 648 00:37:51,120 --> 00:37:53,320 Yeah, I like. What does that do financially 649 00:37:53,320 --> 00:37:56,880 for me? It's my way of telling my wife I 650 00:37:56,880 --> 00:38:01,160 love her so she goes out and works extra hard. 651 00:38:01,240 --> 00:38:04,080 Happy wife. Exactly. 652 00:38:04,160 --> 00:38:06,720 Guys out there, I hope you're taking notes. 653 00:38:06,720 --> 00:38:10,400 You need to take notes from Dave Foster. 654 00:38:10,400 --> 00:38:13,960 Yeah, That that's, that's our would I say our foster father 655 00:38:13,960 --> 00:38:17,000 now, right. So you need, you need to take 656 00:38:17,000 --> 00:38:21,040 the notes from Dave Foster in others to succeed faster make 657 00:38:21,040 --> 00:38:24,320 with that information whatever you wish to do with it. 658 00:38:24,400 --> 00:38:28,000 So the very last one is if you had to start all over again 659 00:38:28,000 --> 00:38:31,040 today with just $10,000, how would you invest it? 660 00:38:31,280 --> 00:38:34,280 Again, a really counterintuitive question. 661 00:38:34,400 --> 00:38:39,920 I would invest in a membership being Toastmasters and anything 662 00:38:40,040 --> 00:38:43,760 education wise, not liberal arts, technically technical 663 00:38:43,760 --> 00:38:46,480 education. So whether that's Microsoft 664 00:38:46,480 --> 00:38:55,600 Suite or some sort of AI or SEO training is public speaking 665 00:38:55,880 --> 00:38:58,600 where you learn? Because I think I think one of 666 00:38:58,600 --> 00:39:03,080 the things that we're in great danger of losing the Society of 667 00:39:03,080 --> 00:39:06,320 the day is the ability to communicate face to face. 668 00:39:07,000 --> 00:39:09,640 We could do it over screens. We can read text. 669 00:39:09,640 --> 00:39:12,960 We do all this, but being able to communicate face to face and 670 00:39:12,960 --> 00:39:15,760 honestly, what I think is the people that I've done business 671 00:39:15,760 --> 00:39:18,800 with overtime, that I've chosen to do business with overtime, 672 00:39:18,840 --> 00:39:22,560 it's people that could look me in the eye while speaking and 673 00:39:23,520 --> 00:39:26,480 maintain their credibility. Yeah, and composure. 674 00:39:27,120 --> 00:39:30,720 Yes. Yeah, people, people are fast 675 00:39:30,720 --> 00:39:33,800 losing it in this age and time. And I wonder like what is 676 00:39:33,800 --> 00:39:38,120 happening, what is happening? But I think it's really best to 677 00:39:38,120 --> 00:39:42,600 to have that hybrid, you know, being able to communicate in 678 00:39:42,600 --> 00:39:46,000 person and of course, you know, communicate via digital tools. 679 00:39:46,440 --> 00:39:50,920 And it involves putting yourself in those situations over time, 680 00:39:50,960 --> 00:39:54,160 over time. I remember in university, I was 681 00:39:54,160 --> 00:39:58,640 an MC, I anchored events, conferences, right? 682 00:39:58,640 --> 00:40:00,880 Spoke in front of large audiences. 683 00:40:01,160 --> 00:40:04,400 And I did not realize that me putting myself in those 684 00:40:04,440 --> 00:40:08,600 uncomfortable situations. Was preparing me for bigger and 685 00:40:08,600 --> 00:40:11,720 greater leadership roles, you know in yes to come. 686 00:40:12,000 --> 00:40:15,600 So when I see people being scared, you know, to present in 687 00:40:15,600 --> 00:40:20,640 front of an audience of 502 hundred people, say even 1000 688 00:40:20,640 --> 00:40:24,480 people, I laugh because like back in university, I was doing 689 00:40:24,480 --> 00:40:27,280 presentations in front of 5000 people. 690 00:40:27,400 --> 00:40:31,080 So why would 100 people intimidate me, right? 691 00:40:31,200 --> 00:40:34,560 So I think it's important for people to put themselves out 692 00:40:34,560 --> 00:40:37,320 there, especially very early in life, right? 693 00:40:37,400 --> 00:40:41,320 It helps you to be able to have that confidence, right? 694 00:40:41,480 --> 00:40:45,360 To to be able to excel and being able to communicate is very, 695 00:40:45,360 --> 00:40:47,840 very important. Of course, no matter the level 696 00:40:47,840 --> 00:40:50,200 of technical skills that you have, right? 697 00:40:50,520 --> 00:40:54,400 You need to be able to comfortably and confidently 698 00:40:54,800 --> 00:40:58,800 communicate the knowledge of those technical skills. 699 00:40:59,000 --> 00:41:03,600 And that's what is going to take you, you know, far and help you 700 00:41:03,600 --> 00:41:07,160 to, to achieve things with those skills that you have. 701 00:41:07,400 --> 00:41:10,800 So I don't know what you what, what you would say regarding 702 00:41:10,920 --> 00:41:12,680 these things. Well, you're absolutely right. 703 00:41:12,680 --> 00:41:15,080 It's Warren Buffett. Actually, that quote's been 704 00:41:15,080 --> 00:41:17,360 running around. Now, if you're going to invest, 705 00:41:17,480 --> 00:41:20,520 first invest in yourself. Invest in education. 706 00:41:20,520 --> 00:41:23,600 Absolutely, absolutely. Like a very, very important. 707 00:41:23,920 --> 00:41:27,960 I remember, you know, like I remember some of the when I was 708 00:41:27,960 --> 00:41:30,600 investing in my MBA, this one was like, oh, why don't you 709 00:41:30,600 --> 00:41:34,120 invest in probably like a property back home in Nigeria. 710 00:41:34,120 --> 00:41:37,760 So I'm going to argue doing more education and I'm like, excuse 711 00:41:37,760 --> 00:41:41,480 me, do do you understand what it means to have an MBA? 712 00:41:41,480 --> 00:41:44,840 I don't know, like the biggest investment you can possibly 713 00:41:44,840 --> 00:41:47,680 invest is investment in yourself. 714 00:41:48,080 --> 00:41:52,720 And investing in yourself helps you to exponentially increase 715 00:41:52,760 --> 00:41:59,160 the capacity of revenue that you can possibly earn overtime. 716 00:41:59,160 --> 00:42:02,600 And yeah, I'm, I'm not a multimillionaire now, but you 717 00:42:02,600 --> 00:42:05,720 are. So I love it to come from you to 718 00:42:05,720 --> 00:42:09,280 advise that the younger people out there letting letting them. 719 00:42:09,280 --> 00:42:13,720 Know look at the zeros today, tomorrow. 720 00:42:14,280 --> 00:42:17,040 Yeah, very, very important because I think a lot of young 721 00:42:17,040 --> 00:42:21,080 people in this age and time because that investment in 722 00:42:21,360 --> 00:42:24,280 education does not bring the immediate, you know, 723 00:42:24,680 --> 00:42:27,320 gratification. Just like TikTok behind the 724 00:42:27,320 --> 00:42:33,560 TikTok generation, we want to like, just think we we can put 725 00:42:33,560 --> 00:42:36,680 in X and get XYZ immediately after. 726 00:42:36,680 --> 00:42:40,280 It doesn't work that way, but it's difficult explaining it. 727 00:42:40,360 --> 00:42:45,560 But when they see established figures like yourself reiterated 728 00:42:45,560 --> 00:42:48,800 these things that you know, millennials like myself are 729 00:42:48,800 --> 00:42:51,760 saying, I think he hits a home run better. 730 00:42:51,800 --> 00:42:54,240 Of course I can't be saying it to my generation. 731 00:42:54,240 --> 00:42:56,960 You won't be saying it to your generation if it's not true. 732 00:42:57,120 --> 00:42:58,120 Lived it. Yep. 733 00:42:58,200 --> 00:43:00,640 Absolutely. And of course, that's why I very 734 00:43:00,640 --> 00:43:04,120 much appreciate having, you know, great individuals like 735 00:43:04,120 --> 00:43:09,480 yourself who are role models and mentors to the up and coming 736 00:43:09,480 --> 00:43:11,640 generation from me. To you. 737 00:43:11,640 --> 00:43:14,040 It's a love, respect, appreciation. 738 00:43:14,040 --> 00:43:15,920 I do not take your time for granted. 739 00:43:15,920 --> 00:43:19,000 And of course, I wish you the very best. 740 00:43:19,000 --> 00:43:22,680 And my prayer for you is that, you know you keep being 741 00:43:22,680 --> 00:43:25,480 successful in health and in wealth. 742 00:43:25,600 --> 00:43:28,960 So before you leave, do you want to leave a shout out to anybody? 743 00:43:29,080 --> 00:43:31,280 Well, thank you for having me. This has been absolutely 744 00:43:31,280 --> 00:43:33,520 awesome. Well, I thank you. 745 00:43:33,640 --> 00:43:36,680 I love your mindset because that's, that's really where it's 746 00:43:36,680 --> 00:43:39,000 at. We the 1031 exchange is just a 747 00:43:39,000 --> 00:43:41,320 tool. It's a tool that you could use 748 00:43:41,320 --> 00:43:45,720 to do some great things in real estate, but the greatest tool in 749 00:43:45,720 --> 00:43:50,600 the world is of no value unless there is a willing hand that's 750 00:43:50,640 --> 00:43:53,640 going to wield it. And that hand has to have the 751 00:43:53,640 --> 00:43:58,640 education to do it, the mindset, the drive and the desire to use 752 00:43:58,640 --> 00:44:00,240 it. And if you've got those things, 753 00:44:00,240 --> 00:44:03,320 and that's what I love about what you and I have talked about 754 00:44:03,480 --> 00:44:06,440 with what you're doing so. I thank you very much. 755 00:44:07,560 --> 00:44:11,400 I hope people can come and find us at That's It 31 investor.com. 756 00:44:12,200 --> 00:44:14,320 You're gonna put it in the show. Yeah, it's gonna be in the 757 00:44:14,320 --> 00:44:16,440 discussion. So guys, look into the 758 00:44:16,440 --> 00:44:19,760 description and get it. Well, it's time to go. 759 00:44:19,760 --> 00:44:23,320 And of course, I wish we can have you on again on the 760 00:44:23,320 --> 00:44:25,800 podcast. And of course, guys do the right 761 00:44:25,800 --> 00:44:29,040 thing like comment, share with your network. 762 00:44:29,160 --> 00:44:32,320 And of course, till I come, your weight gain always go for 763 00:44:32,320 --> 00:44:35,480 something in your life. Remember I always say conceive, 764 00:44:35,720 --> 00:44:38,760 believe, strive to thrive and go achieve. 765 00:44:39,120 --> 00:44:42,600 And of course, till we meet again next time, it's goodbye 766 00:44:42,600 --> 00:44:45,040 for me. And all the way from Florida, 767 00:44:45,200 --> 00:44:50,400 United States of America, it is a faster goodbye from Dave 768 00:44:50,400 --> 00:44:51,600 Foster. Thank you.