Four years ago he came to the realization that the traditional path of working a 9 to 5, being stuck in the rat race, and saving in a 401(k) until he was 65 was not the road to the wealth he wanted to follow.

So after studying various asset classes, he came to realize the power of multifamily real estate for generation generating wealth. And since then, he’s acquired 32 units and maybe a little bit more and dedicated himself to helping others learn more about the incredible potential of the multifamily asset class. Since this realization, he acquired 32 units and dedicated himself to helping others learn more about the incredible potential of this asset class through his podcast.

 

Watch the episode here:

 

Listen to the podcast here:

 

 

Launching Your Multifamily Business with Shawn Dimartile

 

Brett:

We’re gonna be talking about all things launching your multifamily business with this particular guest. for about four years ago, he came to the realization that the traditional path of working the nine to five or being stuck in what’s called the rat race and saving in a 401k until he was 65 was not the road to wealth that he wanted to follow. So after studying various asset classes, he came to realize the power of multifamily real estate for generation generating wealth. And since then, he’s acquired 32 units and maybe a little bit more and dedicated himself to helping others learn more about the incredible potential of the multifamily asset class, please welcome to the show with me, Shawn. Sorry, Shawn, say the last name again.

Shawn:

Dimartile. But that’s okay. Most people don’t get it right the first time. 

Brett:

Yeah, Dimartile, Shawn Dimartile, San Diego. And by the way, he is the host of the Multifamily Takeoff Podcast. You can find more about Shawn and his team at multifamily takeoff calm. But before we get to dive too, too much into the show, Shawn, could you give us a little bit more about your story and your current focus?

Shawn:

Yeah, so I started as an air traffic controller. I’ve been a traffic controller for 10 years now that’s been my day job. I still haven’t quite quit the job yet. I’m very close. But essentially, I came across a real estate from a friend of mine who was a realtor, and I was looking for areas to invest my money outside of my 401k. To make a long story short, like a lot of others. I started with books and podcasts, everything from cashflow quadrant two, the bigger pockets stuff, and I really went down deep into the rabbit hole and got really into it. And it didn’t take long for me to realize that multifamily was much more scalable, and could really get me to much greater heights than when the single family at a time. So with my very first property purchase, I liquidated my 401k with two with a couple of partners and bought a 32 unit in Indiana. Today, we actually have 182 units and we have 104 another 145 units that we’re adding on to that’s under contract as of today in Greensboro, North Carolina. So our focus is on value add multifamily properties. We like to find properties that you know, need some renovations on the inside and outside, maybe have some operational efficiencies, we like to go in, fix them up, increase rents increase the bottom line, provide cash flow for ourselves and our investors, and a really big payout when we sell the property.

Brett:

Amazing Shawn Dimartile, and you can learn more about him at multifamilytakeoff.com. Alright, Sasha, let’s dive right into the show. What’s the biggest kept secret when it comes to launching your multifamily business?

Shawn:

Ooh, the biggest kept secret that I think the biggest bit of advice I’d give to anybody is to find yourself some type of a mentor or some type of partner, I think that’s really the secret to hurtling or hurtling your way towards the front of the line. If you try to do this alone, it’s possible, but it’s going to take you much longer. I think that, you know, my partners, and I were able to expedite our way to getting these large properties, like, you know, I told you I got 145 units under contract. And I think that you know, just for the simple fact that there are huge barriers to entry in this business, you can skip all over those by working your way into a relationship with somebody about providing them with some kind of value. And, and using their leveraging their experience to help you grow your business. So I think anybody that wants to jump into this business, that’s the biggest secret right there. And most people that you’ll see in this business that might be like the face of it like they might have their own podcast, or they might be a really big name on Instagram that you know, they have a whole team of people. And they started out with partners and mentors, most of them did, to begin with. So I think that’s the biggest secret in this business is to leverage other people.

Brett:

Excellent very well said. And I went a little bit out of order for our listeners because you’re an air traffic controller, which is kind of unique. I don’t think you’d have one of those on a show yet. So you know, I believe we’ve all been getting certain gifts in this life. And these gifts were given to us to be a blessing and help to others. So some people call a strength some him called superpowers. I think their God-given gifts, some are curious what are the one or two gifts you believe you were given? And how does that help how you help and bless people today? In particular, how does that apply to be an air traffic controller?

Shawn:

That’s a really good question. But I would say that the thing that I have, that’s one of my best qualities in gifts is work ethic. And may I just have a constant drive and ability to work constantly. I feel like I’m an animal, sometimes with the kind of hours that I’m willing to put in. So I think that that goes, that fits into just about any industry, including air traffic control, because you know, when I started in that business, it’s a very cutthroat business where a lot of people washed out and don’t make it, you have to do a lot of studying and memorize a lot of material to make it in that job. So it requires a very strong work ethic, work ethic, and then translating that into real estate in the multifamily space. It’s a grind to build your own business and be an entrepreneur. I mean, in the beginning, you’re doing everything, and I’m still doing everything and wearing a lot of hats. So it requires an intense work ethic to get your business off the ground. It’s like a rocket ship is what I like to say where you know it, the power jets off, and it makes it a couple of seconds before it gets off the ground. And then for it to really pick up speed. So I think work ethic is really my strongest suit because even if I don’t fully understand something, or don’t have the experience with it, I’m willing to put in the work to go learn it and make it happen.

Brett:

Excellent. Yeah, very well said on a constant drive to work, work ethic, and then be willing to grind to take the rocket ship off of the ground. And, and so very cool. All right, so we covered the first secret, which is kind of finding mentors or partners to partner with. And then the next, maybe the next biggest hurdle that helps you maybe even go from 32 units for maybe a year ago, to where you’re at now what’s been the biggest shift in strategy, process system, or our secret.

Shawn:

I think that the biggest thing for continuing the growth, the biggest secret is constantly putting yourself out there in whatever way you can. You’ve got to keep yourself busy and in front of people, because to scale a business like multifamily investing in apartments, you have to continuously be raising capital from investors. And in order to do that, you have to continuously be growing your investor base. In most cases, you’re not gonna be able to go to the same people back to back to back to back for another 50,000. So in order to do that, my main focus has been doing lots of podcasts, our own podcast, and advertising that getting the word out of what we’re doing, what we’re trying to teach people how to do, going to as many local real estate meetups as I possibly can be really active on social media with things like Instagram or LinkedIn and even recently TikTok which has really surprised me with the engagement on that. But I’m really just put all hands on deck too, uh, to get in front of as many faces as humanly possible because the more people we attract, the more traffic we get to our content, the more interest we can drive up in our business and potentially bring in more investors. So that’s been really you know, digital marketing all of that stuff is really the next secret.

Brett:

Phenomenal love it. All right, so maybe you can tell us about you know, maybe it’s incredibly accredited investors little plug here, right? Make sure your credit but maybe you can talk to us about maybe a current offering or current deal or maybe even past do you want to spell a plug something right now?

Shawn:

Yeah, sure, appreciate it. We do have a current deal that we’re working on getting all the materials together for and it will be a five will succeed race or credit investors only or are able to participate, but it’s going to be a really great deal in Greensboro, North Carolina, it’s our bread and butter value, add deal 1970s vintage that we’re going to take and completely renovate the interiors, all the outdoor amenities are going to be updated, including, you know, adding things like a dog park, we have on-site management that our partners and cotp are vertically integrated with. So that also gives us a little bit of competitive advantage but this is going to be very robust returns double-digit IRR double-digit cash on cash returns year over year. So you know if anybody out there is interested in things like that if that meets their criteria, they can always go to our website pac3capital.com and they can you know, click the Contact Us button and reach out and we’re always willing to bring people on and show them our deals.

Brett:

Phenomenal. So Joe Biden has some big news for real estate investors. Mr. Shawn and Mr. Brett’s who I’m saying and Mr. All of our listeners and gals are listening there too. He wants to change the game right some commercial I call it the game-changing potential tax laws, eliminating the stepped-up basis limiting or eliminating the 1031 exchange doubling the capital gains tax federal rate, but also this thing that’s kind of sneaky that maybe people aren’t necessarily looking at unless they’re in the business like he is a thing called carried interest right. Or as a general partner doing this sweat equity, you get a thing called carried interest. Do you want to explain what that is? And are you familiar with what Biden is proposing to do?

Shawn:

I’m actually not familiar with it. He’s promoting his proposal to do so I’m curious if you could explain it to me, so I can understand better because I was aware of the 1031 going out. And I was aware of the doubling of the capital gains tax proposal. So I know that I knew that you know, tax advantages were kind of dwindling. I know that you could still refinance your properties and avoid, you know, defer taxes in that sense. But what is this? What is he doing with this other?

Brett:

Yeah, so I’m reading here, and I want to make sure you get it right. Biden’s plans would eliminate private equities covered at tax break, right. So private equity is the most lucrative tax break is the pearl once it’s not the pearl used to be, essentially what he’s thinking about doing is taking away or permanent, eliminating carried interest is, is what he’s talking about and making it ordinary income. Right. So it’s a congress to abolish the professor at the preferential treatment given to a key method of compensation for private equity managers. And this is the salaries these managers rely, especially on a share of appreciation, on the assets they once oversee, known as carried interest, those profits sometimes in the millions of dollars have been taxed as capital gains, at a much lower rate than the top marginal income tax rate applied to wages. So essentially, he’s taking it and he’s converting it from capital gains tax treatment to ordinary income tax, which the way I’ve looked at this is the incentivizing people to hit it out of the park, right? Because they’re going to get taxed more, maybe do less deals, essentially, it’s just not as great as it used to be.

 

 

Shawn:

Yeah, no, I totally agree. Because that’s essential if it’s going to be taxed as ordinary income and earned a 30% tax bracket, as opposed to maybe the 15% capital gains tax or right back to this whole doubling of your tax burden on your profits. So that’s going to be huge, I’m curious, though, if you know, because I also know that you know, the bonus depreciation is going to be phasing out in the years to come. So that’s going to be another tool of ours taken away. So I wonder what the repercussions of that are going to be. I think that in the multifamily space, that could hurt it in the sense that there’s going to be a lot fewer deals, it’s going to be much harder to make it pencil out. And it’s definitely going to be hurting the investors. I think that overall, though, that’s going to end up hurting a lot of the people they don’t intend to hurt because these tools are here for us because it allows the average middle-class American to grow a business like that, or invest in something like this so that they can try to become wealthy. And now if you take that away, you’re making it twice as hard as somebody to better themselves.

Brett:

100%, let alone You’re taking 1970s vintage, you know, and you’re doing a complete renovation, you’re improving the community, you’re making it safer, you know, more a better housing environment for tenants that are on the ground, right. And less and less, we’re incentivizing real estate investors to do this, this works not going to get done, or it’s not going to get done as much or as to the level that they could, right because they want to maximize their return, which means they want to make this thing as valuable and as attractive as possible. Any thoughts on that?

Shawn:

No, I agree 100%. Because at the end of the day, this kind of business, as you’ve alluded to, it’s a win-win situation for both parties. And if there isn’t an incentive for someone to go in and renovate those properties in order to give themselves a return, then why would they do it? They don’t want to do it as a sense of charity. If the properties, obviously, they will keep the community in good working order, and they’ll take care of the property. But the property is not going to get as many improvements. If there’s not some type of an incentive there. I think it’s just it’s black and white is that so yeah, you’re gonna you’ll definitely see less money being funneled into things like that.

Brett:

Yeah, exactly. Right, what goes on the next one, she’s taken with a 1031 exchange. So even if he does take it away, or limit that what’s been the biggest frustration for you Shawn as a multifamily syndicator when it comes to the 1031 exchange?

Shawn:

Well, my biggest frustration with the 1031 exchange as a syndicator is that it’s already difficult for people if they want the 1031 of their own property and then invest as a passive investor in syndication, it becomes very difficult to do that unless you do what’s called a tenancy in common situation, which can be very complicated. And in almost all scenarios, you’re not going to do that. But what frustrates me as a multifamily investor with like my own properties, if I want to do a 1031 exchange, I have that time variable that’s there. And that’s always been my biggest gripe with a 1031 exchange. And when you’re in a market like today, where it’s really difficult to find good deals, and you could look for up to a year before you find the one you want to strike on. Having a certain number of months to identify the property you want to purchase really puts you in an unfavorable time constraint. That’s always been one of my biggest gripes with the 1031 overall, but with them taking away the 1031 exchange now It’s going to definitely factor into your calculus on what you’re going to what’s your exit strategy is going to be on your property. And no matter what I mean, they’re taking away so much, though it seems like one of the only strategies left. I’m not sure if the strategy that you talked about on your show a lot would still be a possible strategy. But then the only other one left I could think of is doing a cash-out refinance and just holding the property longer.

Brett:

Yeah, no. So you’re right. The deferred sales trust is a solution alternative for failed 1031 exchanges, or just all together. Making time your friend right, so you can sell defer the tax, pay off the debt, wait on the sidelines, go back in as passive or active you don’t want to do to a tenant and comments. Very friendly for syndicators. But diversification plays a big part in that too, right? Because we don’t want to sell high and use a 1031 just to buy higher 180 days later, with more debt and less opportunity, less value. That’s what happened on, 08 09 010. Or I’m sorry, 05 06 07, before the crash in 08, you know, people really got hurt up into 2011. Because they had to fight the debt. So yeah, so the number of ways to look at I mean, there’s also opportunity zones, they do have that hopefully, they keep that intact, right, because that there are some opportunities there. But you certainly want to make sure you have an exit plan here. And then yeah, if you’d never sell right, and then just refi cash-out refi and buy more. That’s also a good strategy, right. However, for commercial real estate, syndicators are different typically incentivized on the outcome of it. So they improve the property early, but all the sweat, equity, all of their value, add expertise, and then they get paid on the back end, three to five years out, or whatever, right. So that’s kind of you kind of disincentivize them on that which kind of goes to towards people who are kind of the rich get richer because they can collect the monopoly chips and just buy more and more and more. So lots of lots of rate ways we can kind of go down this place. The last one will give us a basis, Shawn, I don’t know if you’re familiar that Biden is considering taking a stepped-up basis, right? Where we’re upon death, essentially, your errors, the tax is triggered. And there’s no step of basis, not only is it there’s no step of basis, but the tax is actually triggered. So that’s what he’s proposing. So like, who knows, if they know how to sell it, or if there are multiple siblings, it doesn’t matter, like you die, and you’re gonna see your wife dies, stepped-up basis is not there, and they need the tax, you’re like, wait, so I have to force me to sell. So we’ll see if this stuff actually passes, guys, like we’re not, we don’t know, there’s still a lot to be had. But just know that these are the things that are on the table. And it’s not good for real estate investors.

Shawn:

It’s definitely not. And I would be furious if I worked my lifetime to have a legacy to pass on to my heirs. And that’s what they did to them. As soon as the money went to their hands, they dip their big paws in there and ripped out a huge chunk of it. That’s infuriating. But that’s a definite real possibility.

Brett:

Yeah, so just be aware of it. So you buy we go to capitalgainstaxsolutions.com, we have the Deferred Sales Trust, that we believe is a clear solution for all of those challenges. And that, and you can learn about how to use that. In fact, we just did a deal in Vegas for a multifamily syndicator, like you saw a $20 million asset, he and his partner to GPS, some other LPs, they used it for their deferred sales, trust their funds for that. And then they use another one in Phoenix. So $16 million deal, move that into the deferred sales trust, and they use those funds to go buy the next part of their next asset. And we’re going to have a cryptocurrency mastermind, and they’re going to come and talk to that on Monday because you can also now sell crypto deferred tax and buy multifamily properties with it, which is all tax-deferred by using the deferred sales trust. So we’re talking about all of those things coming up on Friday. So if you’re listening to the show right now, we’re unique every Friday at 10 am PST, come and join us bring a client bring a friend and learn a little bit about tax because it’s no longer about Cash Flow Quadrant. I like to say, Shawn, it’s actually about the tax flow project. Right? no longer just managing cash flow, do we got to manage tax? And where does our tax gonna be paid? How much is going to be paid? What’s the planning? Because again, these government laws, they want to, they want to take their big paw and they want to, they want to just grab it as much as they can. So all that being said, Are you ready for the lightning round? 

Shawn:

Let’s go. 

Brett:

All right, knowing what you know. Now if you go back to your 25-year-old self, Shawn, what is the one Golden Nugget you make sure to tell yourself to do?

Shawn:

That’s an easy one. Start earlier, go out, and buy your first multi-property, no multifamily property no matter how big it is buy it immediately. Because if I would have bought that when I was 25 years old, where that was where the markets at now. I would have quit my job a long time ago. 

 

Brett:

Beautiful second question, what’s the number one book you’ve recommended a gift to the most in the past year?

Shawn:

The number one book, I would have to say is Multi-Family Millions by David Lindahl. That was one of the ones that got me started and I always recommend that to people that are really interested in multifamily investing.

 

 

Brett:

Excellent, third question. Favorite leadership quote or theme that you strive to live by.

Shawn:

“Think of the person that you want to be and start acting like that person right now.”

Brett:

Perfect, biggest challenge you and your partners are facing right now and your business.

Shawn:

Finding good deals is easy. That’s just the debt. By far the hardest thing to do is everybody’s overvaluing, their multifamily properties, the cap rates continue to get compressed and compressed. So we have to get extremely creative to find deals, the relationships off-market, and that’s really hard and like finding a needle in a haystack. So that’s gonna continue to be the biggest issue for us.

Brett:

Yeah, percent couldn’t agree more. The biggest opportunity that you see in your business.

Shawn:

The biggest opportunity I see is actually in buying it. Well. This is gonna get a little bit away from multifamily, but just in the commercial space is in buying small boutique motels or hotels and converting it into a nice Airbnb property. That’s some things I’m working on some things right now in that ballpark, I think that there’s going to be buying opportunities and small motels and vacation destinations. And I think Airbnb is the platform that can take it to new heights. I’m a huge believer in Airbnb in the capital that it provides. So I think there’s gonna be some cool opportunities there.

Brett:

Love it. Fantastic. Second last question. What are you most curious about right now?

Shawn:

I’m most curious. I’m probably most curious about a lot of things that a lot of people are listening are curious about. I’m curious about what’s going to happen with the market over the next two to three years. I think it’s going to keep going up. But I mean, with how quickly it’s risen. It’s going to be an interesting next 24 to 36 months. I’m also really curious about these, the ramifications of whatever tax laws do pass are going to be on the real estate investing space, I think it’s going to definitely bring a hammer down on it. And I’m going to be interested in seeing what that result is going to be.

Brett:

As are we would very well said the last question for you, Shawn. Is this after succeeding as an air traffic controller almost retired from that? By multifamily? Having your podcast helping people create and preserve more wealth through real estate investing? How do you stay centered in your values? And how do you stay encouraged to charge forward to reach new goals?

Shawn:

I think really family is one of the main things I think about my family and where we’ve come from and how I want to lift up my family to new heights and be able to take care of all my family and so thinking back on that is something that really keeps me centered keeps me focused and keeps me striving to do greater and greater things.

Brett:

Amazing. Hey, I want to encourage you, Shawn, to keep using the gifts that you’ve been given to bless other people and to help people create and preserve more wealth by having a constant work ethic right and drive to succeed and to help others and for our listeners who want to get in touch with you could you remind them one last time what’s the best place for them to find you.

Shawn:

Please reach out on you can reach out directly to my email shawn@pac3capital.com you can visit our website pac3capital.com you can find me on TikTok making multifamily How To Videos Shawn pack3capital and any of those were 

Brett:

Beautiful Shawn Dimartile. Thank you for being on the show. Thank you for being here. And also want to thank our listeners for listening to another episode of the Capital Gains Tax Solutions Podcast. As always, we believe the highest net worth individuals and those who help them they struggle to clarify their Capital Gains Tax Deferral Options, not having a clear plan is the mean using a proven tax deferral strategy such as the Deferred Sales Trust is the best way to exit your real estate and to get an alternative to the Biden tax plan if he takes away the 1031 or the stepped-up basis. Get with us today it’s a 25-year track record 1000s of closes billions under management close seven deals in the last 45 days alone and it works for cryptocurrency unbelievable right I know but come and learn about it it really works we want to help you go to capitalgainstaxsolutions.com that’s capitalgainstaxsolutions.com please rate review subscribe We so appreciate you out there in the iTunes world Spotify, YouTube, the likes the shares, the tags, they all help help help please please rate review subscribe. We appreciate you guys.

 

Important Links:

• Shawn Dimartile
• The Multifamily Takeoff
• Multifamily Takeoff Podcast
• PAC 3 Capital

 

About Shawn Dimartile

Four years ago he came to the realization that the traditional path of working a 9 to 5, being stuck in the rat race, and saving in a 401(k) until he was 65 was not the road to the wealth he wanted to follow.

So after studying various asset classes, he came to realize the power of multifamily real estate for generation generating wealth. And since then, he’s acquired 32 units and maybe a little bit more and dedicated himself to helping others learn more about the incredible potential of the multifamily asset class.

Since this realization, he acquired 32 units and dedicated himself to helping others learn more about the incredible potential of this asset class through his podcast.

 

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