July 31, 2025 • 14 mins
“Hey Mike, how do you determine if it makes sense to sell your rental property and pay the tax or do a 1031 exchange into something else?” Discover strategies that can help you avoid paying capital gains and depreciation recapture taxes when you sell your investment real estate.
Text your questions to 913-363-1234.
Request Your Wealth Analysis by going to www.retireontime.com
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Mike (00:05):
Welcome to How to Retire On Time, a show that answers
your retirement questions. Saygoodbye to the oversimplified
advice. This show is all aboutgetting into the details so so
you can determine what is rightfor you. As always, text your
questions to (913) 363-1234. Andremember, this show is not
financial advice.
It's information to continueyour exploration. With me in the
(00:26):
studio today, mister DavidFransen. David, thanks for being
here. Yes. Hello.
Thank you. David's gonna readyour questions, and I'll answer
them. Let's jump in.
David (00:34):
Hey, Mike. How do you determine if it makes sense to
sell your rental property andpay the tax or do a ten thirty
one exchange into somethingelse?
Mike (00:44):
Yeah. So for the uninitiated in this, we're
talking about rental realestate, whether it's residential
properties, whether it'scommercial real estate, but
there are other things that alsoqualifies for anything that
would qualify as real estate. Somineral rights qualify for this,
farmland that isn't subject to,like, a government contract.
(01:04):
There's some nuance there, butif it's in the real estate
investment category, this is foryou.
David (01:09):
Okay. Many
Mike (01:12):
real estate investors are do it yourselfers that love to
go in there and, you know, putup the drywall or fix something.
They're very, very handy, andthey're very good at it. But
there's this thing that's pushedon us from father time where we
just get tired. Arthritis setsin, the bad back, the lower
(01:34):
energy, and you just don't wannado that anymore, you're faced
with a decision. Do you hire itout?
And it's becoming more and moredifficult to find handy people,
people in the trades that can dothis, and many management
companies that I've just I'veheard a lot of complaints that
they can't find a goodmanagement company. That's not
saying the management companiesare bad. I believe it's not that
they're bad. I think that manyof them are just spread too
(01:56):
thin.
David (01:57):
Mhmm.
Mike (01:58):
K? So you're faced with the decision. Do you keep it and
just deal with it, or do yousell it? And if you sell it,
you've got really three options.One is you can sell it and pay
the taxes, and it's not just thecapital gains tax.
Don't forget the depreciationrecapture. So you've been been
depreciating your asset,enjoying those tax benefits.
(02:20):
Well, the government's, youknow, the piper, and you gotta
pay the piper. Uh-huh. So that'sone option.
You could just sell and pay thetaxes.
David (02:27):
And some people might be okay with that, like, whatever.
Just wash my hands.
Mike (02:30):
Yeah. If it's like a $304,100,000 dollar property, or
in some parts of this country,know properties are, like,
50,000 for a house, 100,000 fora house. Other parts of the
country, you'd be lucky to finda $2,000,000 house. So just
understand that the variation ofreal estate is wide, and we talk
to people all over the country.But those amounts, those gains
(02:52):
are subject to federal taxes.
They're subject to you've gotyour state and your federal
taxes on how all this is done,but I digress there. So you've
you've gotta figure out what'sthe tax consequences, and are
you okay paying that? That's oneoption. And that's the option I
hear said so often fromfinancial advisers or
professionals that areuninitiated. They're not dumb.
(03:15):
They're not sleazy. They're notdeceptive. They don't know. I
wanna be very forgiving ofsomeone that did not tell you
what I'm about to tell you.They're not being selfish.
A lot of people get upset. Howcan they tell you what they
don't know? How can they offer aproduct that they're not allowed
to offer? So just be patient ifyou haven't heard what I'm about
(03:36):
to tell you. But the other twooptions are, you could do a
seven twenty one UPREIT.
So that's where you take yourproperty, you move it over into
a REIT, a real estate investmenttrust that's privately held, and
then you get what's called an OPunit or OP units. So you now
have fractional shares of theREIT or the LLC or the business.
(03:59):
K? So you've deferred it all taxfree, and then you can slowly
sell those units over time. Thathelps spreads out the tax
burden.
You're receiving cash flow fromthe REIT as long as it's
properly managed and they havepositive cash flow. So there's
business risk. There's rentalrisk. There's still landlord.
There's there's a lot of risksassociated with it, but there's
no such thing as a risklessretirement, so there you go.
(04:20):
So that's one option.
David (04:21):
K? So are you selling your property to the REIT? Is
that how this works?
Mike (04:24):
Or Yeah. Basically, they absorb it Oh. In exchange for OP
units. So you don't realize theasset. When you realize the
asset means you've sold it.
David (04:34):
Okay.
Mike (04:34):
You never sell it. You transfer the asset over without
realizing it in exchange for OPunits.
David (04:42):
Okay. What does OP stand for? What just I
Mike (04:43):
actually don't know. Not Overland Park? Yeah. It's not
Overland Park. It's likeoperating I don't know.
Layton, would you would you justGoogle that for me real quick?
What what is OP units for aREIT? Well, let's find that out.
So seven twenty one UPREIT.Okay.
Now you've gotta vet thedifferent REITs you're going to.
Just like all professions, thereare well managed REITs, and
(05:07):
there are not so well managedREITs. And the last thing you
want is, if you do this, to moveinto a REIT that's poorly
managed because you havebusiness risk. You've got rental
risk. You've got all sorts ofrisks that then your property
you can't sell out these OPunits fast enough to get your
money back, and then things gosideways.
Operating partnership. Close.Yeah. Operating partnership.
(05:28):
Know, that makes sense.
Yeah. So that there you go. OPunits. So that's one option. So
you can sell it and pay thetaxes.
You can do a seven twenty oneUPREIT. You got to know where do
you want it to go. Yeah. Thereis a company out there. It's
called Flock, f l o c k.
This is all that they do. Youmay look at them, but just
(05:49):
understand that's all they do,so you'll probably get a hard
sales pitch. They are an option,but their cash flow is kinda
high. So just understand, arethey doing things well? Are you
satisfied with them?
Do you understand the risks ornot? I'm not associated with
flock at all. I just know thatthey're a major player in the
place, and I wanna give peopleoptions so that they can explore
(06:11):
it. Is that right for you? Is itnot right for you?
I don't know. But don't callthem and expect that you're
gonna get an objective thing.It's okay that they're
salespeople. But if you callthem, they're gonna make it
sound really, really nice.
David (06:25):
And don't tell them that Mike Necker sent me.
Mike (06:27):
You can say that. I
David (06:28):
don't care. Okay.
Mike (06:29):
They don't know me from Adam. And if you do business
with them, great. I've got nodog in the fight. I don't get
back end commissions on thesealternative investments. I'm
paid a flat fixed fee, whetherit's a monthly membership fee
that's flat, doesn't change, orit's a one time planning fee,
and then you manage it.
Yeah. So it allows me to be veryhonest. Right. The most
liberating thing I've ever done.Yeah.
(06:51):
There are other options withother companies that you can't
get access to. I have found thatthe privately traded REITs that
you have to go through afinancial adviser, I like them
more. I don't get a back endcommission for it. I just am
more confident in the moreexclusive options or offers.
That's not a criticism to flockat all.
I'm sure they're a wonderfulcompany. Again, I don't know
(07:13):
them, but it's an option toexplore, because you wanna
educate yourself. You wannaexplore your options. K. So
that's one.
And the significance, by theway, is let's say you've got a
million dollar property, and youdidn't have to pay your taxes,
you could just move it over, andyou're good. Like, that's a
pretty cool thing. Yeah. I mean,what's let's say 7% is the cash
(07:33):
flow of the seven twenty oneUPREIT. K?
Just hypothetical throwing itout there. I'm not quoting a
rate. Would you rather get 7% ofa million dollars or 7% of
$700,000? Mhmm. Obviously, youwant the higher amount.
David (07:47):
Mhmm.
Mike (07:48):
That's kind of what this allows people to do. K? Then
you've got the other one, theten thirty one exchange. This is
option three. This is optionthree.
David (07:56):
Okay.
Mike (07:57):
A a ten thirty one exchange into a Delaware
statutory trust. Okay. A DST.DST. So a Delaware statutory
trust is where you havefractional ownership of the
actual real estate itself.
So think of like it's selfstorage unit or student housing.
You got like 1% of the realestate of the housing unit or
(08:19):
the storage unit or whatever itmight be. They're professionally
managed, so you don't be worriedabout capital calls and all this
other crap if you shop it right.Gotta look at the contract.
Gotta look at the details.
But what you do is you can deferyour taxes, put it in there.
You'll probably have less cashflow with the Delaware statutory
trust, but the real estateitself is appreciating in value.
(08:40):
You might not get appreciatingvalue on your REIT. It just cash
flows. K?
But with a Delaware statutorytrust, you're getting the
appreciated value of the realestate itself plus the cash flow
itself, though the cash flowmight be a little bit less, but
the cash flow may be better thanyour current cash flow anyway.
If you look at the net operatingexpenses, net operating income,
(09:01):
and so on, like, you have to netnet net all of it out of your
current real estate. And thenwhat you do, this is it's called
swap until you drop. And whatyou do is a DST, it's gonna be
in there for five to sevenyears. Once the DST has been
matured and the property isbeing sold off, you then move it
back over to a qualifiedintermediary so you don't touch
it, and then you buy anotherDST, and then you buy another
(09:23):
DST.
And so you're you keep gettingthe appreciated value moving
over. You're maintaining yourcash flow, and you do it until
you drop, and then your kids getthe appreciated value with the
step up in basis. That meansthey don't pay the capital gains
tax.
David (09:37):
Okay.
Mike (09:37):
It's a legacy play.
David (09:39):
So just to make sure I understand, when you sell your
property, right, you have yourhouse or your apartment complex,
whatever it is, and then youtake that cash, and then you buy
the DST, and that's what theexchange is. You've exchanged
this sort of real estate forthis fractional fractional
ownership ownership in in thethe DST? Yeah.
Mike (09:54):
But, I mean, if you come to me and say, we just sold the
property. We wanna do a DST. I'mgonna say, I'm sorry. I can't
help you.
David (09:59):
Oh, why is that?
Mike (10:00):
There's a very specific timeline. This is a very
tactical exchange. So first off,when you sell the property, the
money has to go directly to aqualified intermediary, which
means you've gotta line thingsup before you sell the property.
Has to be a rental property too.It can't be somewhere that
you've lived or enjoyed.
Your second home. Has toqualify. Yeah. Okay. Then you've
(10:21):
got around forty five days topick the properties that you're
interested in.
You have to identify them withina certain period of time, and
that could be, oh, maybe you buythis unit or that unit, or maybe
you buy this DST or that DST.But you've gotta list them all
out and identify them with aqualified intermediary. K? The
third party. Mhmm.
Think like escrow, but a littlebit different.
David (10:41):
Okay.
Mike (10:42):
Then you have around a hundred and eighty days, if I
remember right. And I've neverbeen on the line for that one.
We've always done this muchquicker. Then the funds have to
get to the asset itself within acertain time frame, or else the
whole thing is taxable. Blows upin your face.
Mhmm. So you've gotta beorganized. You've gotta be well
researched. You've gotta be verysystematic about the movements,
the timelines, the deadlines toget it all done correctly. And
(11:04):
DSTs aren't as readily availableas like the stock market.
Hey. You wanna buy Apple? Youcan just go buy Apple at any
given time. Well, there's like acouple of DSTs available any
given time. Oh.
Very limited market.
David (11:17):
Okay.
Mike (11:18):
So starting a relationship with someone that does this,
looking at the options, and justbeing proactive about it can be
a huge game changer just tounderstand how to proceed with
all of this. But, yeah, thoseare really your three options.
Sometimes it makes sense to sellthe property, pay the taxes, and
just move on. You've got moreliquidity. You've got more
flexibility, but you're gonnahave less money.
(11:40):
Are you okay with that? Are younot okay with that? Then you've
got the seven twenty one UPREIToption, which could be great.
Then you've got the ten thirtyone to a Delaware statutory
trust, which also could begreat. Working with a lot of
these properties, just be awarethat many of them have back end
commissions.
People come to us because wedon't get that back end
commission. So like for DST,there might be, like, a 5% back
(12:01):
end commission that the brokerwould get just by helping you
buy this. We can't get that. Wedon't have the licensing to
accept it, so that back endcommission just gets rolled up
to the client. So you just keepmore of your money.
Because you're you're treatingus like a CPA. Just do the work
for the hours that it took to dothe job, and that's it. So like,
especially for the higher networth people that have
(12:22):
5,000,000, 10,000,000 in realestate properties, they tend to
favor us for these types ofsituations because you're paying
us for the time and all that.Shameless plug. But Mhmm.
But these are things to be awareof. So it is complicated. It is
nuanced, but there are manyoptions. And we didn't cover all
the options, by the way. Thereare other options on how to do
the planning on your real estateexit.
(12:45):
We only have so much time foreach episode. Those are the
three most popular that I'veseen. If you have a bunch of
real estate, maybe twoproperties aren't heavily
depreciated, and you sell thoseand just pay the taxes, but the
other ones you move into DSTs.Blending your exit also could be
a very thoughtful process. Itall comes down to you just you
(13:07):
gotta run the numbers.
Don't shoot from the hip. Don'tmake an emotional decision. Take
the time. Look at your options.Understand the benefits and
detriments of each option,because none of them are
perfect.
There's no such thing as aperfect investment product or
strategy, and there's no suchthing as a riskless retirement.
Which option or blend of optionsis right for you? That is the
(13:30):
most important thing, and ittakes time. But my goodness, for
those who are willing to spendthe time to slow down and make a
thoughtful decision, it tends toplay out better in your favor.
That's all the time we've gotfor the show today.
If you enjoyed the show,consider subscribing to it
wherever you get your podcasts.Just search for how to retire on
time. Discover if your portfoliois built to weather flat market
(13:53):
cycles or if you're missing taxminimization opportunities that
you may not even know exist.Explore strategies that may be
able to help you lower youroverall risk while potentially
increasing your overall growthand lifestyle flexibility. This
is not your ordinary financialanalysis.
Learn more about Your WealthAnalysis and what it could do
for you regardless of your age,asset, or target retirement
(14:16):
date, go towww.yourwealthanalysis.com today
to learn more and get started.
Welcome to How to Retire On Time, a show that answers
your retirement questions. Saygoodbye to the oversimplified
advice. This show is all aboutgetting into the details so so
you can determine what is rightfor you. As always, text your
questions to (913) 363-1234. Andremember, this show is not
financial advice.
It's information to continueyour exploration. With me in the
(00:26):
studio today, mister DavidFransen. David, thanks for being
here. Yes. Hello.
Thank you. David's gonna readyour questions, and I'll answer
them. Let's jump in.
David (00:34):
Hey, Mike. How do you determine if it makes sense to
sell your rental property andpay the tax or do a ten thirty
one exchange into somethingelse?
Mike (00:44):
Yeah. So for the uninitiated in this, we're
talking about rental realestate, whether it's residential
properties, whether it'scommercial real estate, but
there are other things that alsoqualifies for anything that
would qualify as real estate. Somineral rights qualify for this,
farmland that isn't subject to,like, a government contract.
(01:04):
There's some nuance there, butif it's in the real estate
investment category, this is foryou.
David (01:09):
Okay. Many
Mike (01:12):
real estate investors are do it yourselfers that love to
go in there and, you know, putup the drywall or fix something.
They're very, very handy, andthey're very good at it. But
there's this thing that's pushedon us from father time where we
just get tired. Arthritis setsin, the bad back, the lower
(01:34):
energy, and you just don't wannado that anymore, you're faced
with a decision. Do you hire itout?
And it's becoming more and moredifficult to find handy people,
people in the trades that can dothis, and many management
companies that I've just I'veheard a lot of complaints that
they can't find a goodmanagement company. That's not
saying the management companiesare bad. I believe it's not that
they're bad. I think that manyof them are just spread too
(01:56):
thin.
David (01:57):
Mhmm.
Mike (01:58):
K? So you're faced with the decision. Do you keep it and
just deal with it, or do yousell it? And if you sell it,
you've got really three options.One is you can sell it and pay
the taxes, and it's not just thecapital gains tax.
Don't forget the depreciationrecapture. So you've been been
depreciating your asset,enjoying those tax benefits.
(02:20):
Well, the government's, youknow, the piper, and you gotta
pay the piper. Uh-huh. So that'sone option.
You could just sell and pay thetaxes.
David (02:27):
And some people might be okay with that, like, whatever.
Just wash my hands.
Mike (02:30):
Yeah. If it's like a $304,100,000 dollar property, or
in some parts of this country,know properties are, like,
50,000 for a house, 100,000 fora house. Other parts of the
country, you'd be lucky to finda $2,000,000 house. So just
understand that the variation ofreal estate is wide, and we talk
to people all over the country.But those amounts, those gains
(02:52):
are subject to federal taxes.
They're subject to you've gotyour state and your federal
taxes on how all this is done,but I digress there. So you've
you've gotta figure out what'sthe tax consequences, and are
you okay paying that? That's oneoption. And that's the option I
hear said so often fromfinancial advisers or
professionals that areuninitiated. They're not dumb.
(03:15):
They're not sleazy. They're notdeceptive. They don't know. I
wanna be very forgiving ofsomeone that did not tell you
what I'm about to tell you.They're not being selfish.
A lot of people get upset. Howcan they tell you what they
don't know? How can they offer aproduct that they're not allowed
to offer? So just be patient ifyou haven't heard what I'm about
(03:36):
to tell you. But the other twooptions are, you could do a
seven twenty one UPREIT.
So that's where you take yourproperty, you move it over into
a REIT, a real estate investmenttrust that's privately held, and
then you get what's called an OPunit or OP units. So you now
have fractional shares of theREIT or the LLC or the business.
(03:59):
K? So you've deferred it all taxfree, and then you can slowly
sell those units over time. Thathelps spreads out the tax
burden.
You're receiving cash flow fromthe REIT as long as it's
properly managed and they havepositive cash flow. So there's
business risk. There's rentalrisk. There's still landlord.
There's there's a lot of risksassociated with it, but there's
no such thing as a risklessretirement, so there you go.
(04:20):
So that's one option.
David (04:21):
K? So are you selling your property to the REIT? Is
that how this works?
Mike (04:24):
Or Yeah. Basically, they absorb it Oh. In exchange for OP
units. So you don't realize theasset. When you realize the
asset means you've sold it.
David (04:34):
Okay.
Mike (04:34):
You never sell it. You transfer the asset over without
realizing it in exchange for OPunits.
David (04:42):
Okay. What does OP stand for? What just I
Mike (04:43):
actually don't know. Not Overland Park? Yeah. It's not
Overland Park. It's likeoperating I don't know.
Layton, would you would you justGoogle that for me real quick?
What what is OP units for aREIT? Well, let's find that out.
So seven twenty one UPREIT.Okay.
Now you've gotta vet thedifferent REITs you're going to.
Just like all professions, thereare well managed REITs, and
(05:07):
there are not so well managedREITs. And the last thing you
want is, if you do this, to moveinto a REIT that's poorly
managed because you havebusiness risk. You've got rental
risk. You've got all sorts ofrisks that then your property
you can't sell out these OPunits fast enough to get your
money back, and then things gosideways.
Operating partnership. Close.Yeah. Operating partnership.
(05:28):
Know, that makes sense.
Yeah. So that there you go. OPunits. So that's one option. So
you can sell it and pay thetaxes.
You can do a seven twenty oneUPREIT. You got to know where do
you want it to go. Yeah. Thereis a company out there. It's
called Flock, f l o c k.
This is all that they do. Youmay look at them, but just
(05:49):
understand that's all they do,so you'll probably get a hard
sales pitch. They are an option,but their cash flow is kinda
high. So just understand, arethey doing things well? Are you
satisfied with them?
Do you understand the risks ornot? I'm not associated with
flock at all. I just know thatthey're a major player in the
place, and I wanna give peopleoptions so that they can explore
(06:11):
it. Is that right for you? Is itnot right for you?
I don't know. But don't callthem and expect that you're
gonna get an objective thing.It's okay that they're
salespeople. But if you callthem, they're gonna make it
sound really, really nice.
David (06:25):
And don't tell them that Mike Necker sent me.
Mike (06:27):
You can say that. I
David (06:28):
don't care. Okay.
Mike (06:29):
They don't know me from Adam. And if you do business
with them, great. I've got nodog in the fight. I don't get
back end commissions on thesealternative investments. I'm
paid a flat fixed fee, whetherit's a monthly membership fee
that's flat, doesn't change, orit's a one time planning fee,
and then you manage it.
Yeah. So it allows me to be veryhonest. Right. The most
liberating thing I've ever done.Yeah.
(06:51):
There are other options withother companies that you can't
get access to. I have found thatthe privately traded REITs that
you have to go through afinancial adviser, I like them
more. I don't get a back endcommission for it. I just am
more confident in the moreexclusive options or offers.
That's not a criticism to flockat all.
I'm sure they're a wonderfulcompany. Again, I don't know
(07:13):
them, but it's an option toexplore, because you wanna
educate yourself. You wannaexplore your options. K. So
that's one.
And the significance, by theway, is let's say you've got a
million dollar property, and youdidn't have to pay your taxes,
you could just move it over, andyou're good. Like, that's a
pretty cool thing. Yeah. I mean,what's let's say 7% is the cash
(07:33):
flow of the seven twenty oneUPREIT. K?
Just hypothetical throwing itout there. I'm not quoting a
rate. Would you rather get 7% ofa million dollars or 7% of
$700,000? Mhmm. Obviously, youwant the higher amount.
David (07:47):
Mhmm.
Mike (07:48):
That's kind of what this allows people to do. K? Then
you've got the other one, theten thirty one exchange. This is
option three. This is optionthree.
David (07:56):
Okay.
Mike (07:57):
A a ten thirty one exchange into a Delaware
statutory trust. Okay. A DST.DST. So a Delaware statutory
trust is where you havefractional ownership of the
actual real estate itself.
So think of like it's selfstorage unit or student housing.
You got like 1% of the realestate of the housing unit or
(08:19):
the storage unit or whatever itmight be. They're professionally
managed, so you don't be worriedabout capital calls and all this
other crap if you shop it right.Gotta look at the contract.
Gotta look at the details.
But what you do is you can deferyour taxes, put it in there.
You'll probably have less cashflow with the Delaware statutory
trust, but the real estateitself is appreciating in value.
(08:40):
You might not get appreciatingvalue on your REIT. It just cash
flows. K?
But with a Delaware statutorytrust, you're getting the
appreciated value of the realestate itself plus the cash flow
itself, though the cash flowmight be a little bit less, but
the cash flow may be better thanyour current cash flow anyway.
If you look at the net operatingexpenses, net operating income,
(09:01):
and so on, like, you have to netnet net all of it out of your
current real estate. And thenwhat you do, this is it's called
swap until you drop. And whatyou do is a DST, it's gonna be
in there for five to sevenyears. Once the DST has been
matured and the property isbeing sold off, you then move it
back over to a qualifiedintermediary so you don't touch
it, and then you buy anotherDST, and then you buy another
(09:23):
DST.
And so you're you keep gettingthe appreciated value moving
over. You're maintaining yourcash flow, and you do it until
you drop, and then your kids getthe appreciated value with the
step up in basis. That meansthey don't pay the capital gains
tax.
David (09:37):
Okay.
Mike (09:37):
It's a legacy play.
David (09:39):
So just to make sure I understand, when you sell your
property, right, you have yourhouse or your apartment complex,
whatever it is, and then youtake that cash, and then you buy
the DST, and that's what theexchange is. You've exchanged
this sort of real estate forthis fractional fractional
ownership ownership in in thethe DST? Yeah.
Mike (09:54):
But, I mean, if you come to me and say, we just sold the
property. We wanna do a DST. I'mgonna say, I'm sorry. I can't
help you.
David (09:59):
Oh, why is that?
Mike (10:00):
There's a very specific timeline. This is a very
tactical exchange. So first off,when you sell the property, the
money has to go directly to aqualified intermediary, which
means you've gotta line thingsup before you sell the property.
Has to be a rental property too.It can't be somewhere that
you've lived or enjoyed.
Your second home. Has toqualify. Yeah. Okay. Then you've
(10:21):
got around forty five days topick the properties that you're
interested in.
You have to identify them withina certain period of time, and
that could be, oh, maybe you buythis unit or that unit, or maybe
you buy this DST or that DST.But you've gotta list them all
out and identify them with aqualified intermediary. K? The
third party. Mhmm.
Think like escrow, but a littlebit different.
David (10:41):
Okay.
Mike (10:42):
Then you have around a hundred and eighty days, if I
remember right. And I've neverbeen on the line for that one.
We've always done this muchquicker. Then the funds have to
get to the asset itself within acertain time frame, or else the
whole thing is taxable. Blows upin your face.
Mhmm. So you've gotta beorganized. You've gotta be well
researched. You've gotta be verysystematic about the movements,
the timelines, the deadlines toget it all done correctly. And
(11:04):
DSTs aren't as readily availableas like the stock market.
Hey. You wanna buy Apple? Youcan just go buy Apple at any
given time. Well, there's like acouple of DSTs available any
given time. Oh.
Very limited market.
David (11:17):
Okay.
Mike (11:18):
So starting a relationship with someone that does this,
looking at the options, and justbeing proactive about it can be
a huge game changer just tounderstand how to proceed with
all of this. But, yeah, thoseare really your three options.
Sometimes it makes sense to sellthe property, pay the taxes, and
just move on. You've got moreliquidity. You've got more
flexibility, but you're gonnahave less money.
(11:40):
Are you okay with that? Are younot okay with that? Then you've
got the seven twenty one UPREIToption, which could be great.
Then you've got the ten thirtyone to a Delaware statutory
trust, which also could begreat. Working with a lot of
these properties, just be awarethat many of them have back end
commissions.
People come to us because wedon't get that back end
commission. So like for DST,there might be, like, a 5% back
(12:01):
end commission that the brokerwould get just by helping you
buy this. We can't get that. Wedon't have the licensing to
accept it, so that back endcommission just gets rolled up
to the client. So you just keepmore of your money.
Because you're you're treatingus like a CPA. Just do the work
for the hours that it took to dothe job, and that's it. So like,
especially for the higher networth people that have
(12:22):
5,000,000, 10,000,000 in realestate properties, they tend to
favor us for these types ofsituations because you're paying
us for the time and all that.Shameless plug. But Mhmm.
But these are things to be awareof. So it is complicated. It is
nuanced, but there are manyoptions. And we didn't cover all
the options, by the way. Thereare other options on how to do
the planning on your real estateexit.
(12:45):
We only have so much time foreach episode. Those are the
three most popular that I'veseen. If you have a bunch of
real estate, maybe twoproperties aren't heavily
depreciated, and you sell thoseand just pay the taxes, but the
other ones you move into DSTs.Blending your exit also could be
a very thoughtful process. Itall comes down to you just you
(13:07):
gotta run the numbers.
Don't shoot from the hip. Don'tmake an emotional decision. Take
the time. Look at your options.Understand the benefits and
detriments of each option,because none of them are
perfect.
There's no such thing as aperfect investment product or
strategy, and there's no suchthing as a riskless retirement.
Which option or blend of optionsis right for you? That is the
(13:30):
most important thing, and ittakes time. But my goodness, for
those who are willing to spendthe time to slow down and make a
thoughtful decision, it tends toplay out better in your favor.
That's all the time we've gotfor the show today.
If you enjoyed the show,consider subscribing to it
wherever you get your podcasts.Just search for how to retire on
time. Discover if your portfoliois built to weather flat market
(13:53):
cycles or if you're missing taxminimization opportunities that
you may not even know exist.Explore strategies that may be
able to help you lower youroverall risk while potentially
increasing your overall growthand lifestyle flexibility. This
is not your ordinary financialanalysis.
Learn more about Your WealthAnalysis and what it could do
for you regardless of your age,asset, or target retirement
(14:16):
date, go towww.yourwealthanalysis.com today
to learn more and get started.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.