January 16, 2025 • 27 mins
William “Bill” L. Exeter is a highly respected expert in the financial services industry with over 40 years of experience, specializing in real estate tax strategies, including 1031 Exchanges, Self-Directed IRAs, and Title Holding Trusts. As the CEO, Chief Trust Officer, CFO, and Treasurer of The Exeter Group of Companies, Bill oversees operations for Exeter 1031 Exchange Services, LLC, Exeter Trust Company, and Exeter Asset Services Corporation.
A pioneer in the 1031 Exchange industry, Bill has administered over 125,000 transactions and is a founding member of the Federation of Exchange Accommodators. He is a sought-after speaker, educator, and expert witness, sharing his knowledge on investment strategies and alternative assets through seminars, podcasts, and media appearances.
Bill holds a Bachelor of Science degree in Accounting from California State University, Los Angeles, and the Certified Securities Operations Professional (CSOP) designation from the Cannon Financial Institute. He is based in San Diego, California.
In this episode:
- Meet Bill Exeter: CEO of Exeter 1031 Exchange Services and industry expert.
- 1031 Exchanges Explained: Their history, purpose, and tax-deferral benefits for real estate investors.
- Why choosing a regulated expert is critical.
- Qualified use, intent to hold, and compliance essentials.
- Importance of consultation and strategic preparation.
- Eligible Property Types: What qualifies for a like-kind exchange, including DSTs.
- Reinvestment Requirements: Meeting deadlines, partial exchanges, and avoiding pitfalls.
- Steps for identifying replacement properties.
The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669. For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.
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Narrator (00:01):
Welcome to The Norris Group real estate podcast, a
show committed to bringing youinsights from thought leaders
shaping the real estateindustry. In each episode, we'll
dive into conversations withindustry experts and local
insiders, all aimed at helpingyou thrive in an ever-changing
real estate market. continuingthe legacy that Bruce Norris
(00:24):
created, sharing valuableknowledge, and empowering you on
your real estate journey.
Whether you're a seasoned pro ora newcomer, this is your go-to
source for insider tips, markettrends and success strategies.
Here's your host, Craig Evans.
Joey Romero (00:45):
Hey everybody, and welcome to The Norris Group Real
Estate Podcast. Once again, I amyour host, Joey Romero, today we
have another great guest, beenon with us for quite a bit of
time, but hasn't been on since2021, so we thought it was a
good time to get him back on.
Joining us today is Bill Exeterof Exeter 1031 Exchange
Services, LLC. He is the ChiefExecutive Officer, Chief Trust
(01:09):
Officer, Chief Financial Officerand Treasurer. Bill's been in
the financial services industryfor over 40 years. He is
administered in excess of125,000 1031 Exchanges. And is
one of the founding members ofthe 1031 Exchange Industries
Trade Association, theFederation of exchange
accommodators. And hasadministered 1000s of self
(01:31):
directed IRAs and individual 401(k) plans during his extensive
career, prior to funding theExeter Group of Companies. Bill
served as President and ChiefExecutive Officer of TransUnion
Exchange Corporation in SanDiego, and prior to that, as
Executive Vice President andChief Operating Officer and
Chief Financial Officer of theChicago Trust Company of
California and its 1031subsidiary in San Diego. In
(01:54):
addition, he has served asPresident and Chief Executive
Officer and Chief FinancialOfficer with two 1031 exchange
companies in the 80s, during the1031 exchanges industry's
infancy. Bill is also served asAssistant Vice President and
Controller of Providence SavingsBank in Riverside, California,
and Assistant Vice President andController of OneCentral bank in
(02:15):
Glendale, California during the1980s. His professional
experience includes 1031Exchange, 1033 Exchange, 721
Exchanges, 121 Exclusions,self-directed retirement
accounts, includingSelf-Directed IRAs and
Individual 401(k) Plans, titleinsurance and escrow services,
trust company management, trustoperations; custody and
(02:35):
investment accounts andinvestment services; commercial
banking; and insurance agencyadministration.Bill graduated
from Cal State, LA with aBachelor of Science degree in
accounting from the Canonfinancial institute, attaining
certified securities operationsprofessionals, a CSOP
designation. That's quite a bio.
(02:55):
So, let's get into theinterview. So, welcome to the
show again, Bill, it's been awhile. It's been since 2021
since you've been on thepodcast. I know, we've been
partners for for quite a bit onthe Florida boot camp, but it's
been a little bit since we'vebeen on the podcast.
Bill Exeter (03:10):
It has been a while. It's been that long. It's
amazing how time flies, right?
Joey Romero (03:14):
Yes, so, let's get right into it, just with some
general questions, what is thehistory and the main purpose of
the 1031 exchange,?
Bill Exeter (03:23):
Oh, great question.
You know, it goes way back. Thisis actually just past the 103rd
anniversary of 1031 exchangesthat dates back to 1921. Yeah,
you know, it originally came outbecause you have farmers and
ranchers who are, you know,exchanging equipment or
livestock, or what have you. Andthe question is, well, what's
the value of those things? And,you know, the value is kind of
(03:45):
difficult to ascertain. Sothat's where Congress kind of
came out and said, 'Well, youknow, if you guys say they're
worth, you know, both herds ofcattle or whatever are worth the
same, then we're just going tolet you swap it, and it's tax
deferred.' So that's reallywhere it came about. And then
fast forward to today. You know,it's, it's just applies to real
estate now. So you can'texchange, you know, livestock
(04:06):
and equipment like we used to beable to, but now it's all about
deferring the taxes, so you cansell your current real estate
that's held for rentalinvestment or business use and
reinvest in other real estatealso held for rental or
investment purposes, and thendefer your capital gain tax,
defer your depreciationrecapture tax, which also means
that, that gain will not berecognized. So you also avoid
(04:29):
the net investment income tax,or what people call the
Obamacare tax. So all aboutdeferring taxes and keeping all
of your equity in your pocket.
Joey Romero (04:38):
Yeah, we'll get into some of those things a
little more in detail, a littlebit. But what's, what's your
role in the exchange process?
Bill Exeter (04:46):
So we're the Qualified Intermediary, at least
on the Exeter 1031 Exchangeside. That's the Qualified
Intermediary. You know, somepeople call it an Accommodator,
facilitator, you know, I've beenin this 41 years. When I first
got into it, people would callit 'Strawman', never really
liked that one. Always soundedkind of weird. And then on the
(05:07):
Exeter Trust Company side,Exeter Trust Serves as trustee
of the qualified trust account,which is the actual trust
account that holds the 1031exchange proceeds.
Joey Romero (05:16):
And are you guys regulated?
Bill Exeter (05:18):
We are regulated.
That makes us one of the fewqualified intermediaries that
has any kind of government orregulatory oversight. That's a
good question, because a lot offolks don't realize our
industry. I should say the 1031Exchange Qualified Intermediary
industry doesn't have anylicensing or regulatory body.
There's no capability to belicensed or regulated. So for
someone to be regulated, theyhave to go down a different path
(05:41):
and we went down the bankingpath and got our own Trust
Company charter.
Joey Romero (05:46):
Okay, so one of the questions I ran across in doing
some of the research, what isthe qualified use rule?
Bill Exeter (05:54):
Ooh, good question.
That's probably the mostimportant thing in the 1031
exchange world, and it reallyboils down to the properties you
sell and the properties youpurchase through the 1031
exchange have to be held forqualified use, and that means
that it's held for some kind ofincome production. You could
rent the property out. You couldlease the property out, you
know, whatever it might be, butyou're producing income.
(06:16):
Contrary to what you see on theinternet, though, where it says,
in a lot of sites, it'll say ithas to be held for rental. What
they really mean is it has to beheld for investment. So you
could buy property, usuallydirt, but you could buy any kind
of real estate and hold it forcapital appreciation. So held
for investment would alsoqualify or you could buy a piece
of real estate that you can usein your business. Maybe it's a
(06:40):
little office or retail orwarehouse building that you can
use in your business. So as longas it falls into one of those
categories, it satisfies thequalified use. And a lot of
folks get hung up on the lengthof time they've held title to
the property.
Joey Romero (06:57):
And I was also going to ask, how long do I have
to own it before I can exchangeit?
Bill Exeter (07:00):
Yeah, that's one of the big questions you get all
the time. And I totally getthat, you know, a lot of stuff
that you read out there, or whenyou talk to people, they will
say you have to hold it for twoyears or 18 months or a year and
a day, or, you know, whatever itmight be. And it's important to
note that the tax code, theregulations, they don't have any
(07:21):
holding period required. Itreally just says you have to
have the intent to hold forrental, investment or business
use. Now, the reason people gethung up on the length of time
that you've held the property isthe longer you hold it as rental
or investment property, theeasier it is to prove intent.
But we've got transactions wherethey held it for a month or two,
(07:42):
and were audited, and they wereallowed to, you know, continue
with the 1031 exchange, becausethey could prove there was
intent to, oh, excuse me, andyou know, one of them that I can
think of, right off the bat, theintent was to hold for rental.
But out of the blue, they gotthis offer that was a phenomenal
offer, and they took it. And ofcourse, they got audited, and
(08:04):
they tried to disallow theexchange, but he was able to
prove that his intent was tohold, but he got an offer out of
the blue, and we had another onewhere there was a business
reason why he couldn't rent theproperty. So again, even though
it was a month and a half, theyallowed his exchange to qualify.
So it's all about intent andwhat you can prove, but the
longer you rent that, the easierit is to prove intent.
Joey Romero (08:25):
With that in mind, do you have a recommendation, if
somebody like, let's say theyreach out to you and say, I'm
thinking about, you know, buyinga property and possibly
exchanging it. Like, can they doany kind of preemptive like,
just, consultation with you, anddo you have a recommendation six
months a year, you know, twoyears or anything like that.
Bill Exeter (08:46):
Sure, we can always do consultations. We're more
advisory and consultative innature than a lot of our
competitors. You know, 1031exchanges they should be really
simple, and they've just gottenreally complicated over the
years.
Joey Romero (08:58):
They're scary for a lot of people.
Bill Exeter (09:00):
They really are.
Yeah, people go, Oh, geez, Idon't want to do one of those,
but I guess I have to, you know,that kind of stuff. And you
know, once you get to know them,they're actually not that scary,
but they just appear that way.
So we certainly can walk throughthe process, answer questions,
bounce ideas, office, thingslike that. So that's always
important. When folks ask us thequestion, you know, how long do
I have to hold title to theproperty. Usually it's in
(09:23):
conjunction with, can I moveinto the property later, or
something along that line. Sothe issue is, again, goes back
to intent. So if it's a plainvanilla transaction and you're
selling rental property, you'rebuying rental property, you're
not going to push the envelopeor anything like that. I think
one year is sufficient. I thinkit straddles two tax periods.
(09:44):
You're in really good shape, youknow, if, if you're going to
plan on maybe moving into it,you know, you want your initial
intent to be held for rental orinvestment purposes. I'd
probably rent it for two years,which will straddle three tax
period, which is reallyconservative. I just don't want
to do battle with any kind ofauditor. It's always tough.
Joey Romero (10:06):
So, let me understand that. So let's say I
started and I moved to a house,lived there for two years, but
then I rented it for five years.
Now, even if I moved back andlived for one more year there, I
could still use it as a 1031exchange?
Bill Exeter (10:24):
point. But there's some interesting tax planning
opportunities there, becauseyou've got the 121 exclusion.
That's the $250,000 in tax freegain, or 500,000 if you're
married, really 250 per person.
And so if you, if you boughtproperty, you and you could say
(10:47):
you lived in it for two out ofthe last five years, you're
going to get 250 or 500,000 taxfree. Now, when you move into
it, and then move out and rentit, then move back into it, it
gets a little more complicated.
So that's where your tax advisoris going to have to sit there
and look at it. Okay, how doesthis affect it? For example, if
it was a primary residencefirst, and then you moved into
(11:09):
it, a lot of people think all Ihave to do is live there for two
years and I get 500,000 taxfree. Unfortunately, it doesn't
work that way. It's pro-rated,but there's a lots of planning
opportunities there, so.
Joey Romero (11:21):
Then, and that's what maybe we should have
started this whole show as talkto your CPA before you talk to
anybody, right?
Bill Exeter (11:30):
Very, very true.
Joey Romero (11:32):
Now, we got to what you can exchange. But what can
you change into and have? Howhas that changed over the years?
Hey, really good question,because there's a lot of there's
still curriculum out there,online material and things that
will say, if you sell a condo,you have to buy a condo. If you
sell apartments, you have to buyapartments, etc. And that is
(11:53):
absolutely not true. It neverhas been true. The definition of
like kind property is literallyyou have to sell real estate and
buy real estate. So, anythingthat is considered to be real
property will qualify for 1031exchange treatment. So the real
issue is, is it held forqualified use? Yes or No. If it
is and it's real estate, thenit's going to, it'll satisfy
(12:15):
that requirement. And Like-Kindincludes things people wouldn't
even think of, like air rightsand water rights and mineral
rights, certain types of oil andgas investments would qualify.
We've done exchanges ontimberland, vineyards, cell site
towers, billboards. There's lotsof things you can exchange,
(12:36):
either out of or into, as longas it's considered to be real
property.Before 2017 youactually were able to do 1031
exchanges on non real estate orpersonal property. So we would
do exchanges on, you know,aircraft, shipping, trucking,
equipment, livestock, all sortsof things. But today it only
applies to real estate.
(12:57):
Yeah, you know, a lot ofinvestors that call us to get to
refuse. It's like they 'Well, Iwant a 1031 an apartment
building, but I can't buy houseswith that? Can I?'
Bill Exeter (13:08):
Yes, absolutely.
And the answer is, absolutely.
As long as it's real estate, youcan absolutely do that. Yeah.
Joey Romero (13:14):
Now this was interesting. You can exchange
foreign properties?
Bill Exeter (13:18):
You can, you know a lot of things you, again, a lot
of things you see on theinternet out there will say you
cannot exchange foreignproperties, which is not true.
But what they're trying to sayis you can't sell foreign
property and buy US property orexchange into US property, and
you can't sell US property inexchange into foreign property.
But if you're a US taxpayer, andyou've got rental, investment or
(13:42):
business use property in aforeign country, and the sale of
that property is going totrigger a US tax consequence.
You could do a 1031 exchange,but it has to be selling foreign
property and buying foreignproperty. Of course, it won't
defer any of the foreignproperty taxes that might be
due. It would only defer the UStax consequences, but we've done
(14:04):
them now in about 45 differentcountries, and every country is
a little different.
Joey Romero (14:11):
That's gotta be quite a circus. Now, before I
decide to do a 1031 exchange,what would you say is the most
important thing to consider, ifI'm an investor?
Bill Exeter (14:22):
Great question, because I think the most
important thing right off thebat is talk to your tax advisor.
And almost nobody does that,which is unfortunate. But, you
know, as a taxpayer, you haveall sorts of things on your tax
return. So you may havesuspended passive activity,
losses you may have netoperating loss carry you
(14:44):
forwards. I mean, there could beall sorts of things that could
offset some gain, or all of yourgains. So you need to know, what
are your tax consequences fromthe sale of that real estate?
And then do you have to do acomplete 100% tax deferred
exchange? You do a partialexchange and still not pay tax?
There may be things that offsetthat, or maybe you don't have to
(15:05):
do a 1031 exchange at all. Sovery important, and we get
people all the time to call andsay, 'Well, I really shouldn't
have done one,' but they did it,and it's too late, so meet with
your tax advisor. The number twois, always have your team
together. You know, you neverknow what's going to come up in
the middle of your transactions.
And if you don't have your team,we're ready to go in case
something drops in your lap,then it can be a little
(15:27):
challenging.
Joey Romero (15:29):
Yeah. So what would you say? I guess this is just a
general question, and maybe it'stoo random to answer, but one
would be the best time or theright time to exchange?
Bill Exeter (15:43):
Oh, great question.
It's my favorite answer, itdepends. And I say that because,
you know, you've got economiccycles and so that comes into
play. You have scenarios wheremaybe you bought one property as
a rental property. It's beenfive years, and you like the
business and you want to domore, it might be time to
(16:05):
diversify. So maybe you sell oneand buy two or three. You might
be retired, and you're tired ofall the you know, repairs and
maintenance and things you haveto do. So maybe you're ready to
sell three or four and buy onethat's easier to manage. So
there's all sorts of differentthings that you can take a look
at. Some people are in a, youknow, let's say a Class C
(16:27):
market, and they want to getinto a Class A market. So
there's just all sorts ofdifferent things that may come
into play. I think most of thetime, you see people
repositioning based on theeconomic cycles and what they
think is going to be the nextbest investment for the next,
say, the next 10 years, orsomething.
Joey Romero (16:46):
Well, that's basically what we did with our
boot camp in Florida. You know,a lot of weeks later, you know,
the appreciation was through theroof, and went and built, you
know, for the price of sellingone or two here they were, you
know, we were building two andtwo five, you know, out in
Florida. What's, you know, thisis another one of these
confusing questions that we getfrom investors is, you know,
they don't really trulyunderstand the difference
(17:08):
between a 1031 and a DST. Canyou tell people how that's
different?
Bill Exeter (17:14):
Absolutely. And I completely get the confusion out
there, because a lot of the DSTsponsors and DST brokers the way
they've done their websites andbrochures, you can't quite tell
you know who's a DST sponsor,who's...
Joey Romero (17:26):
So, what is the DST? Just to for those that may
not know.
Bill Exeter (17:29):
Sure. So the DST is a Delaware Statutory Trust, and
so ignore the fact that it'scalled the Delaware Statutory
Trust. It's a statutory trust.
It owns a very large properties.
It could be one property, itcould be a portfolio of
properties, but typically, thevalue of these DSTs are, most of
(17:50):
them are anywhere from 50million to say, 250 million, so
very large trusts, and theyqualify as real estate for 1031
exchange purposes. So I couldsell my property, 1031 exchange
into a DST, and I couldidentify, like a point .25%
interest, so very tinyfractional ownership position in
the DST. And if I own a quarterof 1% of the DST, I own a
(18:15):
quarter of 1% of everything inthat DST. So if it's one
property or multiple properties,I own a little piece of all of
that. And if there's debt in theDST, which there usually is, the
debt, you don't have to gothrough underwriting or be
approved or anything like that.
You automatically get, let'ssay, a quarter of 1% of whatever
the debt is. It's effectivelynon recourse, so they can't go
(18:37):
after you as an investor if theproperty goes south. So it's
really a great deal there allthe way around, but that's what
it so it's really a replacementproperty option for the 1031
exchange. So when you're lookingat the various players, you have
your 1031 exchange qualifiedintermediary. That's what we do.
That's where you structure the1031 exchange. We work on with
(18:59):
the sale of the closing of yourrelinquished property. We work
with the closing of yourreplacement properties. And the
DST is one of the tools in thetoolbox. So it gives you one
more option to look at forreinvesting in replacement
property.
Joey Romero (19:15):
Interesting. So what if a partner is on a on a
property, or I have a multimember LLC. How does that work
for an exchange?
Bill Exeter (19:24):
Oh, those get confusing and complicated, of
course. The one thing I guess Icould say right off the bat is
investors often think they ownreal estate and they don't. If
it's an LLC like you, like inyour example, and there's
multiple members. It's typicallytreated as a partnership for tax
purposes, so what the investorreally owns is a membership
(19:47):
interest, which is also treatedas a partnership interest for
tax purposes. They don't ownreal estate, and then the entity
itself actually owns the realproperty. So if the LLC is going
to sell real estate. The LLCdoes a 1031 exchange, and the
LLC reinvest in replacementproperty, nice and clean,
perfectly okay, as no issues, itgets really complicated when
(20:11):
people are want to go differentdirections, and they all want to
do a 1031 exchange, but they allwant to buy their own property,
and they don't want to staytogether as a partnership, what
they're really getting is adistribution from the sale of
the real estate through thepartnership. And that doesn't
qualify for 1031 exchangetreatment. There are all sorts
(20:31):
of solutions there. If you have,probably the easiest way to look
at is if you have plenty oftime, and plenty of time would
be defined as probably twoyears, you can drop the property
out of the LLC, deed it out tothe individual members as
tenants in common. Now they'reindividual owners. Hold it for
two years, and then it's easy.
You could sell, and each personcan make their own decision. The
problem is, nobody wants to waittwo years. So there are options,
(20:54):
it just we have to look at thefacts and circumstances and then
try to figure out with theiradvisors what we can do.
Joey Romero (21:03):
Can you expand a little bit on the reinvestment
requirement? What does thatmean? And can you do a partial?
Bill Exeter (21:08):
Yep, good question.
I guess first what you can't door what is not correct, because
a lot of people will call us andsay, I thought all you had to do
was reinvest your equity or yourcash coming out of the sale, or
all I had to do was reinvest mytaxable gain, my profit. Then
neither of those are true orcorrect. It's really the top
(21:29):
level. So let's say you sellproperty for a million dollars.
You could subtract your routineselling expenses, so your
broker's commission, title,escrow, documentary, transfer
packs and things like that, andthat's going to get you down to
a net sale price of about950ish. And that's the magic
number. That's what you have toreinvest. So if you like, with
with your Florida boot camp. Youknow, if you sell in California
(21:52):
for two or 3 million, it's veryeasy to buy five to 10
properties in Florida equal toor greater than whatever your
net sale price is. So it's agreat way to diversify, as long
as you're buying equal orgreater based on that net sale
price.
Joey Romero (22:08):
Well, yeah, a lot of these folks there, like
you're seeing a lot of these old50s and 60s build just in great
locations that are, you know, amillion and $2 million and
they're 1300 square feet.
Bill Exeter (22:21):
It does part of the mind.
Joey Romero (22:23):
And they go and exchange it. They're getting
almost 2000 square feet of brandnew build. And, you know,
they're getting three Orville,you know. So it's crazy before I
get into the specific types ofexchanges. Well, actually, let's
just jump right in. I knowthere's three main, main ones.
So, let's go dive into them alittle bit. The first one I want
(22:43):
to talk about is thestraightforward exchange.
Bill Exeter (22:48):
And what I could say too about the forward
exchange first is about 97% ofour transaction volume, or
forward 1031 exchanges. Soalmost everybody does these type
and the forward exchange iswhere you sell your current
property first, and then youreinvest another property after
the fact. Excuse me. So, so mostpeople sell first and then
(23:10):
you've got your time frames,which I guess we'll talk about
to reinvest in the variousreplacing properties you choose.
Joey Romero (23:17):
Yeah, let's talk about that right now. So when is
the 180 day trigger?
Bill Exeter (23:24):
So, let's see that your the sale of your current
property closes today, tomorrowis day number one, and you've
got exactly 45 calendar days toidentify what you're going to
buy, and then after that, youhave an additional 135 days to
complete your exchange. Andthat's a total of 180 so a lot
of investors who call us willsay, 'Well, I thought it was 45
plus 180' it's not. It's a totalof 180. Yeah, that's a it's
(23:49):
like, whoops. You off by 45days. That could be a big
whoops. So it's really 45 daysto ID, another 135 to complete.
Joey Romero (23:56):
Now, can I, can I identify multiple properties,
and can I change it? Or once I'mlike, once I get to the 45 I
understand, like, you're stuck,right? You have to change into
one of those. But so at day 45you have to pick the one that
you're going into, right?
Bill Exeter (24:16):
Yeah, there's really three identification
rules, and as long as you are incompliance with one of those
three, you're okay. Now, thevast majority of people use the
three property rules. So withinthat 45 days, you can identify
up to, but not more than threeproperties, and you're
absolutely right. When you hitthat 45 day mark, you're done.
(24:36):
During the 45 days, you canchange your mind if a property
you had listed is it turns outto be a disaster, so you want to
take it off the list, you canchange your mind. Once you pass
the 45 day mark, then you'restuck with what you've
identified, and you have to buysomething on that identification
list. It's funny, we get callsall the time and say, I just
(24:57):
thought you had to identify butyou can buy anything. So it's
like, you know, you have to findsomething on the ID list, so
that's critical. But then youget investors who say, I want to
sell one property, andCalifornia is a good example. As
an example, we had somebody sellproperty a few months ago,
closed here in California for 4million. He wanted to diversify,
(25:19):
and he was going to Tennessee.
So he could use the secondidentification rule, which is
what we call the 200% of fairmarket value. He sold for
4,000,000, 200% would be 8million. So he could identify as
many properties in Tennessee, upto $8 million in value. So he
identified 56 single familyproperties. Well, why anybody
(25:39):
would I want to do that? I don'tknow.
Joey Romero (25:45):
A lot of time on his hands, I guess.
Bill Exeter (25:47):
That does. Now he doesn't have to buy all those.
It just gives him the ability toidentify more and go through due
diligence and then narrow itdown to what they actually want
to buy. So I forget, in hiscase, he bought 20 some of
those. So in his case, he soldfor 4 million. You subtract your
closing costs. So his net saleprice was probably 3.8-3.85
(26:09):
something like that. That's allhe has to buy. So he could buy
as many of those singlefamilies, up to or more than
that, 3.8 and then he'sreinvested everything.
Joey Romero (26:19):
That leads me to the question you get. So let's
say, let's say he wanted to, youknow what? I just love some of
these properties. I know I'mgoing to go over my 3.8 What if
I want to buy $5 million worthof properties in my exchange?
What happens at that point?
Bill Exeter (26:35):
Certainly, trading up in value is not a problem.
The more properties involved,the more complicated it gets.
But in that example, you knowhis 200% limit was 8 million. So
if he identified 56 and hebought five or six or $7 million
worth, perfectly, okay. So youcould certainly do that. It's a
great way to to use the equitythat's trapped in your current
(26:55):
property and then reallyleverage that up and buy a lot
of assets.
Joey Romero (26:59):
Well, everyone that's going to do it for part
one of our interview with BillExeter of Exeter of Exeter 1031
Exchange Services, LLC. Be sureto tune in next week to catch
part two.
Narrator (27:08):
For more information on hard money loans, trust deed
investing, and upcoming eventswith The Norris group. Check out
thenorrisgroup.com. For moreinformation on passive investing
through the DBL Capital RealEstate Investment Fund, please
visit dblapital.com.
Joey Romero (27:28):
The Norris group originates and services loans in
California and Florida underCalifornia DRE license 01219911.
Florida mortgage lender license1577 and NMLS license 1623669.
For more information on hardmoney lending go to
thenorrisgroup.com and click thehard money tab.
Welcome to The Norris Group real estate podcast, a
show committed to bringing youinsights from thought leaders
shaping the real estateindustry. In each episode, we'll
dive into conversations withindustry experts and local
insiders, all aimed at helpingyou thrive in an ever-changing
real estate market. continuingthe legacy that Bruce Norris
(00:24):
created, sharing valuableknowledge, and empowering you on
your real estate journey.
Whether you're a seasoned pro ora newcomer, this is your go-to
source for insider tips, markettrends and success strategies.
Here's your host, Craig Evans.
Joey Romero (00:45):
Hey everybody, and welcome to The Norris Group Real
Estate Podcast. Once again, I amyour host, Joey Romero, today we
have another great guest, beenon with us for quite a bit of
time, but hasn't been on since2021, so we thought it was a
good time to get him back on.
Joining us today is Bill Exeterof Exeter 1031 Exchange
Services, LLC. He is the ChiefExecutive Officer, Chief Trust
(01:09):
Officer, Chief Financial Officerand Treasurer. Bill's been in
the financial services industryfor over 40 years. He is
administered in excess of125,000 1031 Exchanges. And is
one of the founding members ofthe 1031 Exchange Industries
Trade Association, theFederation of exchange
accommodators. And hasadministered 1000s of self
(01:31):
directed IRAs and individual 401(k) plans during his extensive
career, prior to funding theExeter Group of Companies. Bill
served as President and ChiefExecutive Officer of TransUnion
Exchange Corporation in SanDiego, and prior to that, as
Executive Vice President andChief Operating Officer and
Chief Financial Officer of theChicago Trust Company of
California and its 1031subsidiary in San Diego. In
(01:54):
addition, he has served asPresident and Chief Executive
Officer and Chief FinancialOfficer with two 1031 exchange
companies in the 80s, during the1031 exchanges industry's
infancy. Bill is also served asAssistant Vice President and
Controller of Providence SavingsBank in Riverside, California,
and Assistant Vice President andController of OneCentral bank in
(02:15):
Glendale, California during the1980s. His professional
experience includes 1031Exchange, 1033 Exchange, 721
Exchanges, 121 Exclusions,self-directed retirement
accounts, includingSelf-Directed IRAs and
Individual 401(k) Plans, titleinsurance and escrow services,
trust company management, trustoperations; custody and
(02:35):
investment accounts andinvestment services; commercial
banking; and insurance agencyadministration.Bill graduated
from Cal State, LA with aBachelor of Science degree in
accounting from the Canonfinancial institute, attaining
certified securities operationsprofessionals, a CSOP
designation. That's quite a bio.
(02:55):
So, let's get into theinterview. So, welcome to the
show again, Bill, it's been awhile. It's been since 2021
since you've been on thepodcast. I know, we've been
partners for for quite a bit onthe Florida boot camp, but it's
been a little bit since we'vebeen on the podcast.
Bill Exeter (03:10):
It has been a while. It's been that long. It's
amazing how time flies, right?
Joey Romero (03:14):
Yes, so, let's get right into it, just with some
general questions, what is thehistory and the main purpose of
the 1031 exchange,?
Bill Exeter (03:23):
Oh, great question.
You know, it goes way back. Thisis actually just past the 103rd
anniversary of 1031 exchangesthat dates back to 1921. Yeah,
you know, it originally came outbecause you have farmers and
ranchers who are, you know,exchanging equipment or
livestock, or what have you. Andthe question is, well, what's
the value of those things? And,you know, the value is kind of
(03:45):
difficult to ascertain. Sothat's where Congress kind of
came out and said, 'Well, youknow, if you guys say they're
worth, you know, both herds ofcattle or whatever are worth the
same, then we're just going tolet you swap it, and it's tax
deferred.' So that's reallywhere it came about. And then
fast forward to today. You know,it's, it's just applies to real
estate now. So you can'texchange, you know, livestock
(04:06):
and equipment like we used to beable to, but now it's all about
deferring the taxes, so you cansell your current real estate
that's held for rentalinvestment or business use and
reinvest in other real estatealso held for rental or
investment purposes, and thendefer your capital gain tax,
defer your depreciationrecapture tax, which also means
that, that gain will not berecognized. So you also avoid
(04:29):
the net investment income tax,or what people call the
Obamacare tax. So all aboutdeferring taxes and keeping all
of your equity in your pocket.
Joey Romero (04:38):
Yeah, we'll get into some of those things a
little more in detail, a littlebit. But what's, what's your
role in the exchange process?
Bill Exeter (04:46):
So we're the Qualified Intermediary, at least
on the Exeter 1031 Exchangeside. That's the Qualified
Intermediary. You know, somepeople call it an Accommodator,
facilitator, you know, I've beenin this 41 years. When I first
got into it, people would callit 'Strawman', never really
liked that one. Always soundedkind of weird. And then on the
(05:07):
Exeter Trust Company side,Exeter Trust Serves as trustee
of the qualified trust account,which is the actual trust
account that holds the 1031exchange proceeds.
Joey Romero (05:16):
And are you guys regulated?
Bill Exeter (05:18):
We are regulated.
That makes us one of the fewqualified intermediaries that
has any kind of government orregulatory oversight. That's a
good question, because a lot offolks don't realize our
industry. I should say the 1031Exchange Qualified Intermediary
industry doesn't have anylicensing or regulatory body.
There's no capability to belicensed or regulated. So for
someone to be regulated, theyhave to go down a different path
(05:41):
and we went down the bankingpath and got our own Trust
Company charter.
Joey Romero (05:46):
Okay, so one of the questions I ran across in doing
some of the research, what isthe qualified use rule?
Bill Exeter (05:54):
Ooh, good question.
That's probably the mostimportant thing in the 1031
exchange world, and it reallyboils down to the properties you
sell and the properties youpurchase through the 1031
exchange have to be held forqualified use, and that means
that it's held for some kind ofincome production. You could
rent the property out. You couldlease the property out, you
know, whatever it might be, butyou're producing income.
(06:16):
Contrary to what you see on theinternet, though, where it says,
in a lot of sites, it'll say ithas to be held for rental. What
they really mean is it has to beheld for investment. So you
could buy property, usuallydirt, but you could buy any kind
of real estate and hold it forcapital appreciation. So held
for investment would alsoqualify or you could buy a piece
of real estate that you can usein your business. Maybe it's a
(06:40):
little office or retail orwarehouse building that you can
use in your business. So as longas it falls into one of those
categories, it satisfies thequalified use. And a lot of
folks get hung up on the lengthof time they've held title to
the property.
Joey Romero (06:57):
And I was also going to ask, how long do I have
to own it before I can exchangeit?
Bill Exeter (07:00):
Yeah, that's one of the big questions you get all
the time. And I totally getthat, you know, a lot of stuff
that you read out there, or whenyou talk to people, they will
say you have to hold it for twoyears or 18 months or a year and
a day, or, you know, whatever itmight be. And it's important to
note that the tax code, theregulations, they don't have any
(07:21):
holding period required. Itreally just says you have to
have the intent to hold forrental, investment or business
use. Now, the reason people gethung up on the length of time
that you've held the property isthe longer you hold it as rental
or investment property, theeasier it is to prove intent.
But we've got transactions wherethey held it for a month or two,
(07:42):
and were audited, and they wereallowed to, you know, continue
with the 1031 exchange, becausethey could prove there was
intent to, oh, excuse me, andyou know, one of them that I can
think of, right off the bat, theintent was to hold for rental.
But out of the blue, they gotthis offer that was a phenomenal
offer, and they took it. And ofcourse, they got audited, and
(08:04):
they tried to disallow theexchange, but he was able to
prove that his intent was tohold, but he got an offer out of
the blue, and we had another onewhere there was a business
reason why he couldn't rent theproperty. So again, even though
it was a month and a half, theyallowed his exchange to qualify.
So it's all about intent andwhat you can prove, but the
longer you rent that, the easierit is to prove intent.
Joey Romero (08:25):
With that in mind, do you have a recommendation, if
somebody like, let's say theyreach out to you and say, I'm
thinking about, you know, buyinga property and possibly
exchanging it. Like, can they doany kind of preemptive like,
just, consultation with you, anddo you have a recommendation six
months a year, you know, twoyears or anything like that.
Bill Exeter (08:46):
Sure, we can always do consultations. We're more
advisory and consultative innature than a lot of our
competitors. You know, 1031exchanges they should be really
simple, and they've just gottenreally complicated over the
years.
Joey Romero (08:58):
They're scary for a lot of people.
Bill Exeter (09:00):
They really are.
Yeah, people go, Oh, geez, Idon't want to do one of those,
but I guess I have to, you know,that kind of stuff. And you
know, once you get to know them,they're actually not that scary,
but they just appear that way.
So we certainly can walk throughthe process, answer questions,
bounce ideas, office, thingslike that. So that's always
important. When folks ask us thequestion, you know, how long do
I have to hold title to theproperty. Usually it's in
(09:23):
conjunction with, can I moveinto the property later, or
something along that line. Sothe issue is, again, goes back
to intent. So if it's a plainvanilla transaction and you're
selling rental property, you'rebuying rental property, you're
not going to push the envelopeor anything like that. I think
one year is sufficient. I thinkit straddles two tax periods.
(09:44):
You're in really good shape, youknow, if, if you're going to
plan on maybe moving into it,you know, you want your initial
intent to be held for rental orinvestment purposes. I'd
probably rent it for two years,which will straddle three tax
period, which is reallyconservative. I just don't want
to do battle with any kind ofauditor. It's always tough.
Joey Romero (10:06):
So, let me understand that. So let's say I
started and I moved to a house,lived there for two years, but
then I rented it for five years.
Now, even if I moved back andlived for one more year there, I
could still use it as a 1031exchange?
Bill Exeter (10:24):
point. But there's some interesting tax planning
opportunities there, becauseyou've got the 121 exclusion.
That's the $250,000 in tax freegain, or 500,000 if you're
married, really 250 per person.
And so if you, if you boughtproperty, you and you could say
(10:47):
you lived in it for two out ofthe last five years, you're
going to get 250 or 500,000 taxfree. Now, when you move into
it, and then move out and rentit, then move back into it, it
gets a little more complicated.
So that's where your tax advisoris going to have to sit there
and look at it. Okay, how doesthis affect it? For example, if
it was a primary residencefirst, and then you moved into
(11:09):
it, a lot of people think all Ihave to do is live there for two
years and I get 500,000 taxfree. Unfortunately, it doesn't
work that way. It's pro-rated,but there's a lots of planning
opportunities there, so.
Joey Romero (11:21):
Then, and that's what maybe we should have
started this whole show as talkto your CPA before you talk to
anybody, right?
Bill Exeter (11:30):
Very, very true.
Joey Romero (11:32):
Now, we got to what you can exchange. But what can
you change into and have? Howhas that changed over the years?
Hey, really good question,because there's a lot of there's
still curriculum out there,online material and things that
will say, if you sell a condo,you have to buy a condo. If you
sell apartments, you have to buyapartments, etc. And that is
(11:53):
absolutely not true. It neverhas been true. The definition of
like kind property is literallyyou have to sell real estate and
buy real estate. So, anythingthat is considered to be real
property will qualify for 1031exchange treatment. So the real
issue is, is it held forqualified use? Yes or No. If it
is and it's real estate, thenit's going to, it'll satisfy
(12:15):
that requirement. And Like-Kindincludes things people wouldn't
even think of, like air rightsand water rights and mineral
rights, certain types of oil andgas investments would qualify.
We've done exchanges ontimberland, vineyards, cell site
towers, billboards. There's lotsof things you can exchange,
(12:36):
either out of or into, as longas it's considered to be real
property.Before 2017 youactually were able to do 1031
exchanges on non real estate orpersonal property. So we would
do exchanges on, you know,aircraft, shipping, trucking,
equipment, livestock, all sortsof things. But today it only
applies to real estate.
(12:57):
Yeah, you know, a lot ofinvestors that call us to get to
refuse. It's like they 'Well, Iwant a 1031 an apartment
building, but I can't buy houseswith that? Can I?'
Bill Exeter (13:08):
Yes, absolutely.
And the answer is, absolutely.
As long as it's real estate, youcan absolutely do that. Yeah.
Joey Romero (13:14):
Now this was interesting. You can exchange
foreign properties?
Bill Exeter (13:18):
You can, you know a lot of things you, again, a lot
of things you see on theinternet out there will say you
cannot exchange foreignproperties, which is not true.
But what they're trying to sayis you can't sell foreign
property and buy US property orexchange into US property, and
you can't sell US property inexchange into foreign property.
But if you're a US taxpayer, andyou've got rental, investment or
(13:42):
business use property in aforeign country, and the sale of
that property is going totrigger a US tax consequence.
You could do a 1031 exchange,but it has to be selling foreign
property and buying foreignproperty. Of course, it won't
defer any of the foreignproperty taxes that might be
due. It would only defer the UStax consequences, but we've done
(14:04):
them now in about 45 differentcountries, and every country is
a little different.
Joey Romero (14:11):
That's gotta be quite a circus. Now, before I
decide to do a 1031 exchange,what would you say is the most
important thing to consider, ifI'm an investor?
Bill Exeter (14:22):
Great question, because I think the most
important thing right off thebat is talk to your tax advisor.
And almost nobody does that,which is unfortunate. But, you
know, as a taxpayer, you haveall sorts of things on your tax
return. So you may havesuspended passive activity,
losses you may have netoperating loss carry you
(14:44):
forwards. I mean, there could beall sorts of things that could
offset some gain, or all of yourgains. So you need to know, what
are your tax consequences fromthe sale of that real estate?
And then do you have to do acomplete 100% tax deferred
exchange? You do a partialexchange and still not pay tax?
There may be things that offsetthat, or maybe you don't have to
(15:05):
do a 1031 exchange at all. Sovery important, and we get
people all the time to call andsay, 'Well, I really shouldn't
have done one,' but they did it,and it's too late, so meet with
your tax advisor. The number twois, always have your team
together. You know, you neverknow what's going to come up in
the middle of your transactions.
And if you don't have your team,we're ready to go in case
something drops in your lap,then it can be a little
(15:27):
challenging.
Joey Romero (15:29):
Yeah. So what would you say? I guess this is just a
general question, and maybe it'stoo random to answer, but one
would be the best time or theright time to exchange?
Bill Exeter (15:43):
Oh, great question.
It's my favorite answer, itdepends. And I say that because,
you know, you've got economiccycles and so that comes into
play. You have scenarios wheremaybe you bought one property as
a rental property. It's beenfive years, and you like the
business and you want to domore, it might be time to
(16:05):
diversify. So maybe you sell oneand buy two or three. You might
be retired, and you're tired ofall the you know, repairs and
maintenance and things you haveto do. So maybe you're ready to
sell three or four and buy onethat's easier to manage. So
there's all sorts of differentthings that you can take a look
at. Some people are in a, youknow, let's say a Class C
(16:27):
market, and they want to getinto a Class A market. So
there's just all sorts ofdifferent things that may come
into play. I think most of thetime, you see people
repositioning based on theeconomic cycles and what they
think is going to be the nextbest investment for the next,
say, the next 10 years, orsomething.
Joey Romero (16:46):
Well, that's basically what we did with our
boot camp in Florida. You know,a lot of weeks later, you know,
the appreciation was through theroof, and went and built, you
know, for the price of sellingone or two here they were, you
know, we were building two andtwo five, you know, out in
Florida. What's, you know, thisis another one of these
confusing questions that we getfrom investors is, you know,
they don't really trulyunderstand the difference
(17:08):
between a 1031 and a DST. Canyou tell people how that's
different?
Bill Exeter (17:14):
Absolutely. And I completely get the confusion out
there, because a lot of the DSTsponsors and DST brokers the way
they've done their websites andbrochures, you can't quite tell
you know who's a DST sponsor,who's...
Joey Romero (17:26):
So, what is the DST? Just to for those that may
not know.
Bill Exeter (17:29):
Sure. So the DST is a Delaware Statutory Trust, and
so ignore the fact that it'scalled the Delaware Statutory
Trust. It's a statutory trust.
It owns a very large properties.
It could be one property, itcould be a portfolio of
properties, but typically, thevalue of these DSTs are, most of
(17:50):
them are anywhere from 50million to say, 250 million, so
very large trusts, and theyqualify as real estate for 1031
exchange purposes. So I couldsell my property, 1031 exchange
into a DST, and I couldidentify, like a point .25%
interest, so very tinyfractional ownership position in
the DST. And if I own a quarterof 1% of the DST, I own a
(18:15):
quarter of 1% of everything inthat DST. So if it's one
property or multiple properties,I own a little piece of all of
that. And if there's debt in theDST, which there usually is, the
debt, you don't have to gothrough underwriting or be
approved or anything like that.
You automatically get, let'ssay, a quarter of 1% of whatever
the debt is. It's effectivelynon recourse, so they can't go
(18:37):
after you as an investor if theproperty goes south. So it's
really a great deal there allthe way around, but that's what
it so it's really a replacementproperty option for the 1031
exchange. So when you're lookingat the various players, you have
your 1031 exchange qualifiedintermediary. That's what we do.
That's where you structure the1031 exchange. We work on with
(18:59):
the sale of the closing of yourrelinquished property. We work
with the closing of yourreplacement properties. And the
DST is one of the tools in thetoolbox. So it gives you one
more option to look at forreinvesting in replacement
property.
Joey Romero (19:15):
Interesting. So what if a partner is on a on a
property, or I have a multimember LLC. How does that work
for an exchange?
Bill Exeter (19:24):
Oh, those get confusing and complicated, of
course. The one thing I guess Icould say right off the bat is
investors often think they ownreal estate and they don't. If
it's an LLC like you, like inyour example, and there's
multiple members. It's typicallytreated as a partnership for tax
purposes, so what the investorreally owns is a membership
(19:47):
interest, which is also treatedas a partnership interest for
tax purposes. They don't ownreal estate, and then the entity
itself actually owns the realproperty. So if the LLC is going
to sell real estate. The LLCdoes a 1031 exchange, and the
LLC reinvest in replacementproperty, nice and clean,
perfectly okay, as no issues, itgets really complicated when
(20:11):
people are want to go differentdirections, and they all want to
do a 1031 exchange, but they allwant to buy their own property,
and they don't want to staytogether as a partnership, what
they're really getting is adistribution from the sale of
the real estate through thepartnership. And that doesn't
qualify for 1031 exchangetreatment. There are all sorts
(20:31):
of solutions there. If you have,probably the easiest way to look
at is if you have plenty oftime, and plenty of time would
be defined as probably twoyears, you can drop the property
out of the LLC, deed it out tothe individual members as
tenants in common. Now they'reindividual owners. Hold it for
two years, and then it's easy.
You could sell, and each personcan make their own decision. The
problem is, nobody wants to waittwo years. So there are options,
(20:54):
it just we have to look at thefacts and circumstances and then
try to figure out with theiradvisors what we can do.
Joey Romero (21:03):
Can you expand a little bit on the reinvestment
requirement? What does thatmean? And can you do a partial?
Bill Exeter (21:08):
Yep, good question.
I guess first what you can't door what is not correct, because
a lot of people will call us andsay, I thought all you had to do
was reinvest your equity or yourcash coming out of the sale, or
all I had to do was reinvest mytaxable gain, my profit. Then
neither of those are true orcorrect. It's really the top
(21:29):
level. So let's say you sellproperty for a million dollars.
You could subtract your routineselling expenses, so your
broker's commission, title,escrow, documentary, transfer
packs and things like that, andthat's going to get you down to
a net sale price of about950ish. And that's the magic
number. That's what you have toreinvest. So if you like, with
with your Florida boot camp. Youknow, if you sell in California
(21:52):
for two or 3 million, it's veryeasy to buy five to 10
properties in Florida equal toor greater than whatever your
net sale price is. So it's agreat way to diversify, as long
as you're buying equal orgreater based on that net sale
price.
Joey Romero (22:08):
Well, yeah, a lot of these folks there, like
you're seeing a lot of these old50s and 60s build just in great
locations that are, you know, amillion and $2 million and
they're 1300 square feet.
Bill Exeter (22:21):
It does part of the mind.
Joey Romero (22:23):
And they go and exchange it. They're getting
almost 2000 square feet of brandnew build. And, you know,
they're getting three Orville,you know. So it's crazy before I
get into the specific types ofexchanges. Well, actually, let's
just jump right in. I knowthere's three main, main ones.
So, let's go dive into them alittle bit. The first one I want
(22:43):
to talk about is thestraightforward exchange.
Bill Exeter (22:48):
And what I could say too about the forward
exchange first is about 97% ofour transaction volume, or
forward 1031 exchanges. Soalmost everybody does these type
and the forward exchange iswhere you sell your current
property first, and then youreinvest another property after
the fact. Excuse me. So, so mostpeople sell first and then
(23:10):
you've got your time frames,which I guess we'll talk about
to reinvest in the variousreplacing properties you choose.
Joey Romero (23:17):
Yeah, let's talk about that right now. So when is
the 180 day trigger?
Bill Exeter (23:24):
So, let's see that your the sale of your current
property closes today, tomorrowis day number one, and you've
got exactly 45 calendar days toidentify what you're going to
buy, and then after that, youhave an additional 135 days to
complete your exchange. Andthat's a total of 180 so a lot
of investors who call us willsay, 'Well, I thought it was 45
plus 180' it's not. It's a totalof 180. Yeah, that's a it's
(23:49):
like, whoops. You off by 45days. That could be a big
whoops. So it's really 45 daysto ID, another 135 to complete.
Joey Romero (23:56):
Now, can I, can I identify multiple properties,
and can I change it? Or once I'mlike, once I get to the 45 I
understand, like, you're stuck,right? You have to change into
one of those. But so at day 45you have to pick the one that
you're going into, right?
Bill Exeter (24:16):
Yeah, there's really three identification
rules, and as long as you are incompliance with one of those
three, you're okay. Now, thevast majority of people use the
three property rules. So withinthat 45 days, you can identify
up to, but not more than threeproperties, and you're
absolutely right. When you hitthat 45 day mark, you're done.
(24:36):
During the 45 days, you canchange your mind if a property
you had listed is it turns outto be a disaster, so you want to
take it off the list, you canchange your mind. Once you pass
the 45 day mark, then you'restuck with what you've
identified, and you have to buysomething on that identification
list. It's funny, we get callsall the time and say, I just
(24:57):
thought you had to identify butyou can buy anything. So it's
like, you know, you have to findsomething on the ID list, so
that's critical. But then youget investors who say, I want to
sell one property, andCalifornia is a good example. As
an example, we had somebody sellproperty a few months ago,
closed here in California for 4million. He wanted to diversify,
(25:19):
and he was going to Tennessee.
So he could use the secondidentification rule, which is
what we call the 200% of fairmarket value. He sold for
4,000,000, 200% would be 8million. So he could identify as
many properties in Tennessee, upto $8 million in value. So he
identified 56 single familyproperties. Well, why anybody
(25:39):
would I want to do that? I don'tknow.
Joey Romero (25:45):
A lot of time on his hands, I guess.
Bill Exeter (25:47):
That does. Now he doesn't have to buy all those.
It just gives him the ability toidentify more and go through due
diligence and then narrow itdown to what they actually want
to buy. So I forget, in hiscase, he bought 20 some of
those. So in his case, he soldfor 4 million. You subtract your
closing costs. So his net saleprice was probably 3.8-3.85
(26:09):
something like that. That's allhe has to buy. So he could buy
as many of those singlefamilies, up to or more than
that, 3.8 and then he'sreinvested everything.
Joey Romero (26:19):
That leads me to the question you get. So let's
say, let's say he wanted to, youknow what? I just love some of
these properties. I know I'mgoing to go over my 3.8 What if
I want to buy $5 million worthof properties in my exchange?
What happens at that point?
Bill Exeter (26:35):
Certainly, trading up in value is not a problem.
The more properties involved,the more complicated it gets.
But in that example, you knowhis 200% limit was 8 million. So
if he identified 56 and hebought five or six or $7 million
worth, perfectly, okay. So youcould certainly do that. It's a
great way to to use the equitythat's trapped in your current
(26:55):
property and then reallyleverage that up and buy a lot
of assets.
Joey Romero (26:59):
Well, everyone that's going to do it for part
one of our interview with BillExeter of Exeter of Exeter 1031
Exchange Services, LLC. Be sureto tune in next week to catch
part two.
Narrator (27:08):
For more information on hard money loans, trust deed
investing, and upcoming eventswith The Norris group. Check out
thenorrisgroup.com. For moreinformation on passive investing
through the DBL Capital RealEstate Investment Fund, please
visit dblapital.com.
Joey Romero (27:28):
The Norris group originates and services loans in
California and Florida underCalifornia DRE license 01219911.
Florida mortgage lender license1577 and NMLS license 1623669.
For more information on hardmoney lending go to
thenorrisgroup.com and click thehard money tab.
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