David has more than thirty years of entrepreneurial, small business, and real estate investing and management experience. Starting with initial concepts, strategic planning, implementing business systems, and daily operating procedures, he has experience in every facet of small business. He has been investing and developing real estate starting in 1994 with the first purchase of a bank REO which was subsequently rehabbed and turned into a rental. Since then, he has rehabbed properties, built houses from the ground up, sub-divided land, designed multi-unit residential projects, rehabbed and rented commercial space, fixed and rented numerous residential properties, fixed and sold residential and commercial properties, done seller financing, and purchased nonperforming notes.

In 2014, HGM Business Group was formed as business development, management consulting, and real estate investing company. HGM has been developing multiple business projects for its own portfolio from tech start-ups to financial investments. As part of HGM Business Group, HGM Holdings, LLC, David has rapidly grown its real estate investment portfolio to more than 250 single-family and small multi-family properties in multiple states. In July of 2020, David become COO and co-fund manager of Voyager Pacific Opportunity Fund II, a real estate fund focused on single-family homes, tax liens, and vacant land.

 

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Diversified Real Estate Investing with David Hardcastle

 

Brett:

I’m excited about our next guest. He’s out of Central California, and he leads a part of the team at Voyager Pacific capital, wherein he and his team took over the full-time manager of day-to-day operations in July of that year with the task of building on the foundation laid by previous management. He has been focused on very strong and operations systems and technology, and he’s iplanet proprietary software he designed to track and communicate asset details internally streamlining the management process, a 1000s of smaller assets by increasing operational efficiencies, and prior to his role with voyage Pacific, he started investing in developing real estate in 1994, with his first purchase of a bank REO, which was substantially rehabbed and turned into a rental since then he has rehab properties build houses from the ground up. Divided land design, multi-unit, residential properties, and so much more. Please welcome the show with me, David Hardcastle. David, how are you doing?

David:

I’m doing good. Brett, nice to be with you today.

Brett:

Our listeners getting to know you for the first time, would you give them a little bit more about your story and your current focus?

David:

Like you mentioned, I’ve been investing in real estate since the mid-90s, and then through last year, I was mainly doing it for personal investing, but ended up buying some properties from Voyager Pacific last year, which is the private equity real estate fund that I now the CEO of, and during that transaction, got to know the the the CEO at the time, and also the founder, and we started talking and one of the things that he was interested in was possible if I was interested in either buying all the assets in the fund, or buying out his general partnership in the fund and running it, and so the timing was really good. I had the time to do it, I was looking for some new challenges, I saw a lot of opportunity with Voyager Pacific with the assets that he had accumulated so far, and with the operational efficiencies and software that you mentioned, applied to the fund knew that we could continue to grow it and also maximize the return on investment and with the fund. That’s kind of where we’re at after a little over a year into it.

Brett:

By the way, can learn more about David Hardcastle at VoyagerPacific.com. I think we’ve all been given certain gifts in this life, and I want you to go back maybe to your high school or college days, and some people call the strengths some people call them superpowers, and I think these gifts have been given to us to be a blessing and help to others. I’m curious, what are those one or two gifts that are strengths that you believe you were given? And how does it help you help and bless people today?

David:

If you go back to high school, or even before that, I’ve always been involved in team sports, and I always say business as a team sport, because not everybody can do everything. Like a football team. When I was growing up, I was the quarterback of the football team, and it was up to me to communicate the play, survey the field, see what the defense was doing, and then get my guys in the right spot and execute that play, and that’s a lot what the business is like as a CEO, it’s your job to look forward to kind of see what’s going on in the marketplace, with your businesses and various things and execute the strategies that make sense at the time. Really playing team sports also, in addition to that, just working with different types of people, when you’re running a business or just in day-to-day life, it’s all about interpersonal communication with the various folks you have to work with and teams. There’s no better way to learn that than then dealing with team sports because you got everything you got ups, downs, highs, lows, touchdowns, interceptions, you name it you got it in team sports, and it just really translates well to life.

Brett:

I couldn’t agree with you more. A proponent of team sports and had the privilege of playing college basketball and playing football and basketball growing up and so it’s like nothing else, that can train is what I found. A big proponent of that will very cool. Let’s dive right into the topic at hand which is diversified in real estate investing and talk about ways to grow your wealth, and to do it in a way that can lower your risk. David, what’s the number one secret with Voyager Pacific Capital and what you’re doing there to help individuals create and preserve our wealth and diversify?

David:

Well with our opportunity fund to that’s really designed as a very conservative real estate fund, and the way it works is we have 1000s of smaller assets in this fund. The risk is really spread out over lots of smaller dollar value assets in various geographical locations. I really like it because, you have an issue with one house in Cleveland, for instance, maybe it burns down or something that really doesn’t affect the overall fund itself, and it doesn’t affect the profitability in any major significant way. Whereas opposed to some investments that you can do where say it’s a 300 unit apartment complex, and say, that neighborhood goes bad, or the apartment complex burns down, then you really got some issues, because all your eggs are basically in one basket with the Opportunity Fund II, we’ve got it spread out both geographically as well as across different smaller assets. As I mentioned, single-family rentals, we also have vacant land, which we sell on contracts throughout 28 states, and then we also invest in tax liens, and you got three distinctly different asset classes within one fund.

Brett:

Got it? Multiple asset classes within one fund different geographic locations, and even different product types. That’s the first secret, and what’s like the second secret to growing your wealth with it within or just the next step of someone who’s interested in growing their wealth with this type of strategy?

David:

That’s basically set up for folks that are looking for steady income, very conservative. This year, we started Fund III, which is a little more aggressive, and so Fund III focused on value add very opportunistic-type projects. Those projects are in the three to $15 million range, so higher dollar values, but they’re also potential to have higher returns. What we offer in Voyager is a little of both, you’ve got the very conservative safe, Fund II, and then you’ve got the more aggressive, potentially higher returns in fund three. We’ve we feel like we’ve got all the bases covered there. The other nice thing about our fund is the management team. Our team has combined experience of over 100 years of investing and managing real estate. That’s another thing that’s very important when you’re looking at what to invest in is who is actually running the show, and the experience they have and I would match our team’s experience with anybody’s team out there.

Brett:

It’s not just the asset, you’re purchasing the right to the business plan, and then it’s the players to execute the business plan. Like football. You have the offensive coordinator, you have the game plan, but you got to have the right personnel on the field to execute the business plan. NFL just started this week, and it was fun and college football too. Is there a favorite TV like how they’re doing?

David:

I’ve always been a Dallas Cowboys fan, almost pulling it out against the box. But when you got Tom Brady and a minute, 30 seconds left, he’s hard to beat. We’ll try again later, maybe in the Superbowl.

Brett:

That was a great game. Really great game. Let’s shift to investors. What’s a question that investors that are looking at different groups to invest with on the commercial real estate side? What’s the question they should be asking you or what is a common question that they asked you to find out if it could be a good fit for working with you guys?

David:

Probably the number one question we get is what are the returns and how secure is my money? In fun, too. We have no leverage. There’s no debt on any of the assets and fun to that’s another safety feature massive safety feature that’s built into Fund II those are some of the questions that a lot of folks will ask when they’re looking into what to invest in. Obviously, the other thing is your track record, how long you’ve been around. performance of the fund itself. Over the years Fund II has returned a 10% return every year plus since its inception in 2015. We’ve got a very strong track record. Fund III is headed up by Phil Adler. Phil has been developing real estate and managing real estate in the New York tri-state area for the last 35 years. has developed over $500 million worth of real estate. Our like I mentioned, our team is incredibly strong and has a solid track record behind us.

Brett:

Then on Fund III, a little more value add a little more opportunistic, three to 15 million. If you had any, no any potential returns, I know it’s not guaranteed. You don’t make performance promises. But is there a kind of a, if the first one is 10%? opportunity two is Fund II a Fund III 15 to 20? What’s kind of your mark there? What are you hoping for?

David:

In Fund III, we have an 8% preferred return, that’s guaranteed to the investor for any profits that would come and they would get the first 8% profits that come in. Above that, we’ve got a 6535 split between eight and 12%. The investors would get 65% of any profits, and then above 12%, we split it 5050. Our projections are in the 15 to 20% range returns, your on annualized returns for fun three, and that’s simply because of the types of projects we’re doing. Our first project in Fund III, we’re doing a six unit townhome development in Hastings on the Hudson, New York, which is about 25 minutes outside of Manhattan, and that one is a ground-up development, we’re going to build six townhome units, each unit is going to be worth about 1.2 5 million apiece, we’re picking up the project with a shovel ready project for about 1.6 million, we will build it out for about 4 million and then sell it out between seven and 8 million seeing see quite a bit upside there, and the return on equity should be in the 100% range over the 24 to 36 month period. Very high returns on projects like that the risk on those though, which we’ve talked about risk is what’s the market gonna look like two to three years from now our interest rates going to be good for potential buyers. Those are things that you can’t really predict. But historically, those areas the higher-end areas like that have done quite well, even in economic downturn times. I think we’ll be in pretty good shape.

 

Diversified Real Estate Investing with David Hardcastle

Diversified Real Estate Investing: “Working with different types of people, when you’re running a business or just in day-to-day life, it’s all about interpersonal communication with the various folks you have to work with and teams.” – David Hardcastle

 

Brett:

Thanks for sharing that. By the way. We’re talking with David Hardcastle, and he’s with Voyager Pacific Capital, and you can learn more about David and his team at VoyagerPacific.com. David, we’re going to shift a little bit to Capital Gains Tax and discussions on, ways to defer tax and grow wealth so I believe it’s no longer just about cash flow, it’s about tax flow. Cash Flow is important. But it is with the changing of the guard and leadership and the proposed changes on the table. It’s more and more important to be very, very prepared and planned for capital gains tax and income tax and estate tax, and so I want to start this question when it comes to yourself and your partners and clients over the years. What’s been the biggest frustration when it comes to Capital Gains Tax Deferral and or the 1031 Exchange?

David:

Well right now, we’re seeing a lot of people that come to us that have 1031 money, and unfortunately, they don’t have any place to put that money. Because there’s not a lot of good deals out there right now. That’s one of the biggest issues we’ve been seeing probably for the last six to eight months, a lot of people are selling their properties right out because prices are good. That’s obviously when you want to sell. But then when you got to go reinvest that somewhere, there are no good deals to be had. Product, like what you guys have with DST is probably a really good solution, in the sense that it takes that pressure off them where they don’t have to stress about finding a property and a limited amount of time or investing in a property. That just doesn’t make sense financially just because they have to have to do it. That’s probably the biggest thing I’m seeing right now.

Brett:

I could agree with you more. We call that the shotgun wedding. You get married and 45 get engaged in 45 days, you get married within 180. But even beyond all that of selling high and buying higher, and maybe not being able to find that deal. That makes a lot of sense. Oftentimes, people get in trouble because they’re not diversified and they’re not liquid and they have too much debt, and oftentimes, that’s what the 1031 Exchange requires has equal or greater value within a short period of time, and it’s typically the whole entity must move meaning if you own it by yourself, you’re in it all by yourself which creates more risk. If you have more debt, you have less diversification also have or little liquidity and so the 2008 crash, that’s exactly what we found is the three causes where people got hurt the most. They had too much debt, they had overpaid the view of the 1031 Exchange, and they didn’t have enough liquidity. The Deferred Sales Trust is the solution for that because it’s not a 1031 Exchange, you can sell high diversify your equity, put it into stocks, bonds, mutual funds, hard money lending, real estate, passive or active, all tax-deferred as well as pay off your debt. You don’t have to be in a bunch of debt, and you also have time you can dollar cost average into multiple deals but smaller amounts into smaller deals, because there’s no equal or greater value. When you add all of that, that helps you to build a diversified real estate wealth portfolio, and that’s what we most love about it. Any thoughts on that diversification piece of it?

David:

I’ve seen that with guys that had debt on properties that they’ve sold, and it’s made it very difficult to go find another property and put that same amount of debt on it, and so I think it’s a really negative issue. When you got 1031, you got to place that debt back on it. Diversification is always good. Like we talked about, and fun, too, we’re very diversified. They’re diversified among different types of asset classes, whether it’s real estate or stocks, bonds, mutual funds, whatever. It’s very important to have a well-diversified portfolio, and not having that shotgun pointed here back while you’re trying to make these decisions is just so helpful. Because typically, if you’re rushed, you don’t make good decisions.

Brett:

It’s touched on state, by the way, can learn more about that a CapitalGainsTaxSolutions.com, its CapitalGainsTaxSolutions.com and the Deferred Sales Trust. Let’s talk about the estate tax. I think Biden is, as of yesterday, what I’ve heard, they’re taking off of the stepped-up basis off the table like they’re not, they’re planning on, it’s got so much pushback that that as of right now, it appears to be off the table, they’re not going to be talking about eliminating the stepped-up basis, but they are still talking about the 1031 Exchange, potentially, and the state tax even separate to that is set to expire and drop in half, which I think is the big elephant in the room, I think a lot of people are focused on Capital Gains Tax, and then we are too, but that’s like the tiger by the tail like that’s important to defer that 30 to 50% and Capital Gains Tax. But the other elephant in the room is the estate tax. For those who are worth above 22 million married 12 million single, and those are big numbers. But those are the highest exemptions we’ve seen basically, in the history of this whole thing, those are going to cut in half down to 12 million married 6 million single, and I’ve even heard potentially 7 million married three and a half million dollars single, meaning anything above and beyond those marks upon your estate passing is going to be subject to 40% of state tax for anything less than your taxable estate. David, I’m just curious, any thoughts on that side of things for yourself or for your clients who are ultra-high net worth?

David:

Well, it never ceases to amaze me how our governments can figure out how to tax us and get into our pockets, even more, we live in California, there are always new ways that they’re looking to cut taxes. I’m not surprised with the current administration, that they’re looking at these things. Anything you can do to prepare for that any strategies that would work, I would highly, highly suggest implementing as soon as possible. I know we have a seller of some properties in New York, it’s 17 lots worth about a million dollars a lot each. These poor guys were in contract with one of the large home builders in the country, and they’re stressing out because they got like three months to get it done, because they know what’s coming after the first of the year, and this company is decided they’re gonna drag them along. Good news for us, we might be they’ll swoop in and get a hell of a deal on these 17 lots, but these guys are just kind of stuck in a rock and a hard place, and if it wasn’t for somebody like us to come in and do a deal with them, they might have a massive tax issue and be sending a lot of money to someplace that they didn’t want to send it to or think they are gonna have to send it to you. If it wasn’t for sale come in. Trying to plan ahead for that is crucial these days at least for the next coming years, I would imagine. If you can do it now I would highly recommend it.

Brett:

I couldn’t agree with you more, David. It’s really a plan, plan plan and again, it’s not about cash flow just about cash was about tax flow, and so make sure you have that exit plan. That’s again why we love the Deferred Sales Trust. We can solve partnership challenges, partnership separations, you can work for a business’s cryptocurrency real estate sales, you can save a failed 1031 Exchange I could go to CapitalGainsTaxSolutions.com to learn more about that. That being said, David run out of time you ready for the lightning round? Let’s do it. All right, knowing what you know now if you go back to your 25-year-old self with the one Golden Nugget make sure to tell yourself to do.

David:

I would invest in real estate starting from day one.

 

Diversified Real Estate Investing with David HardcastleBrett:

What’s the number one book you’ve recommended gifted the most in the past year?

David:

Number one book I’ve recommended. Let’s see, the latest book I read, which was pretty awesome was American Marxism, Mark Levin, I really enjoy his writings.

 

 

Brett:

Next question. What are you most curious about right now?

David:

Most curious. Well, just kind of seeing what the future is going to hold with everything that’s going on in the world, that’s probably what I’m most curious about, I really pay close attention to what’s going on on a daily basis, and how it’s gonna affect us, not just as a business and our staff here, but personally and whatnot. I’ve got two young daughters, late, late teens, early 20s, and I’m really concerned about you what the future holds for those guys. Because when I grew up, probably YouTube, we lived in a country that was full of opportunity, and I just hope that continues for them as they start their young lives. That’s, that’s the main thing I’m probably most curious and concerned about right now.

Brett:

I could agree with you more. Second last question. What’s the number one leadership quote or theme that you strive to live by?

David:

Leadership quote, or theme? Well, I got a good one. I don’t know if I can say it on this one. But I love George Patton. He was very direct, which these days being direct kind of gets you in trouble. But he was a very direct guy, and one of my favorite movies is Patton, and he was given his speech before, that at the beginning of the movie when the troops went out, and he said that we’re gonna go through that go through them, like shit through a goose. That’s the way I look at things. We’re just gonna go and barrel through things. Last year, when COVID hit. I told our staff and our investors, I said, it’s for us, it’s business as usual, we’re going to continue to keep doing what we do, and we’re going to, we’re going to come out on the other end of this thing in much better shape because we’re not going to go in a hole. We’re not going to take days off, we’re going to keep working hard, and guess what it worked out very well for us.

Brett:

For our last question, after all your success, helping the people that you’ve helped, in helping to build Voyager Pacific capital up more deals since 1994, and building a bunch of wealth and real estate, I’m curious, how do you stay centered in your values? How do you stay encouraged to charge forward to reach new heights?

David:

Well, fortunately, I got a great wife, I got great kids. Family is very, very important. Growing up, my mother didn’t let us quit anything, and so she said, when you start something, you finish it no matter how hard it is, and that’s really stuck with me throughout life. Because life’s up and downs, there’s no doubt about it. Business, especially the trying times that we’ve seen, even in the last 15 years with the 2008 crash. I would say that’s the thing that really keeps me going is family and just good leadership there.

Brett:

For our listeners who want to get in touch with David, what’s Would you mind him one last time, what’s the best place for them to find you?

David:

VoyagerPacific.com is the best place. We got all the contact information there. If you have any interest, just fill out the form there and we’ll be in touch with you.

Brett:

David Hardcastle. I want to thank you for being on the show. I want to thank you for sharing your gifts with the people that you serve, and help them to work together in a team sport and to move the vision forward and to help people create and preserve our wealth and diversified real estate investing, and I also want to thank our listeners for listening to another episode of the Capital Gains Tax Solutions Podcast also streaming on eXpert CRE Secrets Podcast and YouTube Channel where we believe most high net worth individuals and those who help them they struggled clarifying their Capital Gains Tax Deferral Options, not having a clear plan is the enemy and using a proven tax deferral show such as the Deferred Sales Trust is the best way for you to exit highly appreciated cryptocurrency businesses real estate, save a failed 1031 Exchange or perhaps even save yourself from overpaying taking on too much debt. Not having enough liquidity in a marketplace that is just kind of really a seller’s market, and perhaps diversify and invest in opportunities with VoyagerPacific.com or others and you can go to CapitalGainsTaxSolutions.com to learn more about that, please rate, review, and subscribe. Please share this with someone who could be helpful to We so appreciate all of you out there and the YouTube iTunes world Spotify wherever you are consuming the content and we hope to talk to you again real soon.

 

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About David Hardcastle

 

Diversified Real Estate Investing with David HardcastleDavid has more than thirty years of entrepreneurial, small business, and real estate investing and management experience. Starting with initial concepts, strategic planning, implementing business systems, and daily operating procedures, he has experience in every facet of small business. He has been investing and developing real estate starting in 1994 with the first purchase of a bank REO which was subsequently rehabbed and turned into a rental. Since then, he has rehabbed properties, built houses from the ground up, sub-divided land, designed multi-unit residential projects, rehabbed and rented commercial space, fixed and rented numerous residential properties, fixed and sold residential and commercial properties, done seller financing, and purchased nonperforming notes.

In 2014, HGM Business Group was formed as business development, management consulting, and real estate investing company. HGM has been developing multiple business projects for its own portfolio from tech start-ups to financial investments. As part of HGM Business Group, HGM Holdings, LLC, David has rapidly grown its real estate investment portfolio to more than 250 single-family and small multi-family properties in multiple states. In July of 2020, David become COO and co-fund manager of Voyager Pacific Opportunity Fund II, a real estate fund focused on single-family homes, tax liens, and vacant land.

 

 

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