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Today's guest on the Making Money in Multifamily Real Estate Show is Dave Foster

Dave has over 20 years of experience in all phases of real estate investing from large scale institutional and residential development to small boutique real estate investments such as historical and ecologically sensitive projects, fix-n-flips, rental portfolios, and vacation and resort property development and management. He specializes in discovering multiple ways for each investor to create portfolio enhancing strategies using the power of the 1031 exchange.

In this episode we cover:

• How Dave started in this area of real estate and how his first property motivated him to use this tool
• The concept of a 1031 exchange
• The role of a Qualified Intermediary and how they protect you by using the tax code and handling the transactions correctly
• The challenges of getting the transactions (sometimes multiple) done in the allotted 45 day time period and how to best prepare for it
• The theory behind transacting on both sides of a deal in the same cycle of a market
• Fractional interest and how it could help you \\u2018get out\\u2019 of the active investing game later in life
• Tenant in common structures

Quotes from the episode:

• \\u201cWhen you do it the right way, you don't have to pay tax on the gain. It gets deferred indefinitely and you don't have to recapture depreciation. That gets deferred indefinitely. So the idea is that's going to add 20% to 40% onto your profit every time and you are going to use that money to invest for yourself. So you are getting the benefit of the deferred taxes as long as it goes, which when you start looking at that compounds you returned that just fuels your investing career with octane to get you where you want to get to go. So that was where I started doing that over 20 years ago and haven't looked back since.\\u201d
• \\u201cSo as an investor you have a team around you that is the people that are the people that get you where you need to get to, your realtor, your accountant, your attorney, your painter, your property manager, all of those folks that are indispensable. One additional piece is the Qualified Intermediary for the 1031 exchange. And all they do, just like all your painters going to do is paint. All the QI is going to do is manage the 1031 process. So they are both required by the IRS, but they are also your guide to keep you straight.\\xa0You use the service of a third party and then there are some timing restrictions.\\xa0You've only got 45 days to shop around. You only have 180 days to close on your new property. You can't touch the proceeds. They have to be held by the Qualified Intermediary. It has to be investment real estate, so real estate that you hold with the intent of using for productive service\\u201d
• \\u201cIf it's a sellers\\u2019 market, people want to say, \\u201cBut Dave, no one is going to let me buy a property and contingent on selling another property\\u201d. That may be true in a sellers\\u2019 market, but don't forget that when you are doing a 1031 exchange, you are not just buying that property. You are also selling another property.\\xa0So why not sell your new, your old property using a contingency that allows you to locate your new property before you close on the sale. If it's a sellers\\u2019 market, those buyers are going to be much more willing to go along with you. So on either side, the buyer or the seller, you can use contingencies

*****Thank you so much for listening to the Making Money in Multifamily Real Estate Show! This show covers everything to do with Multifamily Real Estate Investing to help you, the listener, become an expert in your real estate ventures. The host, Dave Morgia, brings on guests who are already experts in their respective fields to discuss what principles and practices they follow that have helped them achieve their success so far.