Dr. Gurpreet Padda is founded a real estate investment, development, and management company, Red Pill Kapital. His goal is to help his fellow doctors attain financial independence and practice medicine on their own terms. He currently owns several hundred multi-family units, along with over 2-million square feet of commercial space. Additionally, he joint ventured into real estate syndications of nearly one thousand multi-family units. Helping his colleagues achieve financial independence has become a passion of Dr. Padda. 

 

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How to Avoid the Handcuffs of the 1031 timeframe with Dr. Gurpreet Padda

 

Brett:

I’m excited about our next guest. He is from the great state of Missouri he is a physician by trade and buys a commercial real estate expert enthusiasts with helping people create and preserve wealth, especially in the physician field, you can find him at Red Pill Kapital spelled with a K for instead of a C for Kapital, RedPillKapital.com, and he’s going to share a little bit about his background in this episode, and then we’re going to dive into the biggest tax deferral struggle that he’s had when it comes, to deferring taxes. Then we’re going to introduce the full episode cover as well. Please welcome to the show with me, Gurpreet Padda. Gurpreet, how are you doing?

Gurpreet:

I’m doing very well. Thank you. Thanks for hosting me.

Brett:

Welcome to the show, give our listeners a little bit about your background and your current focus.

Gurpreet:

The short and quick of it is that I have a medical background. But I started in the business when probably when I was 14 years old, and I started rehabbing homes and things of that nature. I started that even before I could drive. A lot of times my contract folks that were working with would have dropped me off at school, and I was taking phone calls in the high school cafeteria during lunch to figure out what they were doing. I had always alike for construction, but then I went to medical school, and I loved it, and as I got through medical school, I realized that I loved what I was doing. But that was not perfect financial security. Being a physician, you make a lot of money, but you pay a lot of taxes, and so I had to figure out a way that I wasn’t dependent upon a job, I wasn’t dependent upon somebody else giving me money, and I also had to figure out what those biggest frictions work in wealth creation, and it turns out, it’s taxed, that’s about 40% of your loss of wealth, and then once you go into that rabbit hole of what creates wealth and how to maintain it, and you realize that it’s a combination of inflation, and taxes and things of that nature, and realize that taxes are just a way for the government to align you with their own goals, and get you to do what they can’t do efficiently, then it makes perfect sense when you use taxes as a planning vehicle for your own personal wealth growth, and so that’s, that’s kind of how I ended up starting in construction, going to medical school, and then better understanding the financial aspects of it later.

Brett:

I can’t wait to dive into the full interview in all those spot spots. You just talked about it, especially about the taxes, getting the government getting you to do what you can’t do what they can’t do efficiently, aligning them. Aligning you with their goals. Very, very interesting. That being said, for this episode, would you give us kind of the biggest frustration you a client, a friend family member has had, when it comes to capital gains tax deferral options, or just in general, what you’ve maybe a story that you’ve faced? That’s been a challenge?

 

 

Gurpreet:

The biggest frustration with capital gains. Is the component that if you’re going to do a 1031 Exchange, which is your type in the real estate world, that’s how we avoid paying capital gains on something that we’ve made money at. The biggest issue that you have is you have a limited timeframe, we got 45 days to identify, you got 180 days to close, and what happens if you can’t perfectly find that next project. You end up taking, you end up getting shot in your own foot because you might take a project, that doesn’t make sense for you, and it creates a false sense of urgency, and we know from a negotiation standpoint, the person who has time urgency is in the worst position and will overpay and so I never want to be in that position, and rather than do that, I have to come up with alternatives, and some of those alternatives, thank god we’re accelerated depreciation so I, I could walk away from a 1031 and reset it, and then more recently, I’ve looked at DST’S because that’s a way that I get to avoid having to pay taxes and still can negotiate for the best possible deal. I believe that the ability to give yourself time is more important than even the financial tools. Time is the one thing we can’t come back with and that time element is what I really look for, and so I’ve always been trying to figure out how to avoid the handcuffs of the 1031 timeframe.

Brett:

We’ll say we call that optimal timing, and on the other side, we call that the shotgun tends to be one marriage, you get engaged in 45 days, and you get married that deal within 180, and, and sometimes, if you can’t find the timing that lined up, you can oftentimes Shoot yourself in the foot or overpay, and so the idea is to sell high and buy low or sell high and make a good deal with no time urgency. Thank you for sharing that. That being said, for those who want to get in touch with you right now and connect with you, what’s the best best place for them to connect with you, and perhaps even maybe, if we’re looking for investors, or talk about what services and connections you’d like to make with them.

Gurpreet:

Probably the best way is just through our website, red pill capital with a k.com, and then info at red pill capital calm is the way to each reach me the quickest. We were not out in the market looking for investors if occasionally we find something that’s just amazing, and then we’ll share it with other people, and we’re constantly scouring opportunities, and I probably look at 25 to 30 opportunities a month, that is significant, and I limit myself to probably 17 to 20 investments a year, which is not insignificant, but I’m really looking for that amazing deal, and we can talk about some of those deals and and and how to get to that. But I’m not looking for rates of return of eight or 12%, I want something that’s going to be amazing. I want every deal to be the best deal that I’ve done and better than the previous one.it takes me a little bit and it takes a lot of hustle, and I don’t want to I don’t want to waste. I don’t want to waste time on deals that aren’t perfect for what I’m trying to achieve.

Brett:

Thank you so much, Gurpreet being modest too. He has owned and managed over, I believe over 2 million square feet of commercial space as well as, hundreds and hundreds and hundreds of units of multifamily. Is that a fair summary Gurpreet?

Gurpreet:

We constantly hustling and looking, and I firmly believe that the velocity of your capital determines your end result. If you let capital stagnate you, that’s a mistake. That’s a horrendous mistake. I love holding things for a long period of time. But I like moving that capital and trying to get better rates of return over time, and that’s a function of it’s a function of using inflation as your friend.

Brett:

We’re going to have that to the full episode so much there so look for the full episode to do drop soon on iTunes, YouTube, Spotify, all the major channels, and if you’re listening to the show and you’re interested, reach out to Gurpreet and check them out at Red Pill Kapital spelled with a redpillkapital.com.