Deferred Sales Trust | Tough Decisions Podcast

November 14, 2019
real estate broker, bad decisions, entrepreneur, commercial real estate, failures, tough calls

LISTEN TO SHOW NOW

 

Brett Swarts On Making Tough Decisions As A Commercial Real Estate Broker

On the show with us is Brett Swarts. Brett, welcome to the show. 

Dan, thanks so much for having me.

Brett, I want you to get us started. Talk to the audience a little bit about you and your background and where you are right now as an entrepreneur. 

I have two companies, Commercial Realty Apartment Advisors. I’m a commercial real estate broker here in Northern California, mainly Sacramento. My big focus is mainly on capital gains tax solutions. My second company where we help business owners, financial advisors, commercial real estate brokers, give an alternative to a 1031 exchange or any other tax deferral plan when they go to sell their highly appreciated assets. My background is one, I started at Marcus & Millichap a few years ago in 2006 actually as a real estate agent at the time, commercial real estate agent focused on multifamily properties. Before that, I learned the sticks and bricks of real estate from my father growing up in the Bay Area, building custom homes and rentals all my life with my family there. It’s always been in the blood. I played college hoops and love working on teams. I have a family here in Northern California, five kids and my wife and I live in Sacramento.

Five kids, busy family, busy life entrepreneur. I’m sure you’ve made some tough decisions over these last several years. I want you to get us started on this first tough decision we’d like to cover first, which I call it the sore thumb tough decision. It’s a tough decision that you’ve had to make that. You think about tough decisions that you spend a lot of time and energy effort on and it didn’t turn out so well. It sticks out to you in your mind. Most entrepreneurs put a finger on what that is. I want you to talk about that tough decision, some of the nuances around it and also some of the lessons that you learned through that tough decision.

If the client wants something, be there to serve.CLICK TO TWEET

It starts at the beginning of my career, the first couple of years at Marcus & Millichap. I didn’t graduate until 2007, then I went full-time into real estate. I was in an internship at Marcus’ starting in 2006. At the time the market shifted in ’08 and the market crashed. The first decision was do you stay in the real estate career in that business? A lot of my friends would say, “Go get a real job because you’re not going to make any money doing what you’re doing.” It was true for a lot of things. A lot of us weren’t making any money, but that led to a very tough decision that had to do with a particular client and an opportunity that I was working on.

I had met with this client and I had worked with him for a couple of years and underwritten his property and had built up a good rapport with them. He had given me a verbal commitment to list a property with me. I had a decision to make when he called me out of the blue before we listed the property. He said, “I have a gentleman I want you to work with.” He said, “He’s a residential realtor. I know you haven’t met him yet, but I like you to coalesce the property with him.” It was tough because at that point I thought I had the listing and I was going to help them out. He’d never brought it up before. We were on the 11th ending, if you will, before we put the property into the marketplace. It was a $4.5 million listing and it was a multifamily property and would have been one of my biggest ones.

It was one of the ones which would have kept me going in the business per se versus maybe having to get out. The context too was we were pregnant with our first child and we weren’t sure even with the way where things are going how to afford healthcare, how to afford housing. We knew it was tough. I was touched with the decision, “Do I partner with this gentleman or do I ask the client to make a decision?” I ended up asking the client to make a decision and he decided not to choose me. He chose the residential realtor. Even worse than that for me that hurt is he chose my commercial real estate competitor to list the property with them. They went on to represent both sides of the transaction with a buyer that would’ve been my first call to buy the property and then went on to list the property and sell it again. I was absolutely crushed. I felt like all the win, all the momentum, all the time and energy that I had spent and the context of where I was personally with my family, it was as sore of a thumb as you could have. It beat me up in a marketplace that was already beating up brokers at that time.

How did that shape you moving forward? 

Shaping me moving forward, it humbled me. It made me really look at my approach and that moment when he called me out of the blue and not taking it for granted what he was saying on the phone and instead of saying, “What’s going on here? Let’s go sit down and find out what the story behind this realtor that he was bringing in.” It taught me to say, if there’s a serious conversation or something that’s sensitive, whatever you do, get in the car and go meet with somebody if they’re local and you can do that and go. Sit down face-to-face and understand what’s happening and discuss the best way to work together. At the end of the day, if the client wants something, I’m there to serve. I’m not there to make decisions for him, but rather to serve. That’s the first thing. Go and sit down face-to-face with the client and the realtors is what I would’ve done differently. Understand perhaps, maybe there was a personal relationship going on with the agent. Who knows what was going on in that realtor’s world? He could have been down as well. I know he was a younger guy like me at the time. Perhaps this client was trying to help everybody out and make it a win for everybody.

TDE 323 | Making Tough Decisions
Making Tough Decisions: If there’s a serious conversation or something that’s sensitive, whatever you do, just get in the car and go meet with somebody.

 

I don’t know enough. I called out of the blue, about twenty days later or about two weeks later and said, “You’re ready to list.” He said, “No, Brett. I chose somebody else.” Sit down, understand. The biggest thing is instead of letting the feelings of pride, entitlement and frustration control my attitude, I had a chance to choose an attitude of gratitude and humility and then go perform. If I were to perform really well and maybe the next deal, he says, “Brett, you did this well enough, I’ll choose you by yourself.” Instead of feeling I was entitled to the listing. Those are the biggest takeaways I had from that one.

What about animosity? Was there any animosity on either side? 

I would say so. I know it wasn’t pleasant for either of us. When I called two weeks later to find out what was going on, he said, “I’ve moved in a different direction.” I was hurt. Animosity, you could say I was feeling frustrated by being blindsided by it. I was young and naive to be honest. I felt too much entitled to the work that I had done so far and the rapport that we had built. I definitely would say there was probably animosity on both sides.

Let’s shift here a little bit and talk about a different tough decision that is a little bit more glowing. That had a good and positive outcome and then some of the lessons you learned through that one. 

The positive one I would say is the story of launching and learning about alternative capital gains tax solutions. This is during the same season at Marcus & Millichap we had. At the time, my mentor and manager who had hired me and trained me for multiple years was looking for creative solutions for our agents to win deals beyond what the 1031 exchange. He brought in the gentleman to speak about a thing called a deferred sales trust. There were about 30 of us and a few of us gravitated and looked at this strategy and started to study it. Fast forward about 1.5 years after that, he was let go. He was there for many years. He was an awesome broker, but the marketplace was tough and they decided to go a different way in that office. One of the agents who took the leadership role there was one of the ones who did not gravitate towards the strategy. At the time he basically said, “I don’t want you guys talking about that anymore. I want you to focus on 1031.” He sat me down with his regional manager and we had a big discussion and we’re sitting in the room and he’s going, “Why are you talking about this?” I’m going, “I’m trying to win business and try to add value and trying to bring solutions.” Another decision to make of, “I don’t want you to talk about it anymore.” I basically disagreed with him and had a decision to make either to acquiesce to what he wanted me to do versus what I thought the clients were looking for and an alternative to win business.

Failures shape people moving forward. It humbles you.CLICK TO TWEET

For context to it, for those who maybe don’t know, but in commercial real estate, you’re basically an independent contractor although you work for a brokerage, they’re not paying you a salary or benefits. You’re basically your own business underneath them and you split a commission so you either close a deal and make a big check or you don’t and you make zero. Those are all the things that are going on during that 2008 to 2011 timeframe. Most people by the way were making next to zero. It was a tough marketplace. That being said, I was challenged at the time not to pursue that. Instead, I continued to pursue it.

A couple of months later, we went separate ways and that was a major part of us going separate ways, but that led me to where I’m at now with my second business. I’m helping people who feel trapped beyond what their capital gains tax on their primary home business or commercial real estate and have a backup plan for a failed 1031 exchange. Fast forward, I now have something that no one else has focused on or mastered to give an alternative and add value. It’s lost my second business and it’s brought so much fulfillment and value to my clients and I’m so glad I didn’t listen to him. That dream would have died perhaps at that time.

What are some strategies that you like to do when you’re facing one of these types of tough decisions now? That was in the beginning and stuff. What about now? What are some things that you do now to make sure that you make these decisions properly?

The first thing is having mentors and having trusted people, whether it be friends that you know personally that you can go get wisdom and counsel. I have a group of men that mentor me and help me with these big decisions. It’s going to folks who’ve been there before and have made these tough decisions, that’s one thing that can help. The other thing to know is generally speaking, I got a sense that we have 1 to 2 opportunities to be early adopters of certain business ideas and to be willing to take action and risk because it is risky to step out of the general way that your peers are going or not going. To be the outlier on the outside which people aren’t sure it’s going to work or it’s something that they would do. Be willing to take those risks and step out and then pour into it 100%.

We are with Brett Swarts and we’re going through this series of quick questions and answers called the trifecta. We want you, Brett, to get us started and talk to us first about your favorite technology that you use in business that helps make your life easier every day. 

TDE 323 | Making Tough Decisions
Making Tough Decisions: As you add more value, you can earn more.

 

My favorite technology now that I use in business is ActiveCampaign. It’s an automation series where I can spread the message of our content and information and an automated way versus manually sending the information.

What’s a favorite quote that you’ve heard that has helped you as an entrepreneur?

“Learn to work harder on yourself than you do on your job. If we work hard in your job, you’ll make a living, but if we’re harder on yourself, you’ll make a fortune.” It’s by Jim Rohn. The idea is not to make a bunch of money, although that’s a part of it. As you add more value, you can earn more. The idea is to become more of everything. Our health and our finances, our relationship with our spouse, our spiritual walk or personal development or leadership. If we can become more and grow in those areas, we can give more and we can serve more and we can serve better for everybody. Learn to work harder on yourself rather than focusing on your job or your career.

What’s the favorite book that has helped you make better decisions as an entrepreneur?

I’d say the one that I’m rereading is called The Seasons of Life and it’s by Jim Rohn. It talks about the summer, the spring, the fall and the winter and how we all have seasons of life in different areas of our life and we’re probably constantly moving through different seasons. Realizing that sometimes it’s going to be the winter. It’s not always going to be the spring and summer. Sometimes it’s going to be the fall and to be okay with that. As an entrepreneur, probably a lot of your audience, a lot of us are probably type-A personalities or really high performers and want to get things done. That’s always been me. My wife and I have had five kids and we’ve been married several years and our oldest will be nine years old. We’ve accomplished a lot on that front and to look back and say, “That was a season of intensity and it still is with the kids being pretty young.” That’s a sample of the spring, summer, fall, winter. It can happen in business as well. Realize that’s part of life.

If we can become more, we can give more and we can serve everybody better.CLICK TO TWEET

What’s the next thing for you in your vision or dream board? 

Ideally, it starts with my family and as a multifamily investor, myself, commercial real estate investor, myself and growing the business. I want to help as many people be passive so they can spend time with their families and they can give more. If we can grow our businesses and help people do that, then we will be a success. Those are all ways of educating people with the deferred sales trust and in a commercial real estate broker’s transaction. Those are the dream boards for the entrepreneur side and the personal side would be to continue to be able to keep my wife home full-time with our kids. We homeschool our kids and we want to be able to travel a bit with them, with that experience where they’re still young before all the sports really pick up for them to start playing.

Brett, I want to thank you so much for being with us here and sharing all this information with us, all these different golden nuggets throughout. How can the audience reach out to you if they have some further questions for you or wanting to continue the conversation further with you? 

The best place to be is CapitalGainsTaxSolutions.com and you can search that on Google. YouTube, BiggerPockets, LinkedIn, connect with me there.

Thank you so much, Brett, for being with us. I’m looking forward to continuing to follow you as you continue to grow as an entrepreneur. I’m looking forward to having you on a future episode as well. 

Thanks, Dan. It’s my pleasure.

Important Links:

About Brett Swarts

TDE 323 | Making Tough DecisionsBrett Swarts is an entrepreneur, cre investor, podcaster, deferred sales trust educator/trustee, and Nor. CA multifamily broker. His leadership roles include serving as the Founder of Capital Gains Tax Solutions with Brett Swarts podcast, Founder of Capital Gains Tax Solutions, and Founder of Commercial Realty Apartment Advisors.

He leads a team of extraordinary people at his companies. He has served billionaires, Doctors, Veterinarians, Attorneys, Tech Entrepreneurs, Architects, CRE Syndicators/Operators, and more, to help them create and preserve their wealth through investment real estate. He leads them through this process by leveraging the optimal timing capital gains tax deferral structure known as The Deferred Sales Trust. Its purpose is to help individuals escape feeling hostage to the 1031 exchange and 30-50% capital gains tax when they sell their highly appreciated assets such as; a business, CRE or a primary home. By focusing on the timeless aspects of being the guide, and not the hero, Capital Gains Tax Solutions’ educational platform inspires and helps business professionals like Venture Capitalists, Financial Advisors, Business Brokers, CRE Syndicators and Realtors help their clients or partners execute a passive capital gains tax deferral wealth plan of their own.

Swarts has been featured in various notable podcasts across the web, including The Best Ever Real Estate Podcast with Joe Fairless, Lifetime Cashflow through Real Estate Investing with Rod Khleif, Apartment Building Investing with Michael Blank, The Real Estate Espresso Podcast with Victor Menace, RE Investing for Cash Flow with Kevin Bupp, The Project Egg Show and many more. Brett is a guest speaker every year, who trains 100’s of business professionals at companies such as Marcus & Millichap, Keller Williams, Western International Securities, Multifamily Investing Academy & Equilus Financial Group, Inc.
Brett also holds series 22 & 63 licenses.

 

LISTEN TO SHOW NOW

By Brett

Related Articles

Deferred Sales Trust | Millionaire Mindcast

Deferred Sales Trust | Millionaire Mindcast

LISTEN HERE NOW   In this episode of the Millionaire Mindcast, an amazing guest, Brett Swarts who shares information about Deferred Sales Trust, the tools and techniques that will create and preserve more wealth, and tips to attract high net worth. If you’re one...

read more
Deferred Sales Trust | The Real Estate Lab Podcast

Deferred Sales Trust | The Real Estate Lab Podcast

LISTEN HERE NOW Show Notes [00:00:58] Brett’s Contact: Capital Gains Tax Solutions Capital Gains Tax Solutions Facebook YouTube: https://www.youtube.com/channel/UCAykQNmIWZ0KARBeVWcQxUA?reload=9 LinkedIn: https://www.linkedin.com/in/brett-swarts/ #deferredsalestrust...

read more

Lorem ipsum dolor sit amet consectetur

0 Comments

Get the free Deferred Sales Trust Guide Now

Do you feel trapped by capital gains tax of 30-50% when considering to sell your business, primary home or investment real estate? Start your journey to wealth freedom today by understanding how the deferred sales trust gives you tax deferral, liquidity, diversification, eliminates the need for a 1031 exchange and the $250K or $500K home exclusion by downloading this free guide. Check your email after you click download now. 

Check your email for the Deferred Sales Trust Guide