CJ Follini: Hey Mike, nice to meet you. Thank you for being here and why not give our readers and viewers a quick intro to you.
Mike: Well yeah CJ, thanks for having me. I’ve been around in the real estate vicinity for over a decade, first as a broker and then was an positions director for a private Equity company buying apartment buildings 50 to 100 million and utilizing the 1031 to compound and expand our portfolio. Today I’m the VP of growth at 1031 specialist. We’re qualified intermediary. We help investors facilitate their 1031 exchanges which means they don’t pay a diamond tax when they sell their property and buy a replacement property. We’ve got the very hard goal of trying to make 1031 more relevant and have more investors utilize it because in my opinion it’s an interest free loan given to us from the US government and I’m not sure why more people don’t use it.
CJ Follini: I will say that as a marketer and head of growth for a 1031 firm you got a tough job. You are not selling Whole Foods or Shoe Sale. You have a tough job trying to explain and market a concept like 1031. It’s not something that people wake up in the morning and say you know what I got to do a 1031.
Mike: And honestly like it’s kind of bizarre. We’re trying to Market it and simplify the information so it’s easily digestible in kind of 2024 branding but the real problem CJ is like it’s not even taught at the licensing level. There’s maybe 14 words when a real estate broker goes to take their real estate exam to get licensed about 1031 or DSTs and so the problem really stems from a lack of education for a lot of people and the only way people are aware of 1031 is if they have a client doing them or if someone has told them in their center of influence that hey maybe you should explore doing one.
CJ Follini: Very interesting. I think it’s a great point. We haven’t even started the interview and you already made a great point about education and the fact that I don’t understand how 1031 in order to do well by their clients how real estate brokers that’s not mandatory education. I don’t understand it. I did too. Actually at the same time I used a QI qualified intermediary we also had a QP. It was quite a complicated and we had to then take the boots well we’ll get into it. Why don’t we use this as a jumping off point and I’ll start the questions because really interesting. I find it interesting and I also find interesting that not more people also find interesting. You ready?
Mike: I’m ready, go.
CJ Follini: Let’s start really General. Explain what a 1031 exchange is in simple terms. Let’s do a crayon animation explainer video and in that explanation how is it such a powerful tool for new Real Estate Investors looking to build long-term wealth.
Mike: I think in the most simplistic terms CJ a 1031 exchange is the swap of one investment property for another investment property without paying tax. There’s this term called like kind that people get really confused but the reality of it is like it’s any investment property for any investment property in any City in any state in the US and actually 1031 have been around for over a hundred years. I’m gonna break this down even simpler for the viewers out there. A 1031 exchange is just like any other normal real estate transaction except for two key differences. Number one you have to use something called the qualified intermediary. My company 1031 specialist which is an independent third party mandated by the IRS to facilitate someone’s 1031 exchange. They in turn do three things. They educate the client, they make sure that they get the tax benefit and from a compliance standpoint they get all the documents needed to turn into the IRS called an 8824 form at the end of the year and finally we’re not the bank. We don’t hold the funds but we partner with a publicly traded institution that protects and directs protects the funds during the transaction. And number two the other point is as an investor you cannot take constructive receipt of the funds. So at closing you cannot have the funds hit your bank account even for a second or the IRS deems that possession. So what qualified intermediaries do is help the investor set up a segregated trust account in their name, their personal name or their entity’s name, whatever is on the property that they’re selling in order to have the funds go there for the duration of the transaction.
Since we’re into it already there are a couple guidelines to 1031. Number one you’ve got 45 days from closing of the sale of the property that you’re selling, it’s called the relinquished property, to identify up to three properties as a replacement property and then you must close on the transaction within six months or 180 days. So that’s from a simplistic view of how the 1031 really works.
CJ Follini: I’m going to get back to that because my next question was you just preempted it was first and most critical steps but I want to say something about like kind and this is from personal experience. When I was selling we sold at a large capital gain for industrial land. It was a gain of more than $15 million and we wanted to 1031 into two replacement properties. So one thing we will get the boot which is also known as the gain. It had to be split and there had to be two account set up because the investor or in this case in any case in 1031 you’re both a seller and you’re a buyer. You’re selling real estate right. You’re a seller of real estate and then you’re a buyer of real estate also as an investor of real estate. So you’re a seller and a buyer. What you said is take constructive control of the funds. We can’t touch the money. That’s really it right? We cannot touch the money when we sell or even when we buy. You’re our straw man. You’re our IRS dictated straw man right.
Mike: We’re the facilitator right. We like to say we kind of facilitate the transaction. It’s really simplistic and I think a lot of people overthink like what a 1031 exchange is. Think about the home buying process for a second CJ. It is almost identical to the home buying process when you’re going to buy and sell your home. Typically you put your home on the market and then you start looking for another house to purchase right. It’s almost the exact same thing with a little bit of a different timeline but people are under the gun and under pressure to find a replacement home if they’ve put their property in the market and someone makes an offer and they get under contract. I think for most people it’s just all about planning and planning ahead and we can get into that a little bit later but this is a great tool to help compound wealth. The real purpose of the 1031 is think about it. With more Equity you’re able to buy more properties that generate more depreciation, more cash flow and ultimately can generate more wealth faster. So that’s really the point of a 1031.
CJ Follini: So when you say more Equity that means you’re not paying 15 or 20% depending on the term of the gain. You’re not paying that to the government. You have those that 15 to 20% of the gain that would have gone to the government in taxes. You have that to buy and invest in a larger either home, I like your analogy, or investment property. Let’s jump into next question. So we’ve answered some of this but I’m gonna be specific. What are the first and most critical steps to take when beginning the 1031 exchange process?
Mike: So you definitely need to engage with a qualified intermediary. You cannot close on a property and then all of a sudden decide to do a 1031 after you close. That is the biggest thing that we get calls daily. Hey I just closed last week, can I do a 1031? Well no. People just aren’t educated. So what we always say CJ is planned ahead and so while you’re marketing your property with the broker you should be looking for replacement property. You can actually make a short list yourself. You can put a property under contract but the clock doesn’t start until you sell the property that’s on the market right. So a lot of times folks will call us and say hey I’m closing, it’s Monday, I’m closing on Friday, which is totally doable. It happens all the time but then they feel that pressure a little bit more because now they’re under the gun from a timeline perspective. Just so the viewers know CJ like the time, the deadlines are firm. So it doesn’t matter if the 45th or 180th day are on Thanksgiving like tomorrow, a Friday, a Saturday, a Sunday or a holiday. Those deadlines are firm. That’s pretty important.
CJ Follini: So it really is lining up that timing. Six months once the clock starts. In fact it’s interesting, a lot of the Brokers, Jones Lang, LaSalle, CBRE, NewMark, right on their intake forms on their websites or for any property that they’re selling as investment property there’s a question are you in a 1031 exchange and I think that’s to let them know that a clock is ticking.
Mike: I mean look I think there’s a general narrative out there CJ that like 1031 buyers overpay because of that.
CJ Follini: I wasn’t gonna say that but yeah as a real estate guy that’s the best investor you want.
Mike: But it’s kind of a false narrative just because like as a 1031 buyer or seller like you don’t need to tell anyone besides your trusted advisors, your QI, your team because think about it right, if you’re gonna if you’re exposed and saying hey I’m in a 1031 or hey the seller is going to do a 1031 you’re actually leveraging against yourself right. So we actually recommend people to not disclose that they’re in a 1031. There’s no law in the IRS that states you have to disclose it even on the contract. So a lot of people just mistakenly put their oh I’m in a 1031 and then obviously you know the people who don’t plan tend to find themselves in situations that aren’t favorable. But I will add this one thing, we always recommend do not do a 1031 or buy something, do not let the tax Tail Wag the Dog. So if you’re just going to purchase something to avoid paying taxes, it’s better to just opt out of doing a 1031 and just pay the tax.
And you said something earlier CJ like it’s really 30 to 40% taxes that someone’s liable for. It’s not just federal capital gains. It’s state taxes which in California could be 13.3% or Florida and Texas could be zero. There’s also something called the net investment income tax for higher earners. That’s another 3.8% tax rate and then there’s depreciation recapture tax. So if someone is depreciated their building and does do a 1031 like they could be taxed in a maximum of 25% of the amount of depreciation claimed on the property. So there’s a bunch of different things that in doing a 1031 you can defer all those taxes.
CJ Follini: I wasn’t even aware of that. I forgot about our California deals and we got that tax. That was a little bit of a surprise when we did it because we did it in a rush. It wasn’t a 1031 but we did in a rush and I said wait what, what’s that tax? Who told me about tax?
Mike: We work nationally so we have to know every single tax municipality tax environment and that one was a shock in California.
CJ Follini: So what are some of the common mistakes that first time investors sellers 1031 exchangers, what are their common mistakes that they that you’ve seen and how to avoid them?
Mike: Look I think like again it just comes down to planning. I think there’s a lot of other myths out there like just because you’re selling a multifamily property doesn’t mean you have to buy another multi property. Like the like kind thing trips up a lot of people. A lot of people think like they don’t have any options but the beauty of a 1031 really is you have infinite amount of options. You can go from an apartment building to an industrial park. You can go divest from an office building which we’re seeing right now and buy a single family rental portfolio. There’s almost infinite options and a lot of people use this strategy to reallocate the geography of their portfolio. So we see a lot of people coming out of California which is a really high appreciation Market with no cash flow then they pick up some stuff in the Midwest and all of a sudden they have a ton of cash flow. I think from a mistake standpoint it’s do the hard work up front and just get educated. I mean not to plug ourself a little bit but like we’ve got some of the best educational materials out there to really simplify the process.
CJ Follini: That’s how NOYACK found you. So it works.
Mike: He did. We and I’ll just say this because I think it’s interesting to the time that we’re living in. About nine months ago we created, we saw the way technology is going. I’m sure everyone on this podcast will know about chat GPT. We actually created our own 1031 AI GPT tool and we hired an AI engineer to build it. We battle tested it with some of the top tax structuring attorneys and CPA in the country but here’s the real kicker guys. We fed this thing a data set of 88,000 words of 1031 papers, IRS Revenue rulings, the tax handbook and so now any client, any broker, any partner can get great information in 10 seconds or less. It’s in a chat tool on our website or they can email AI@1031 and get an email back in a minute but the point being is like it’s hard for all of us today in this world of instant gratification and constant distraction to get good information and no one has name recall of anything right. So we decided to make it a great tool for people. Any scenario, any question, it can answer. So we’re trying to make it super super easy for people.
CJ Follini: Ingenious by the way. We’re building, we’re launching one for personal Wealth Management, Millennial Wealth Management in one month. We did the same thing. We did a million words because I mean it’s a very broad topic. Personal wealth management is like there’s like a whole curriculum that we had to feed information and train it. Amazing that you did that and actually because your topic is so focused it actually would perform really well knowing what I know about building a small language model whether it’s a chatbase like you might be referring to or an actual LLM which is a large language model. Ours is a small language model. I think it’s an amazing way to teach yourself especially when the topic is like 1031 and ping it questions. That’s a great idea so congratulations on that.
You also answer my next question about timing so I’m going to jump and say what strategies or Tools in today’s competitive market would you recommend to new investors for identifying securing strong replacement property and I’m glad you’ve emphasized the idea of lifetime because when I did mine admittedly and this was a long time ago before there was GPT or even any of most of the internet frankly. It was in the late 80s. I was stuck on the like kind thing too and then I met a QI just like yourself and they said yeah no you don’t have to go back into the same medical office building or back into same dirt industrial land that you just sold at a great profit. You can go the opportunities are infinite in all commercial real estate. So I’m glad we that is the one takeaway I think is really important is to throw away the idea of like kind sell this kind and get find the exact kind because that almost never lines up.
Mike: And look I think you asked the question and I think I heard her correct like what are the planning solutions to identify a property and have a successful exchange. Well number one I think the most successful people are the family offices and institutions that actually go out and do this and close on the same day and line it up or they even do something called the reverse exchange and they buy their property first and sell a property in their portfolio. There’s a little bit more risk in that market today.
CJ Follini: Hold on with that. I want to focus on that that’s really interesting because that solves a lot of problems and I’m wasn’t aware of that of a reverse exchange.
Mike: A reverse is the opposite right. So the investor buys first. They have to be really well capitalized. Most investors can’t do that because they need the equity to buy the property.
CJ Follini: Exactly.
Mike: And then they choose an investor chooses a property in their portfolio to sell it within 180 days but it’s a little bit more complex than that. We, there’s a lot of different steps that are involved and I think just for the sake of being simplistic on this podcast is kind of an introductory course like most people won’t be doing a reverse exchange. It’s really meant for people like family offices that are well capitalized. However I will say going back to the planning CJ like think about the mechanics of when you’re putting your property on the market. You can actually do five different things that really helps you plan and make sure that the 1031 is successful before the 45 day clock even starts. So before you even sell your property you can do the following: you can have a broker short list 10 properties for you, actually go out and identify and property or properties, you can enter into an option contract to buy a replacement property.
CJ Follini: Harder, harder, a little bit easier these days but like when the debt was like running like water that would have been pretty hard but now maybe you can do an option contract.
Mike: And the most important thing is you can actually put your target property or properties under contract assuming you don’t go hard of course because you don’t want to put money at risk and then obviously you can do the reverse exchange but you still are have a little bit of risk because you’d have to sell something in your portfolio to satisfy it. But I think the thing is planning really is a solution for 1031 and like most things in life and if you think about it like the alternative to not planning is paying 30 to 40% of the taxes. So if you treat this like a full-time job you’re going to be saving hundreds if not millions of dollars when you do a 1031 exchange. And I think the real thing, like Charlie Munger said is you don’t want to poison the compounding well of tax-free compounding and it’s a really really beneficial tool that a lot of people just they don’t set up a plan for it and I’d rather as an investor myself start looking to see what’s out there versus just put my property in the market if I don’t have to, that way I can line myself up for a successful exchange.
CJ Follini: Speaking of that compounding I had another personal anecdote. We, one of our investors in the multifamily office I ran before NOYACK, they told me the story that they learned way back when again 70s 80s when it was still a little bit newer to the larger commercial real estate investment community and they did a 1031 exchange. Now he was much older and years and years and years have had gone by and he said I still haven’t paid that tax. Why? I did three or four 1031 exchanges and I just kept rolling over the taxable gain into additional 1031. He’s like I’m gonna die and never pay that tax except actually as the estate but they already had a plan for that too.
Mike: CJ this is another myth like well why should I do a 1031 eventually I’m going to have to pay the taxes right? Well really the grand masters of the top real estate families in this country utilize the 1031 exchange strategy. It’s kind of called swap till you drop and so the way it really works is when your time on Earth is up and your kids inherit your portfolio or whoever inherits the portfolio they’ll get a step up in basis and the lifetime of appreciation that you made happen they won’t have to pay a dime in tax. Think about that. And so that is so powerful and a lot of people don’t realize that because they’re either miseducated, they clearly don’t know but that is what gets passed down from generation to generation and you’re talking hundreds if not billions of dollars have been utilized this way.
CJ Follini: So there’s tax deferral and it’s great we love tax deferral but what you just described is unfortunately death has to occur for it to happen but that’s actually sort of tax elimination because by swapping until they drop, i.e. dead, that step up and basis eliminated a portion of their original capital gain tax. That’s the only way 1031 I know in all Tax Strategies where you have tax elimination not tax deferral or tax transformation. That’s elimination.
Mike: I mean what other tool out there is like this right in the real estate world. I don’t want to use this term but I want to make 1031s definitely more relevant. I want them to, here’s a stat for you guys one in seven commercial transactions are 1031 so like 14%.
CJ Follini: Is that right? 14%? Way higher than I thought.
Mike: Way higher. It should be one and three or one and two because endowments, REITs, Pension funds, certain types of syndications use 1031s and so why isn’t this being utilized more and it’s just because people simply don’t know about it and that’s really the issue. So we’re trying to mass educate from the licensing level from The Brokerage level to the invest level and we’ve got to chop a lot of wood in the next 10 years to make sure we get to that point.
CJ Follini: I’m all in on the education. I agree with you that has been a big inhibitor. A lot of people don’t know. When I did it and I’m a real estate professional and even as long since I was 12 years old really doing real estate investment with my father and solo, I didn’t know when I did that first transaction in the early 90s late 80s, the first, I didn’t know there was a lot of misconception, like kind being one. Didn’t understand the whole QI QP role. I will say this, I’m gonna push back on one thing. I agree with everything you said but we’re leaving one thing out that comes from that experience as well and I’ve done a few now. There is a cost. It’s, I wouldn’t call it, I mean I love the gain deferment but I wouldn’t call it super efficient. Do you agree or disagree?
Mike: I mean look like there are certain times you should do a 1031, there are certain times you shouldn’t do a 1031. Like I think as an investor like if you can’t replace the cash flow or the cash on cash like there’s really no reason to do a 1031 or if you’re trying to level up right. You buy a four unit, it performs well, you take the equity and then you buy a 12 unit or whatever. So I think just in general people just are conditioned the wrong way right now in terms of how they think about it. Like the fee to do a 1031 exchange is very very low. It’s our fee is $1,195 so it’s not a cost thing I think it’s just it comes from.
CJ Follini: The lawyers though, the lawyers got charge a lot more.
Mike: Well they don’t need a lawyer to do a 1031. Honestly they just use, I mean New York is you know out east they have a lot of attorneys that do this stuff. They do it part-time but I think for us like we just specialize in 1031 all day and it’s a very diminimus fee that plays a pretty important part in the transaction. So yeah look I think whenever someone wants to do a 1031 like they really have to think about if this makes sense but let’s just say the 1031 gets eliminated which we don’t think is going to happen in our lifetime, there be no incentive for a lot of people to trade their real estate and so it would I personally think that it’d be a huge detriment to the industry and it’s a fee business. Brokers, investors, lenders, us, a ton of other people make money off of the transaction and the fees and if you’re gonna eliminate the 1031 to get rid of the tax benefit, a lot more people would have no incentive to trade and so I don’t think that’s going away at all.
CJ Follini: The context that we’ve been doing is that you have a single investor making a sale and redeploying that capital gain in another property. What if you are a limited not limited partner but you’re a member of an LLC, you’re a minority member, the managing member of that LLC decides to sell, hopefully you’re friendly and then they listen to your timing, what are the steps if you have a LLC interest but are not the controlling interest?
Mike: So you either have to do it all together, like so the same LLC has to swap into the next property. However there is something called a drop and swap which is used when dealing with Partnerships with multiple members and typically what happens is before, typically before closing and this is up to the tax structuring attorney, like we’re not CPAs, we don’t give tax advice but typically you’re gonna, the partnership is or the LLC distributes the property to the partners or members and creates something called a tenant in common and that typically means that instead of the property being held by the partnership or LLC it’s now held by the individual members in their own names based on the percentage of ownership that’s put on the deed and so then each member can independently exchange their undivided interest in the property for a separate replacement property under the rules of a 1031 exchange. So this is really common.
CJ Follini: You know a tick, tenant in common, they do that. So that’s an extra step basically you go from an LLC to a tenant in common ownership interest, a tick, and then you exchange.
Mike: Think about let’s say the three of us are in an LLC right. The property performs really well. CJ you and I want to continue to go on and do a 1031 but ANIR wants to cash out right just because ANIR always wants to cash out.
CJ Follini: By the way that’s that’s very appropriate, very appropriate example. Wants to cash out.
Mike: And so like well I don’t want to cash out, you don’t want to cash out, you don’t want to pay the tax, you want to keep it rolling and so that’s when you set up a tenant in common and essentially you’ll be able to go your own separate ways at the closing. So we see that a lot with a lot of Partnerships. As much as we like to think about it like Partnerships lasting forever, lifestyle circumstances change and this is a great way to maintain the tax benefit for everyone in the transaction.
CJ Follini: So I think this is the last question. I gave you a little heads up that I was going to ask this. Delaware statutory trusts, this is something that I’ve actually learned again I was a pretty traditional large scale fund and multifamily office owner. Even the LLC even though the numbers were big they were pretty plain vanilla LLC ownership Delaware and then we did the 1031 which still went from one LLC to another LLC. Delaware statutory trust I learned about three or four years ago, later in my career. They’re often mentioned in connection with 1031. I know a couple of our fund competitors who have offered up. JLL has a very big Jones Lang LaSalle has a very large Delaware statutory trust in order to facilitate those people desperate who cannot find a property. So tell me what you think of Delaware statutory trust and what have you seen in their use?
Mike: So typically like a syndication or a regular REIT aren’t allowed in by the IRS to do a 1031. So basically what a Delaware statutory trust is, it’s a legal entity created under Delaware law that allows multiple investors to hold fractional ownership interest in a property. Is as many as 2,000 LPs in a property. A tenant in common can go up to 35 and so when you’re talking at scale here, it’s a really great Tool. The thing with DSTs, they’re probably 10% of the 1031 exchange market right now. I think eventually it’ll get to 20 to 30% once the wealth management companies kind of get more aggressive and Market it to their clients more. But I think here’s the rub on DSTs. Number one, a lot of people still want exposure to real estate and they don’t want the active responsibility of managing their property anymore. So a DST is essentially a way for them to get all the real estate benefits and become a passive investor. The problem with the DST in my opinion is that the front-end load is extremely high, anywhere from 10 to 20%.
CJ Follini: That’s crazy. That’s ridiculous.
Mike: It’s really ridiculous and so there are things I think in the future which will lower that substantially but the problem with a lot of these DSTs are number one, the holding periods anywhere from 5 to 10 years. It’s illiquid right. So like if you want to get out of it you really can’t and number two a lot of these investors that have been having their portfolio for a long time love a sense of control and there’s not a lot of control there because of the sponsor being able to do that. However it is a great vehicle if someone wants exposure to real estate and have all the benefits but I think someone has to do their own due diligence when it comes to the type of deals and the type of DSTs that are out there. We typically don’t give any investment advice even though I have my personal opinion on stuff and so I always say hey ask your representative, ask your broker, ask someone else because as a qualified intermediary CJ like we like to stay completely independent per the law. But yeah I think it’s definitely an interesting space and you just got to be careful because sometimes it seems a little bit too good to be true in my opinion.
CJ Follini: So Mike it’s just you and us here. Tell me what you think about JLL’s DST.
Mike: I mean look I don’t think no one’s ever gonna watch this. I think anything that’s a 4% or four and a half percent coupon Clipper like you’re getting charged 10 to 20% as an investor which makes no sense and there’s no guarantee right. So all it does is create an easier exit for the 1031 because,
CJ Follini: And I don’t think we made this clear so I just want to go back. You’re exchanging the gain on the property that you’re selling for shares in a fund, a Delaware statutory trust which is aka fund that you now own shares in. So you own passive ownership of shares in a fund that was exchanged from the gain of your physical asset that you owned into a fund. Now what you’re saying is if the fund is shitty the DST is still shitty.
Mike: And you can see the last four years there’s been a lot of sponsors in that space not being able to give the dividends that they promised right and so it’s like any investment out there. Like you have to do your due diligence. You have to make sure that it aligns with your investment goals and your strategy and there’s a lot of people out there that they may have a lot of licenses but they just they’re not always acting in the best fiduciary manner because they’re collecting a fee right. Like that’s how they make money and so you just have to be careful. That’s all I’m gonna, I’m gonna comment on on that.
CJ Follini: I can see there’s a lot more you’d like to say about some of the DSTs. Well anyway I’m glad we brought up that Hot Topic in a 1031 conversation. Last thing, we’re going to keep it General, new investors. You like I’m going to build a portfolio, I’m going to be the master of the universe in real estate. What is, how do you see it fitting in the beginning of building a portfolio? Let’s keep it just general and simplistic for the investor who wants that, I’m going to build a portfolio with something.
Mike: So you need Equity to buy property and every time you sell a property if you have to pay 30 to 40% tax left over you’re left with less Equity. So let me just give you guys a real, let me just break it down for you guys really simplistic because I think your viewers will appreciate this slight example that I’m about to give here just on one single transaction. The true power of a 1031 exchange is really the ability for someone to meet their investment objectives without losing Equity to taxation. So I’ve said this before but with more money you can buy larger multiple or more productive properties.
So let’s just say after you sell a property you’re left with $500,000 in equity. If you’re doing a 1031 exchange you don’t have to pay any capital gains tax so you’ll be left with zero dollars of capital gains tax that you’ll have to pay on that same $500,000. Let’s just assume that the capital gains tax that you’d have to pay is $65,000. So the equity left to reinvest over when you’re doing a 1031 is that same $500,000 of equity. When you’re not doing a 1031 it’s only $435,000 of equity. So here’s where the power really gets highlighted. Assuming a 20% down payment, this is more residential obviously, for commercial it’s really anywhere today from 40 to 50, 55, 50% but assuming 20% down just because we’re talking about beginners here. That 1031, doing a 1031 exchange you’ll be able to afford a property worth $2.5 million. That same, if you pay the tax and you’re left with $435,000 you’ll only be able to afford a property worth $2.175 million. So the single difference in just a $500,000 example is $325,000 of purchasing power. So $325,000 gets you more property, more diversification, more bonus depreciation and most importantly more cash flow. So I hope that provides a really simplistic example on just one small transaction. Now add a couple zeros to that and you’ll see over time after you’re doing a bunch of transactions how much further ahead you come out in a 1031 versus paying the tax each time.
CJ Follini: That’s, thank you, that’s, by the way this is the sound bite. This is our clip that we’re going to, that we’re going to promote. It was great because that’s how you ladder up. 1031 is the savior of equity.
Mike: Yep, literally. Savior and savior.
CJ Follini: Hey Mike, really interesting. I learned a lot and I’ve been doing real estate for 30 years and I still learned a lot. So I appreciate your time. This was great and let’s get education out there for all, even the newcomers young adults. Let’s get them educated.
Mike: Great CJ, thanks for having me.
CJ Follini: Thank you Mike.
