Dave Foster  0:00  

The end of the year when my accountant called me and said, here’s the tax bill. And I went holy crud, who knew that I ended up getting a silent partner named Uncle Sam, who’s gonna make more than me on this deal. So real quickly, it became clear that that was going to take quite a bit longer if we had to go that route. Now, this was right about circa 1996. And right at that moment in time, there was a huge court settlement that had just come to be between the IRS and a guy named Starker, who did a new way of using what was called the 1031 exchange. He sold a bunch of investment property and bought a bunch of investment property, and he did not pay the tax on the capital gains in the middle. And he won that case in 1996 ish. And the IRS had come out with their new RECs. And all of a sudden, that opportunity was now available to everybody. 

Announcer  0:45  

Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast.  Whether you’re an investor, broker, lender, property manager, attorney or accountant We’re here to learn from the experts.

J Darrin Gross  0:59  

Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is a podcast focused on commercial real estate, investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio. 

Today, my guest is Dave Foster. Dave is the founder and CEO of The 1031 Investor. Dave is a degreed accountant and serial real estate investor, who is a Qualified Intermediary and consultant for tax saving strategies such as the 1031 exchange, and the section 121. Homestead Exemption. 

And in just a minute, we’re going to speak with Dave about when and why to use the 1031 exchange. But first a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do. You can subscribe, like and share. And as always, we would love to hear from you if you’d leave a comment. Also, if you’d like to see our handsome our guests are, be sure to check out our YouTube channel. And you can find us on Youtube at Commercial Real Estate Pro Network. While you’re there, please subscribe. With that I want to welcome my guest, Dave, welcome to CRE PN Radio.

Dave Foster  2:55  

Darrin, it is great to be here. And I understand that you and I are on opposite ends of the day. I’m looking at five o’clock, and you got a long ways to go.

J Darrin Gross  3:05  

Yeah, no, we’re just getting started here on the west coast. But no, we and then as we just before we started recording, we’ve got a little bit of a similar path there. We’re both Kansas natives. So that’s kind of a fun, fun orientation there. But Dave, before we get started in our talk, if we could if you could share with the listeners a little bit about your background.

Dave Foster  3:30  

Sure, well, I said I’m a Kansas farm boy, that had ocean and his blood. So from my earliest memory, I have always been fascinated by the sea. And so I grew up trying to figure out how I could go to Kansas State University and major in oceanography. And for some reason, it just never seemed to work. But fortunately, through a series of life events, which include going further in and spending 20 years in Denver, where I met my wife, we actually ended up settling on real estate and real estate investing as a profession and actually moving our portfolios around the country, always in search of the perfect sailboat water.

J Darrin Gross  4:18  

Well, that’s definitely a quite a story considering the the start in landlocked Kansas, and, you know, ended up on the ocean there. So that’s kudos to you and, and keeping your dream alive and make an app and that’s awesome. So let’s, let’s talk here a little bit. You mentioned your path as an investor. And I’m assuming you did some exchanges along the way to move your portfolio. Is that fair?

Dave Foster  4:50  

Yeah, that’s exactly I think you’d you would almost call me the accidental exchanger. It wasn’t something that was really in my vocabulary or anywhere else, anybody else’s vocabulary at the time, we were simply looking for a good avenue to let us break from the corporate world and start to follow our dreams. And we quickly decided, like a lot of people have, that real estate was going to be a great avenue. So like everybody else, what do you do? Let’s go buy a house and fix it up and sell it. And so I did that. And it was awesome. And the until the end of the year when my accountant called me and said, here’s the tax bill, and went holy crud, who knew that I ended up getting a silent partner named Uncle Sam, who’s going to make more than me on this deal. So real quickly, it became clear that that was going to take quite a bit longer if we had to go that route. Now, this was right about circa 1996. And right at that moment in time, there was a huge court settlement that had just come to be between the IRS and a guy named Starker, who did a new way of using what was called the 1031. Exchange. He sold a bunch of investment property and bought a bunch of investment property. And he did not pay the tax on the capital gains in the middle. 

And he won that case in 1996. ish. And the IRS had come out with their new Rec’s. And all of a sudden, that opportunity was now available to everybody. So I mean, really thinking about that, instead of having to pay tax on that real estate deal. If I could have kept it and use that to go buy more real estate, how powerful that would have been. I had some really good friends at that time. And Darrin, you know how you can tell your best friends are until they’re the ones that didn’t feel free to mock you at any moment. Yeah. They called me. Oh, look what you had to pay. Dave, we’re starting a business to help people do this do you want in? I said, Absolutely. So at that moment, not only and I set on a course of wanting to do the 1031 exchange for myself, but we started doing them for others. And over the course of the next 25 years, it’s been a really crazy, fun ride, to not only see what we’ve been able to do personally, by not having to pay real estate gains tax, but also watching the impact that that’s had on my clients and investors know how we got to start.

J Darrin Gross  7:47  

That’s awesome. That’s awesome. It’s funny that Starker, I think he was an Oregonian, I think it was a Timberland things. I’ve talked with other local investors, and they’ve called it the star Starker exchange. I was like, wow. And I think I’ve not read up on this, but maybe you would know better, but something about some forest land he bought and sold. And, and I don’t know the details. 

Dave Foster  8:12  

That’s exactly right. It was actually he and his son. And they were amazing guys, because they separated their court cases. So that if one lost in one district, the other one after case going, and they just jump back and forth until finally they won. Ultimately, crazy story. It was a lot of money that they spent, I can tell you that. 

J Darrin Gross  8:37  

Oh, sure. 

Dave Foster  8:38  

Oh, but we’re benefiting from their legal expenditures for sure. 

J Darrin Gross  8:43  

No, that’s awesome. So So tell me so you had the the you were flipping right. And that’s when you realize the the tax situation that that came up? Because I just had to distinguish a think there’s a lot of people that tend to put all of real estate investing in one bucket. But my understanding is that real estate, if it’s if it is kind of flipping, it’s considered more of inventory type thing that if you’re doing it within 12 months, that you’re purchasing, doing the fixing, and selling, are you able to exchange that on a regular basis?

Dave Foster  9:20  

Yeah, it’s not that there is a statutory holding period of the year, two years, you know, you’ll There are all sorts of numbers being bandied about what it is, though, is that your intent way, if you want to do a 1031 exchange, must have been to hold that property for productive use. And if your intent was to hold that property, then you can sell it and use the proceeds in a process to go buy other investment real estate that you also intend to hold. So you’re at the end, I have to pay the tax. You’re absolutely right. fixer flippers would not be able to do 1031 exchanges, because their intent is not to hold that property. They’re simply wanting to buy it, fix it up and get rid of it. So their intent is resell. 

But the 1031 investor simply as a different intent. And one of the ways that you can demonstrate that, of course, is how long you hold the property. So that’s one factor. It could be how you use the property, it could be your correspondence with your professionals. There’s all sorts of things that go into establishing your intent. 

My favorite story of all time comes from this year, I had a client call me up. And he had owned a property for 30 days. And he wanted to sell it into a 1031 exchange. I said, Well, you know, it’s really only for people whose intention was told he goes, by the end the purchase and sales agreement, I do agree to honor the lease with my tenant. Because I meant to hold it. I said, Well, okay. But then why are you selling it? And he said, Well, it was because the tenant moved out. I said, why would the tenant move out? If you had already agreed to honor their long term lease? He said, it was when the bear took up residency at the trashcan. She didn’t want to live with the bear. So she moved. And I don’t want to deal with a bear. So what was his intent?  To hold the property? And a bear gave me excuse, so he could do the 1031 exchange? 

J Darrin Gross  11:37  

Hmm. 

Dave Foster  11:37  

So you never know, what kind of accidents are gonna happen? 

J Darrin Gross  11:41  

Right? 

Dave Foster  11:41  

They can. But they keep the whole thing though. Darrin, is. You’re absolutely right. He oriented has to have a longer time horizon. But what most people don’t realize is that the tax burden between simply fixing and flipping is massive compared to simply holding property for your big capital gains, let alone if you hold the properties, and then sell it do the 231 exchange. So what I tell a lot of potential investors and clients is tweak your model. Instead of buying properties and fixing flipper, buy a property as an investor. And the instead of buying it, fixing it and selling it, buy it, fix it, and rent it. And then evaluate it periodically, to see if it’s time to sell. You do slow yourself down a little bit. But you just changed your tax burden for maybe 30 to 40% to zero on a profit. That’s a huge model shift. That just takes a little bit of patience. And one of the things that people can do in the meantime, if you’re, I confess, I’m a little bit of an adrenaline junkie, I do love the deal. So I do like to buy and sell sometimes. But if you can do a refinance of that property while you’re holding it, then that lets me get my excited little fingers on cash. And I can go and do whatever I want to with that, while keeping the integrity of the tax deferred. So my model looks like buy, fix, rent, refinance, you use that cash to go do something else, and then evaluate that property when I need to sell it and do a 1031 exchange.

J Darrin Gross  11:44  

No, I love it. So that the I think there’s a line and I’ve been trying to figure this out. And maybe maybe you can help identify this because I think that the 1031 exchange, I think from from where I sit, it seems like it’s most apropos or appropriate for for somebody who’s got kind of a longer vision of investing in real estate. I think there’s a lot of people that whether they invest passively or just or are looking just for a quick return, they view investment across all options as the same and that like just get the return get the return to the return. Not Not as much like what I view a lot about or one of the benefits about real estate is actually building equity. And I mean there’s there’s there’s cash flow, which we all want, but the equity is really what’s kind of the muscle behind all of that. The the ability to create wealth, and I wonder if you can talk a little bit about that or if you can help clear that or make it more distinct as to you know, where that fits or how 1031 can help or be a benefit to somebody that that’s an investor.

Dave Foster  14:58  

Yeah, you’re absolutely right. It is Really, in one sense, it’s it’s a factor of patience, and the power of what patients can do for you to remember the old example of the, the guy that offers his son $1 a day. And you’ll give him $1 a day for 30 days, or I’ll give you a penny. And I’ll double it every day for 30 days. 

J Darrin Gross  15:27  

Right? 

Dave Foster  15:27  

Right. It’s billions of dollars of difference by being patient, now. And so I tend to look at people falling into one of three buckets really, there are those people you’re talking about that are really interested in building the equity. So it’s future benefits, future cash flows, future income, built off of the infrastructure that I built. And then there are those people that are all about cash flow, which is a spin off of that, where I am buying real estate, to generate cash to live off of the income coming in. And so that’s a step down, those people that are all about equity, are willing to forego money now, to get much more money tomorrow. Those people that are into cash flow, are looking for money to live now. But they also want to build equity. So they’re doing both. And then there is what I call the deal flow, cash flow people. And those people, we hear a lot of those are the true fixer flippers, because they are trying to finance a lifestyle that is based totally on the real estate activity. So they can’t just live off of rents from a property, they can’t leave those rents in the game, to generate future equity, because they need to live on the now. So that’s their business model. They are in essence, in the business, of buying and selling real estate. And that’s okay, there’s nothing wrong with it. But there’s a cost of doing that. 

And the cost is you pay much higher taxes, you can’t do the 1031 exchange, and 20 years from now, you’re still going to only have your effort to bring in the money. Whereas if you do like what you’re talking about thinking of the longer time horizon, you are building up assets over time, so that in 20 years, you have cash flow that’s coming totally apart from your work. And if you’re the 1031, investor type, a large chunk of that cash flow that is now coming your way through no effort of your own is coming from the income off of the deferred tax. In other words, the government is letting you have the benefit of all the tax, you would probably have paid over the years. And that’s a huge, huge number.

J Darrin Gross  18:12  

And I think, you know, the the if we could, could we talk just actual numbers? Can you give kind of an example there just kind of walk through? Pick a number and just the tax consequence? Because I think it’s one thing to talk like the it’s a big number. But I think when you get into actual numbers, it’s really, it really magnifies the power of the 1031.

Dave Foster  18:39  

Yeah, absolutely. You know what, let’s see if we can do something here. This will be a great experiment, because I’m the least technologically savvy person you’ll ever meet. But let’s see if I can share a screen I’ve actually got actually, can you can you enable screen sharing? Let me see if I can do that. Yeah, this is hilarious. This

J Darrin Gross  18:58  

is the blind lead, the blind participant can share at a time yours, okay, multiple participants. That’ll do the right button here. Let’s see, oh, here, uh, no. Advanced, maybe I took in the advanced options. Here are

Unknown Speaker  19:16  

what I can do, I just pulled up a series of slides on my screen that I could use, just so that I could give you examples. I’ll give you the right numbers. But I like to use an example of two investors that start with the exact same property. And then we make this example it’s really just an Excel spreadsheet. But we make the example where they’re making the exact same appreciation. They’re selling for the exact same about the only difference is that one of them does a 1031 exchange, so they defer the tax. Now remember, the tax doesn’t go away, it’s just deferred. The other investor pays the tax and so they’re not going to leave taxed at the end of each transaction. And we do this if they sell a property for $100,000 in gain.

J Darrin Gross  20:08  

Hey, Dave.

Dave Foster  20:09  

Yeah, 

J Darrin Gross  20:09  

Check real quick. See if I tried to make you the host here, see if you are able to share your screen now.

Dave Foster  20:15  

Let’s see if we can do it all the time. Look at that. Come on up share.

Do You guys have it.

J Darrin Gross  20:27  

I got it perfect.

Dave Foster  20:28  

Holy that that’s awesome. 

J Darrin Gross  20:29  

Hey, we figured it out. All right, yeah, let’s, let’s let’s back up here. And let’s

Dave Foster  20:34  

Yeah, let’s dive into. So these two investors A and B, investor A is the only difference is going to be investor a does a 1031 exchange. So at the end of their first transaction, you see that far right column, they owe $20,000. In tax, investor B, does not do a 1031 Exchange, they pay the tax. So at the end of the transaction, they don’t owe any tax. But look what happens with their available money to put as a down payment. Investor a could use all hundred thousand dollars, whereas investor B only has $80,000. So they can put 20%, down on a 500 and a $400,000. Property respectfully. Now, here’s what happens after five years, those that property appreciates.  Investor A is going to sell, they naw have a gain of 138, they’re again going to defer that tax. So look at how that deferred tax column is adding up. Because they’re doing the 1031 exchange. Investor B again, just pays the taxes they go. But now, investor A is able to purchase a little more than a million dollars in real estate, whereas investor B is only able to purchase, you know, 800,000 or so. Because investor A is using deferred tax dollars, for their own purposes, 10 years, now you start to see it really diverged, don’t you, investor a is controlling almost twice as much property as investor B, simply because they’ve used that $130,000 of tax to buy more real estate using the 1031 exchange. 

And then if you take this example, all the way out to 20 years, which is a pretty healthy investing career for anybody. You can see that simply by using the 1031 exchange. And having a patient, long time horizon. investor A is controlling, almost $12 million in real estate. And they still owe almost $500,000 in tax. Now that’s a huge chunk, you would think, but how much are they making monthly on a $12 million real estate portfolio?  If they’re making 10% of their money, they could pay that tax it just four or five months of income, couldn’t they.  

J Darrin Gross  23:19  

yeah.

Dave Foster  23:21  

Investor B doesn’t owe a penny in tax. They’re called in. But they only control four and a half million in real estate. So the difference in what you can accomplish is really vast. And it all really just boils down to what Albert Einstein called the eighth wonder of the world. It’s compound interest.  Making money on the government’s money, and then making more money on top of that, that just takes patience and runway.

J Darrin Gross  23:51  

It is a fascinating thing when you especially when you apply the timeline to it, I think it gets a little simplified when when people think it was just a transaction a one time event. But as you do the math and you you know, extrapolate it out, you know, multiple years like you’ve done, and what was that three transactions or four transactions?

Dave Foster  24:14  

Yeah, that was just for four

J Darrin Gross  24:16  

transactions. Yeah. So I mean, if you average once every five years, your, your, you know, buying or selling, and, you know, changing up there, then that’s, that’s how you you know, can really multiply that. 

Dave Foster  24:31  

Yeah. And it’s really interesting that you mentioned five years. Was there a reason for that?

J Darrin Gross  24:37  

No, just on what I saw you said 20 years for okay. So yeah, so,

Dave Foster  24:42  

because here’s what the National Association of Realtors tells us that are the average the American lives in the house that they buy. So they live in their primary residence for between five to seven years, on an average. So there’s another application There’s a rule that falls into the five year period. And that is the 121 primary residence exemption that lets you also take money out tax free.

J Darrin Gross  25:12  

You know, if you don’t mind, let’s talk about that a little bit. I don’t know. I mean, typically we focus on investing, or in, you know, an investment property, which would be the 1031. But I haven’t had anybody yet speak about the the home exemption or the we call it the 121.

Dave Foster  25:30  

Yeah, refers to Section 121 of the IRS code. And it’s basically the opposite of 1031. To 1031 deals with investment property, what do we what is your primary residence, and what it says is that if you live in a property for two out of the five years, prior to selling it, that you can sell it and take the first 250,000, or if you’re married 500,000, in gain tax free. And you could do that once every two years. So basically, if you’re staying in a property for five or six years, over the course of your lifetime, you’re gonna have seven or eight or nine opportunities to sell a house that you live in, and take up to $500,000 in profit, tax free.

J Darrin Gross  26:25  

And that’s a gain from purchase to sale, because your is a residential not depreciating that, right?

Dave Foster  26:30  

That’s correct, you’re not depreciated so that that’s not a factor in it. But here’s what’s really interesting during and what we discovered, and used for ourselves. And that is that using the 1031 exchange, remember, you’re selling investment property, and you’re buying investment property, and you intend to use that property for investment uses. But after a year or two, it is perfectly allowable to convert property from investment into primary residence, or vice versa. 

So what we did was we started in Denver, and we would we positioned our investment properties, using the 1031 exchange, where we were going to move next. And so we got rental properties in Stamford, Connecticut. And then a couple years when we were ready to move, we simply moved into one of our former investment properties. So the gain in those was tax deferred. And then we moved into it, which did not create a taxable event they did a couple years, we then sold those properties. And we would get we got a sizable chunk of that tax free. And we simply did a daisy chain of those from Colorado to Connecticut, to Florida. And at each time, the buy the boat bank account was populated with the tax free dollars for the primary residence sales. So at the end of 10 years, we were able to buy our sailboat to go live on it for 10 years and raise our four boys using combination of the 1031 exchange and the 121 primary residence exemption.

J Darrin Gross  28:25  

And are there any said it’s once every two years that you can do that are 

Dave Foster  28:30  

correct. 

J Darrin Gross  28:32  

So you buy a rental property, you sell your residence. And you you win on the as long as you’ve been there to the last five years. If you’re married, you can take up to 500,000 gain, and you move into your rental. And you have to stay in there assume two years.

Dave Foster  28:54  

Yeah, if you did a 1031 exchange to get it, you have to live in it for two years, you have to have a home did a total of five years. So that that’s how you demonstrate your intent is you would use it for rental for a couple years. And they live in it for two or three. Or vice versa, whatever works out. And once you’ve owned it for five years, lived in it for two, you sell it and you get to prorate the game tax free versus paying tax based on how long you actually lived in it. So if you live in it for three out of five, you would get 60% of the gain tax free.

J Darrin Gross  29:32  

Oh, gotcha. So if you live in a for at least five then you get to the full gain or is that

Dave Foster  29:39  

you would still use it for investment for a year or two. Oh, so let’s say you moved into it for for lived in it for four and used it for investment for one, you would get four fifths. Okay, gotcha.

J Darrin Gross  29:50  

Gotcha, gotcha, gotcha, gotcha, gotcha. Okay. So it’s still appropriate thing. So, if you’ve been if you have had long term rentals, it’s still a 1030 one’s probably a You know, as opposed to moving into something, if you’ve held something for 20 years, and you move into it for two, you’re not exactly going to win big on that.

Dave Foster  30:10  

Because you’ve got depreciation issues and that sort of thing that 

J Darrin Gross  30:12  

Yeah, yeah, yeah. 

Dave Foster  30:14  

But think about those people that are wanting to change locations. Yeah. So let’s say someone, well, you and I were talking about how beautiful Sarasota is. So what if someone wanted to sell an investment property in Los Angeles, and go buy a Siesta Key vacation rental, you receive the 1031 exchange, and they were nearing retirement, after a couple years, they could say, you know what, I think I’m gonna move in to that property. And as long as you never sell that property, you’ll never have to pay the tax. So I have people that will use this as a retirement plan. Sure, for 10 15, 20 years, till they absolutely have to move.

J Darrin Gross  30:58  

Sure. And at that point, when you when you’re no longer around, and your heirs would have to step up in basis and, and wipe that clean.

Dave Foster  31:07  

That’s exactly right. That’s exactly right. So that’s just another way that you can strategically package to 1031 exchange, so that you could use it in both your personal and your professional life to get out of it.

J Darrin Gross  31:24  

So let me ask you this, this is something I think that I think people, people are familiar with the word 1031 exchange. They don’t always understand the mechanics of it, they understand the benefit, they don’t understand the the, you know, how do we get from I own an investment property to I’ve exchanged into another property? Can you walk us through that?

Dave Foster  31:49  

Sure. Well, and actually, the most beautiful thing about that is, you as the investor won’t do anything different. It is a process of selling and buying, and you use all of your normal professionals. So if you were going to sell an investment property, you would list it with a realtor, you’d have a title company you work with, you’d have your own normal vendors, who are going to fix up the property or whatever. The difference is the add on of an unrelated third party, called the Qualified Intermediary who sole role is to document the 1031 exchange, and hold the proceeds in between the sale and the purchase. 

So you sell the property just like you normally would the Qualified Intermediary documents along with the title company, and the proceeds, go in your exchange account because you can’t touch them? That was one of the things that they really did not like about Starker is they wanted to see that the money wasn’t in his control. And then you will go shopping, to go buy your new investment property, same thing. And again, the Qualified Intermediary will document that sale.  They send the money into the closing, and voila, you’ve got a 1031 exchange. It’s really that easy. 

Now, the real bugaboo is in the timing, and a lot of people get caught up, because the timing is pretty constrained, from the day that you close the sale of your property, you only have 45 days to identify your potential replacements. So you’ve got to be really focused, because after day, 45, you can’t add properties to your list, and only the ones on that list will count. You have a total of 180 days to close on your new property. But that’s usually not so much of an issue. It’s that first 45 that will get you every time. So that’s bugaboo number one is the timing. So you’re going to do your normal process, just like you would here to use a Qualified Intermediary, you’ve got the 45 to 180 day window, whoever it is who’s selling the property is going to have to buy the new property title needs to be the same. And if you want to defer all tax, you simply have to purchase at least as much as your net sale and use all of the proceeds. So if you sell a property for 320,000, and there was 20,000, in closing costs, your net sale is 300. So you have to purchase at least 300,000. If there was $100,000 mortgage on that, then you have 200,000 in cash that goes into your exchange account. So your goal to defer all tax would be to buy at least 300,000 in real estate, using all 200,000 in cash. 

But the cool thing is you can allocate That cash in any way that you want. So let’s say you found a property for $150,000, that you wanted to buy for cash, you could do that and use the $50,000 as a down payment on a $300,000 property. So you just got yourself two for one, you just sold one property, you purchased two, one of them is debt free. So you did have a had a think there, I call it defensive investing, you just took a part of your equity, and you protected it from debt risk. But meanwhile, on the other transaction, you’re still getting the benefit of the arbitrage of leverage. And that’s one of the greatest applications of the 1031 is the ability to sell one and buy multiples, or to go the opposite direction, sell two or three and combine them to buy one bigger investment. You could go either direction.

J Darrin Gross  36:06  

And I like the the the flexibility of it, I think the the going from one to many is probably a little bit easier than going for many to one based on the timing there. But nice to have the flexibility there. 

Dave, if we could, I’d like to shift gears here for a second. By day, I’m an insurance broker. And I work with my clients to assess risk, and determine what to do with the risk. And there are three different strategies we typically consider. We look to see if we can first avoid the risk. If that’s not an option, we look to see if there’s a way to minimize the risk. And when we can’t either avoid it or or minimize it, then we look to see if we could transfer the risk. That’s what an insurance policy is as a risk transfer vehicle. And I like to ask my guests if they can look at their own situation, whether it be themselves their clients, investors, tenants market, however you want to look at the question. But if you if you can assess and identify what you consider to be the biggest risk. And, again, for clarification, while I’m an insurance broker, I’m not necessarily looking for an insurance related answer. But if you’re willing Dave Foster, I’d like to ask you, what is the biggest risk?

Dave Foster  37:39  

What a great question. You know, I like to think of risk as having been a coin that has two sides. And on one side, I think the greatest risk in both my life. And in my investors, life has been the risk of inaction. We want we had a goal of moving on to a sailboat and living and living out here raising our boys. And oh my gosh, that was the greatest period of our lives. But boy did we have to overcome a lot of naysayers, and a lot of fear, to take that risk. But the risk of inaction had far greater consequences than the risk of actually doing it. And that’s something that Mark Twain actually said it 20 years from now, the things that you regret are not going to be the things that you did, they’re going to be the things that you didn’t do. So I see that risk of inaction has been huge. But the other side of that coin, is that with the 1031 exchange, and with what to build wealth, the greatest risk you’ve got is not exercising patience, and let your money work for you. Everybody talks about passive income, but passive income doesn’t happen overnight. It happens in stages over time. That’s my coin of risk.

J Darrin Gross  39:11  

No, that’s true. You know, it’s funny, you mentioned 20 years, and it did just flies by Yeah, I still can think back. You know, further than 20 years. I’m always shocked when people go well, that’s old. I’m like, What are you talking about? I can remember that like yesterday.

Dave Foster  39:29  

To true.

J Darrin Gross  39:30  

Definitely. Dave, Where can the listeners go if they would like to learn more connect with you?

Dave Foster  39:37  

Yeah, best place to catch us for all your 1031 needs is going to be www.the1031 investor.com. And we have a whole set of like I said, I think it’s 34 and counting videos on how to Stroud to strategically use the 1031 exchange. There’s a primer and review paper that you can use That goes into more detail of all you and I talked about, and just a lot of resources for you. And you can catch us through there.

J Darrin Gross  40:08  

Awesome. All that’ll be in the show notes for anyone that’s not able to write that down. But, Dave, I want to say thanks for taking the time today. I really enjoyed our talk. Learned a lot, and I look forward to doing it again soon.

Dave Foster  40:25  

That sounds awesome, and you of all, people will understand EMAW. Every Man A Wildcat! Right?

J Darrin Gross  40:31  

There you go, especially right now. Go Cats Go!  So, all right. Well, for our listeners, if you liked this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow? That’s all we’ve got this week. Until next time, thanks for listening to Commercial Real Estate Pro Networks. CRE PN Radio. 

Announcer  40:56  

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