Nick Stageberg is a tech veteran turned real estate mogul. With 15+ years in software and a knack for spotting opportunities, Nick built a multi-million dollar portfolio from scratch. As a licensed agent, he merges tech savvy with real estate expertise, advocating for innovative methodologies. Yet, his true passion lies in family and financial empowerment, driving him to share his journey with others seeking financial freedom. Join Nick in revolutionizing both tech and real estate landscapes.
Episode Highlights Here:
Nick But something I feel like a lot of people don’t stop to think about is, if you go to sell that asset, shortly after you purchase it, you know, just a few years later, you immediately have to recapture all that depreciation and then pay capital gains on those returns. And of course, you could theoretically redeploy that capital into a different investment, to try to get more depreciation to make up for the appreciation you just had to recapture and the capital gains you had to pay. Brett What would you say? Is the number one secret to being an investor focus, passive investment or sponsor to help them invest? Nick Absolutely. So I think there’s a lot of groups out there that they’re really focused on kind of a quick win, and how can they, I don’t know, kind of synthetically maximize IRR. And on the surface, it may seem amazing if you can, you know, buy an asset and sell it a couple years later, for what seems like a big, big IRR on paper. But at the end of the day, that’s not necessarily the best outcome for the limited partner for the passive investor. So that limited partner, they probably would, would prefer to stay in that deal for a longer period of time. And if that deals going so great. Like why wouldn’t you want to stay in that deal. Sometimes turning those assets really quickly, it benefits the general partner because they generate more fee income on acquisition fees and disposition fees, and ultimately does not give the best overall return to that passive partner, and particularly from a risk adjusted and tax adjusted perspective. So you typically do cost segregation accelerated depreciation, bonus depreciation, when you buy one of these apartment buildings, single family homes, or, you know, if you’re investing any kind of real estate asset class there, you get this huge windfall of depreciation that you share with your investors that I’m sure most listeners to this podcast are kind of kind of familiar with how that works already. But something I feel like a lot of people don’t stop to think about is, if you go to sell that asset, shortly after you purchase it, you know, just a few years later, you immediately have to recapture all that depreciation, and then pay capital gains on those returns. And of course, you could theoretically redeploy that capital into a different investment, to try to get more depreciation to make up for the appreciation, you just had to recapture the capital gains you had to pay. But it’s a, it’s a kind of a hamster wheel that you fall behind on each time, and it’s a good problem to have, but it’s still a difficult problem to have. So our solution is very different. We target an indefinite hold period, we’ve actually never sold an asset, we return capital to our investors with a cash out refinance event, and then they stay in the deal forever. So this allows them to avoid the huge tax complications that come from constantly buying and selling assets. And, our investors, you know, call more sophisticated investors that have been through that hamster wheel many times, they get a sense of relief when they invest in one of our vehicles. They’re like, okay, so you’re telling me that I can put my money here, and I can, you know, hopefully catch up on the, you know, depreciation recapture and capital gains from the last couple of deals I got out of and I don’t have to worry about this, you know, this, this capital event that’s coming, you know, hopefully not for many years down the road. And we find it it really serves our investors and puts their needs.
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About Nick Stageberg
Nick Stageberg is a career technologist with over 15 years experience in the software development, architecture, and management space, Nick Stageberg developed an interest in real estate investment at the age of 14 when he needed to secure safe housing due to family health issues. With no parental support, no income, and no job, he bargained with some family friends to clean out and rehab their basement in exchange for free housing. Although that was his first and only live-in flip, it gave him an interest in leveraging value-add opportunities. After college, he designed and built a custom home in Edmond, OK, and house-hacked by renting out rooms to former college roommates, all of whom are lifelong friends to this day. He began his real estate investment career in earnest in early 2014. With the help of a trusted Realtor, he and Elaine purchased their first real estate investment – a single family home foreclosure in Oklahoma City that had been vacant for a number of years and was in need of extensive rehabilitation. Using their own capital and labor, Nick and Elaine transformed the home from boarded-up to occupied in less than 4 weeks, refinanced out, and deployed that capital to secure their next asset. He is now the owner of a multi-million dollar real estate portfolio. He expanded his real estate horizons in late 2017 by obtaining a real estate license in the State of Minnesota and works with Keller Williams Premier Realty-Rochester to represent Black Swan Real Estate, other investors, and home buyers/sellers in real estate transactions. He operates nearly all of our day-to-day activities, including project sourcing and representation, rehab and contractor management, property and resident management, and financial management. Using skills gained from working for 10 years at a software development start-up which grew from $12 million in private venture capital to $100 million in equity valuation and his employment in software architecture at a large and prestigious hospital system, Nick is able to deploy both technical and relationship skills to grow and scale Black Swan Real Estate while remaining true to our personal, business, and investment values. Nick is a passionate advocate for Lean and Agile management methodologies in Software and uniquely applies these same cutting-edge practices to real estate. Below is a recording of a talk he gave to 250 software engineers on the topic. His number one priority is his relationship with his two children and his wife, Elaine. Together they are building the financial groundwork for long-term financial stability and freedom for his family and are fervent about teaching others how to do the same.
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