A Real Estate Broker Associate with Coldwell Banker Residential Brokerage in Huntington Beach, California, Jeb Smith offers his clients the benefits of his more than 15 years of experience in real estate and mortgage lending. He has handled many complex transactions for his clients, including short sales, bank-owned properties, and luxury residential properties. While he was at Re/Max, his previous company, Smith successfully handled a large number of transactions, which helped him to achieve memberships in the Platinum and 100 percent clubs. Smith is a graduate of the realtor institute.

Jeb Smith has a work philosophy that is centered around his clients. He strongly believes that his clients should be his top priority and works to provide them with exceptional service at all times. Smith relies on his extensive knowledge and his understanding of both the real estate and mortgage lending industries in order to secure the best results possible for his clients. His attention to detail and service focus combine to make him an asset to both buyers and sellers. In order to offer the most help to his clients, Smith stays current with market trends so that he can make the best recommendations possible. Smith believes that it is important to develop long-lasting relationships with his clients, and he makes himself available whenever they have questions.

 

Watch the episode here:

 

Listen to the podcast here:

 

Fresh Outlook and Perspective on Real Estate with Jeb Smith

 

Brett:

Our next guest is with Coldwell Banker, and the beautiful Huntington Beach, California. He offers his clients the benefits of more than 15 years of experience in real estate and mortgage lending. He has handled many complex transactions for his clients, including short sales, pink on properties, and luxury residential properties. While he was at Re/Max, his previous company, he successfully handled a large number of transactions which helped him to achieve memberships in the platinum and 100 percent clubs. He is a graduate of the Realtor Institute and so much more please welcome to the show with me, Jeb Smith. Hey, Jeb, how are you doing?

Jeb:

Thanks for having me, Brett.

Brett:

Absolutely. For our listeners get to know you for the first time. Would you tell us a little bit more about your story? 

Jeb:

I’ve been in real estate almost 20 years at this point, came from a background in mortgage lending on the mortgage company for over 10 years, went through the last housing “crisis” at that time, and transition my business from that time of mortgage lending primarily into real estate and became a full-time real estate agent, doing a lot of short sales, a lot of foreclosures, a lot of bank-owned short all of that good stuff back then. And it really helped me learn the ins and outs of the market, but I’m a student of the market. I’m constantly trying to learn trying to better myself trying to understand. I’m a numbers guy. I’m a computer science major. So I’m always trying to find the math in it because to me, math makes sense. And use that to help my clients achieve their real estate goals.

Brett:

Amazing. Love that. We’re gonna dive into some of that math and trying to make sense of getting a fresh outlook and perspective on the real estate market because there’s a lot of moving parts in today’s marketplace. But before we go there, Jeb, I want to take one other step back, perhaps go back to the high school days, or the younger child days, and I believe we’ve all been given certain gifts in this life. And these gifts have been given to us to be a blessing and help to others. Some people call them strengths, some people call them superpowers. But I’m curious, what are those one or two gifts that you believe you are given? And how does that help how you help bless and help people today?

Jeb:

Honestly, I believe I’m an educator. I was given a gift to lead. I have a hard time thinking of myself as a leader many times, but I find myself often trying to educate my clients’ edge just educate those around me, whether it’s agents in the business, buyers, sellers, my kids just constantly trying to explain things in ways they can understand them. So that they’re in a better position to make the right decisions and how that translates into real estate is better financial decisions be you know, not trying to time the market, not trying to do certain strategies in a lot of people right now are trying to figure out trying to time things like trying to buy at the bottom sell at the top or vice versa, and I’m just trying to educate those people and guide them through the process in a way they can understand it.

Brett:

Amazing. You can learn more about Jeb Smith at jebsmith.net. He also has a pretty rocking rolling YouTube channel. So Jeb, let us dive right into the number one thing that you’re seeing that will help us get a fresh perspective on residential real estate, you can talk about luxury real estate, you can talk about investment real estate, just kind of give us your perspective on what we’re seeing in today’s marketplace.

Jeb:

Yeah, I mean, I think you know, it’s gonna translate into to all of those residential luxuries, it’s really an investment. I don’t know that any piece of that puzzle is not going to be accounted for when talking about the market at the moment. And obviously, Southern California is a lot like we’re seeing in the rest of the country and that’s a hot housing market, a lack of supply, high buyer demand fueled by low-interest rates, the lack of supply goes back to you know, just the last crisis when they put restrictions on home builders. And then just you know, now you’ve got all of these things happening in the market where people are able to work from home, they no longer have to drive into the office. They can move out of state still have the California income or maybe an income from another state. You’ve got all these factors playing in and you got a lack of supply. And that lack of supply now is also being fueled by a lack of building due to those restrictions back in the days, but also a lack of lumber, higher material cost, so on and so forth. So, we’re seeing, I mean, here in Southern California, and, in fact, I just got out of a real estate conference where I was networking with 700, plus top real estate agents across the country. And it was a similar conversation amongst all of us. And it was multiple offers almost properties going above the asking, we’re seeing a lot of people having to waive contingencies and do certain things in order to be in the best position to get their offer accepted. And in most cases, we’re talking multiple offers and homes going above the asking price when they’re priced correctly.

Brett:

Excellent. Let’s get a little more micro to since it’s capital gains tax, and I agree with you on all the stuff you said before I like to always say that I’m not in the business of selling real estate, California real estate broker started Marcus and Millichap multifamily broker in Sacramento, or even the business of selling capital gains tax solutions, I’m in the business of solving my client’s problems and challenges. So when it comes to the luxury of the higher end, a home homeowner in Huntington Beach, bought the house 25 years ago for 250,000 bucks, and it’s worth three or $4 million dollars, what’s the biggest frustration when it comes to capital gains tax deferral?

Jeb:

You know, I think for one obviously, that tax deferral, being able to roll it into something else below and find the right property, I think more so if we’re going to go micro on it. I think there’s a lot of those buyers that bought those properties 20, 30 years ago, are in a position now where they’re actually looking for property to maybe move into and they’re not able to find it for one reason or another, just because of the lack of supply. So in my market, you actually believe it or not, you have a lot of these people sitting a lot of these baby boomers or whoever aging in place, to some extent, because what they live in now actually makes a little bit more sense than, than what they could potentially get for that same amount of money. But to answer your question with regards to the capital gains, I mean, that’s clearly an issue when you’re making over that 250, or that $500,000 threshold, and potentially having to pay that gain on selling an investment property or what have you. And then obviously, you can probably educate us a little bit more on potentials. DICOM, right. I mean, with this infrastructure plan, how does that play out because that really affects potential capital gains, and more so in the line of business of you trying to protect clients’ assets, and so on and so forth.

Brett:

We’ll touch on that in a minute with the Biden buying proposal and what’s going on there. But you’re absolutely right. You know, that with our clients, the baby boomers, we set a deal a Cupertino, Palo Alto, we’re doing an Atherton Menlo Park. This is like the Silicon Valley area in Northern California. And one of the common themes is people are looking to relocate to next to their grandkids or move out of state and maybe retire and there are these life events that are happening right. And they have all this equity piled up in this house. And they may not even they may be real estate rich but be cashflow poor. Right. And so this like Robert Kiyosaki, Rich Dad, Poor Dad, he says that your house is actually not an investment to liability. An investment in his definition is something that’s producing cash flow, and that’s paying you right. That is a big reason why people want to sell to unlock that equity, but they feel trapped by this capital gains tax. So yeah, we do have a solution. And by the way, what Jeb was referring to is what’s called the 121 Exclusion, you’ve lived there to the last five years in your house, you and you’re single, you got a 250,000 capital gains tax-free, pretty sweet. If you’re married 500. So let’s say you bought a house for 500,000, it’s worth a million you’re married, and you sell it for a million, guess what? Zero capital gains tax. But if that same property’s worth, let’s say 3 million, guess what, you’re going to have a $2 million gain. And that’s going to be hit in California, for example, if it’s a primary home 33% now, what Biden is proposing is taking the federal capital gains tax rate from 20 to basically 40. Right now, it’s 20. The state of California is 13.3. So that same seller, who would have paid 33% on 2 million is looking at paying 53%. Right? So it’s even more painful. So we’ll see if it actually passes some of these things. You know, it’s to speculate. It’s kind of it’s really too early, but you have to consider that person who wants to sell wants to relocate but does feel trap with a capital gains tax and by the way, you can go to capital gains tax solutions to learn about how we solve those challenges for those primary homeowners to learn about the Deferred Sales Trust at capitalgainstaxsolutions.com.Besides that, what other creative ways have you found, Jeb to help people with capital gains tax in your career?

Jeb:

If it’s on investment property, it’s one thing, right? I mean, it’s obviously easy to roll that over into another type of property. Right and avoid capital gains. I mean, I know you’re a big proponent of the deferred sales trust, and how those work honestly, not super privy to those I found out you probably, in my career I’d been doing this 20 years. The first time I heard about them was about two years ago. So I’m not highly educated on them. But you know, I would love to hear more about it from your side, to be completely honest. I mean, I understand how they work. But on a primary residence, that’s not an option, correct. It’s just on an investment property.

Brett:

So you’re correct about the 1031 exchange. And by the way, what you might be referring to some people get the DST, they hear about that. There’s a Delaware Statutory Trust. And that’s just another form of 1031. So that might be another one you are confused with. So and Yes, a Delaware Statutory Trust, which is a 1031 exchange, does not qualify for a primary home. However, a deferred sales trust, which is not a 1031 exchange, actually uses a tax code called IRC 453, which is a form of a seller carry-back, that is available, in fact, for the primary houses, or cryptocurrency or a business, in 1031, only works for investment property. And by the way, Biden is talking about limiting that or taking that away as well. So then there’s nothing for property owners. But I think for us, for the main part unless you want to give it all away to charity. So a recent deal right now, Jeb, we just did that a client did was another one a primary home in Newport Beach, and this couple there, they were getting a divorce needed to sell. And they had a $6 million liability above and beyond their 121 exclusion, it was their primary home. So they use the deferred sales trust to not only sell and defer, but now they’re living off of the interest. And what happens is the government says, look, as long as you put into deferred sales trust, it’s in a deferral state, you still owe the money. It’s just deferred. And we charge zero interest on this six, for as long as it’s in businesses and real estate and investments. And on the interest, you pay ordinary income tax on any account, like an IRA account, like a 401k. So it’s I don’t know if you were referring to Delaware, or did you really hear about the deferred sales trust two years ago?

Jeb:

No, I really heard about the deferred sales trust two years ago. But quite frankly, I mean that’s, that’s good information. Yeah, I’m not super familiar with it. So I mean, it makes a lot of sense. You know, if you could answer a question on it what happens if those people pass away? Right? So tax hasn’t been paid, it’s in this trust, does it then pass on to the heirs without the tax consequences?

Brett:

Close. So it’s inside of a living trust, the kids can step into their shoes. And when they step into their shoes, they remain in a tax deferral state, that’s our first structure, a DST regular, so they just continue the tax deferral. And by the way, most parents I would think it’s up to them, they don’t actually want their kids just to cash out and go spend the money they probably want something that’s going to have some kind of tension between keeping it invested living off the cash flow, and just cash out and paying all that let’s say a million dollars of tax, so they can step into their shoes, tax-deferred and continue on the second one, which has unlimited build-up, you can do as big of a deal as you want. When you set a deal for Clint, Colorado, there was about 25 million, they sold about a $5 million apartment complex, and they moved it outside of their taxable estate. And for that one, they inherited a state tax-free, and capital gains tax-free. So it’s a nuance to what we do. So the answer is yes. But it depends on how we structure it, and how you put it inside of your living trust. It takes some estate planning as well. So we can accomplish that.

Jeb:

Good stuff. I mean, there’s a lot of property is going to be sold, but has a lot of equity. Right? I mean, we’ve got more equity in property now than we’ve ever had before. And so a lot of it is to avoid those taxes. If you can do it’s the way to go.

Brett:

Absolutely. That’s what we’re doing. Back to the 1031 exchange, for your clients that are doing those, what’s the biggest frustration with a 1031 exchange, or especially when it’s a low inventory market, and prices are so high? I feel like I get them I’m calling folks, even this is back in  ‘06 and I love 1031 exchange, but go find me that upleg or I’d love to 1031 exchange, but I don’t want to run out of time. So what’s the biggest frustration that you found for your clients for the 1031 exchange? 

Jeb:

I think you nailed it. It’s identifying a property in that 90-day timeframe. Just with a low supply at the moment, there’s not a lot of property out there, as many of you know, and finding something that fits the bill in that timeframe and actually not even getting the offer accepted, just identifying it is hard enough. And I think in this environment, getting something accepted, I mean, you can be a cash buyer, you can be as strong as the next guy. But you know, when several people want what you want you’re having to do things that you wouldn’t normally do sometimes go above and beyond and you could be the strongest, most qualified buyer out there, investor out there, and there’s no certainty that’s going to happen, which, in terms could set you up for failure and tax consequences if you’re not able to make that happen.

Brett:

Absolutely. Could agree with you more we call it the shotgun wedding, right? You get engaged in 45 days, you get married, and 180. But our parents taught us to sell high and buy low, sell high and buy higher, 180 days later, right. So again, I love the 1031. I’m a broker, I still do those. It’s just I hate having to have my clients still pressured to overpay for a property that they know intrinsically on the value. And on the forced appreciation and on the cash flow, they wouldn’t have bought anyway, except for this big tax of 30% to 50%. Capital gains tax depreciation recapture. It plays into my next question, Jeb, diversification, liquidity, and getting out of debt, you were in the lending business, right? The whole thing kind of just flipped. Right? Not to say that this is going to happen, Lord willing, it doesn’t happen like that all indications seem to be pretty strong at this point. But how important is diversification liquidity and getting out of debt, when there’s uncertainty and not sure how long this bull market is going to last?

 

Fresh Outlook and Perspective on Real Estate with Jeb Smith

Fresh Outlook and Perspective on Real Estate: The most crucial step of that process is not having debt. In times where things go wrong, you don’t know the outcome. Being able to control your monthly output, if you will, provides a lot more security on your side and be able to sleep at night and not having that anxiety. – Jeb Smith

 

Jeb:

I mean, I think it’s, it’s, it’s probably the most crucial step of that process, right? I mean, not having debt. And in times where things go wrong, you don’t know the outcome. You know, being able to control your monthly output, if you will, is I mean, provides for a lot more security on your side and be able to sleep at night not have that anxiety and what have you. I mean, if we’re completely transparent here, I mean, come March of last year I don’t have any debt outside of my mortgage. But come March of last year, I was a bit worried, right? I mean, government shutdown, had listings cancel had buyers back out of escrow. I started looking around going, what happens if this continues for 234 months? I mean, I have assets, I can pull from different places savings, what have you, but how long can you do that? How long can you continue without some sort of additional passive income? And even with that passive income, maybe it comes from a rental property or comes from somewhere else. And now they’re they’ve been told that you can’t be evicted, and now that income is no longer coming in. So there’s a lot of things that happened last year, that provided clarity for me, in many ways, and one of those was making sure you know, you have passive income coming from somewhere, making sure that you know, that whatever your debts are your you know, you’re able to, to make sure you cover I mean, what happens if this were to happen again, and it was a longer-term? You know, stay at home order, or what have you. I mean, the only reason we’re not in turmoil is that there was so much fiscal stimulus pumped into the economy with income add lower interest rates to that, or low-interest rates to that, and in turn, it provided so much stimulus to the economy, that it actually went the other direction. But to answer the question, I think having no debt you need passive income, being able to control what goes in and comes out, it provides I don’t even know the right word I’m looking for here, but you know, just peace of mind, I guess would be what comes to mind.

Brett:

Yeah, I know very well. By the way to learn more about Jeb Smith at jebsmith.net. We’re talking about getting a fresh perspective and outlook on real estate, and also some capital gains tax challenges that have been facing some clients for both of ours. So just take a step back into your business a little bit more now too. So I’m just a real estate professional. You just got done with our with 700 other real estate professionals, perhaps at Coldwell Banker, real learning growing challenging one another? What’s the number one challenge facing the realtor, the commercial broker, the resident luxury realtor, right now? What do you think it is?

Jeb:

From my perspective, it’s, it’s a lack of supply. It’s a lack of supply for one, but it’s also if you know, as a professional in this business. One thing I’ve always you know, been able to rely on is being able to provide my clients with feedback and guidance and really kind of layout a game plan for how the transaction should go where the property should sell where your offer should be. Whatever it is, how you ever want to lay that out. And right now, even as a professional, somebody that continues to educate myself, continues to follow the market, so on and so forth boots on the ground, it times it almost feels like we don’t know what we’re doing. Because it’s just things people are doing things that I’ve never seen in almost 18 years of doing business and there’s no rhyme or reason to it. In many ways outside of obviously, I think there’s a sense of FOMO going on, and people are seeing appreciation at a rapid pace and don’t want to miss out. And so you’ve got all of those factors in but the things you can’t control are, like you mentioned a moment ago, those life events, people moving for one reason or another, and you never know why somebody might pay 100,000, 150,000 whatever the number is above a property’s value in some cases, because maybe somebody lives next door, maybe mom lives down the street or whatever it is, and there’s some reason people are willing to do these things. And we’ve never seen this sort of thing at least where things are moving this fast and there’s this many people willing to do it so I think from my perspective that is a common frustration. I mean, you know, the event that I went to wasn’t Coldwell Banker was actually a Buffini event, Brian Buffini. And this is where one out of eight real estate agents you know, we’re networking with people that sell one out of eight homes in the United States. So these are high producing real estate agents, and we’re all having the same problems regardless of whether you’re in California or Florida or Utah or wherever it’s just you know, not knowing how to guide your clients is one of those frustrations along with a lack of supply for buyers.

Brett:

Yeah, very well said. Brian Buffini is one of the top real estate professional coaches in the world. Really so amazing. Thank you for sharing that insight, Jeb. Are you ready for the lightning round?

Jeb:

Let’s go.

Brett:

Go back to your 25-year-old self with the one Golden Nugget you would make sure to tell yourself to do?

Jeb:

Stay patient. I want things quickly, I want things done and the older I get the more I realized that things will work out the way they’re supposed to work out.

Fresh Outlook and Perspective on Real Estate with Jeb Smith

Brett:

Awesome. Number one book you’ve recommended to give to the most in the past year?

Jeb:

I will say the one I’ve gifted the most in the last year is Chop Wood Carry Water by Joshua Medcalf.

 

 

Brett:

Third question. What is your favorite leadership quote or theme that you strive to live by?

Jeb:

It’s a constant reminder. It actually came from Brian Buffini. It’s, the days are long, but the years are short. And when the grind gets tough. You just remember that it’s a day that you know, the time goes by fast and I think that translates more into my kids’ lives. Right? having three young kids, I think you have five? You know it goes by quickly and just you know, remembering that while it can get tough. Just stay true to what’s going on because it goes by in a flash.

Brett:

Love it. We talked about some challenges for the realtors. But what’s the biggest opportunity for realtors right now do you think?

Jeb:

The biggest opportunity for real estate agents? I think just staying consistent. I mean, I think that everybody wants to get caught up in the hype of taking advantage of you know, they think foreclosures are coming everybody wants to switch their mindset, and do you know the shiny object or what’s going on. But I think the biggest opportunity lies in your relationships, staying true to who you are continuing to nurture those that know you as you trust you’ll have a super profitable business and your business will be you know, consistent over the long haul.

Brett:

Love it. Great answer. What are you most curious about right now?

Jeb:

Housing affordability? That’s one of the things that I struggle with when thinking about the housing market. I’m less worried about supply and demand and interest rates and all of that because I think it’s somewhat controlled and I don’t think anything major can happen with that in the short term when I say short term next a couple of years, but housing affordability is becoming more of what I see is an issue and not necessarily an issue as a whole but for first-time homebuyers right where I see the disparity you know, the gap starting to widen is those that are really in the entry-level houses, which here in Southern California really starting to disappear, and I start to wonder, you know how that all plays out in the long run?

Brett:

Yeah, so do I. Absolutely. The last question, after all your success, Jeb, and helping all the clients, you’ve helped over 20 years in the lending real estate business, and your family of three and everything else? How do you stay centered in your values? And how do you stay encouraged to charge forward to reach for new heights?

Jeb:

You know, faith. I’m continuing to get coaching, business coaching writing goals, and really just trying to stay true to myself, stay true to what’s important, which for me is family is definitely first and I probably prioritize those over my business all day long. You know, so I just try to stay centered around that and the rest will take care of itself.

Brett:

Amazing, Jeb. For our listeners who want to get in touch with you, would you remind them one last time where they can find you?

Jeb:

You can go to my website, jebsmith.net, or on YouTube, just search my name, Jeb Smith.

Brett:

Awesome. Jeb, I want to thank you for being on the show. Given us a chance to know you a little bit, sharing your wisdom and some guidance here and what’s going on with the marketplace. I want to encourage you to keep using the gifts of being an educator and leading others and making things simple so they can make great decisions in real estate. And also want to thank our listeners for listening to another episode of the Capital Gains Tax Solutions Podcast. As always, we believe most high net worth individuals and those who help them they struggle with clarifying their capital gains tax deferral options, not having a clear plan is the enemy, and using a proven tax deferral strategy, such as the deferred sales trust is the best way for you to exit your high-end primary home, your business anything that has high capital gains tax, you can go to capitalgainstaxsolutions.com. You can also go to expertcresecrets.com if you are in the real estate profession or financial advisor and you can learn how to use the deferred sales trust to grow your business. Thanks, everybody for listening to another show. Please rate review, subscribe. We so appreciate you. Bye now.

 

 

Important Links:

 

About Jeb Smith

 

Fresh Outlook and Perspective on Real Estate with Jeb SmithA Real Estate Broker Associate with Coldwell Banker Realty in Huntington Beach, California, Jeb Smith offers his clients the benefits of his more than 15 years of experience in real estate and mortgage lending. He has handled many complex transactions for his clients, including short sales, bank-owned properties, and luxury residential properties. While he was at Re/Max, his previous company, Smith successfully handled a large number of transactions, which helped him to achieve memberships in the Platinum and 100 percent clubs. Smith is a graduate of the realtor institute.

Jeb Smith has a work philosophy that is centered around his clients. He strongly believes that his clients should be his top priority and works to provide them with exceptional service at all times. Smith relies on his extensive knowledge and his understanding of both the real estate and mortgage lending industries in order to secure the best results possible for his clients. His attention to detail and service focus combine to make him an asset to both buyers and sellers. In order to offer the most help to his clients, Smith stays current with market trends so that he can make the best recommendations possible. Smith believes that it is important to develop long-lasting relationships with his clients, and he makes himself available whenever they have questions.

Smith graduated with his Bachelor of Science in computer science from the East Carolina University. He lives in Huntington Beach with his wife and three children (all boys). In his free time, Smith is highly active. He competes in marathons and triathlons, enjoys CrossFit, and actively pursues outdoor activities. Smith is also committed to the community he lives and works in as he dedicates his time to volunteering both at a local soup kitchen and Off The Streets Huntington Beach. He is also a dedicated sponsor of Smith Elementary School.

Love the show? Subscribe, rate, review, and share!
Join the Capital Gains Tax Solutions Community today:

 

Learn Our 9 Step Framework

Learn Our

9 Step Framework

"How To Sell Your Cryptocurrency, Real Estate Or Business Or Any Highly Appreciated Assets Smarter"

CLICK HERE

Check your email for the Deferred Sales Trust Guide

Share This
Secured By miniOrange