Using the Deferred Sales Trust to invest in Multifamily Syndication & Hard Money Lending Prax Cap with Brian Burke

Using the Deferred Sales Trust to invest in Multifamily Syndication & Hard Money Lending Prax Cap with Brian Burke

 

Brett Swarts dives into to conversation with Brian Burke is President & CEO of Praxis Capital, Inc., a vertically integrated real estate private equity investment firm, which he founded in 2001. Brian is also a member of the Praxis Investment Committee. Praxis operates on multiple platforms, currently managing active syndications for the acquisition of single-family, multifamily, and opportunistic residential assets in US growth markets.

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Welcome to the capital gains tax solutions podcast where we believe the highest net worth individuals and those who helped them 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 grow your wealth. Hey, I’m your host, Brett Swarts. In each episode, I’m joined by some of the best real estate investment minds in the world as well as financial advisors, passive income Wealth Advisors, and really the goal is to help bring clarity to different tax deferral options and also ways to grow your passive wealth, especially through investment, real estate, with is at the heart of where I started my career at Marcus and Millichap, and also where I love to invest. So with that I’m so honored to bring on a guest for the second time. He’s actually I think, the official first person to be on for the second time. And it comes at an opportune time, in that we’re seeing a big shift in what’s happening with COVID-19 and COVID-19, we believe, could present some real opportunistic multifamily investments. Coming up here with some distressed sellers. It could be in the next three 612 months. And Brian Burke is here you can hear his first full story, our previous episodes, check that one out. But in the meantime, we’re going to dive right into what he’s seeing and what his fund is. He is poised to do so please welcome to the show with me Brian Burke. Hey, Brian, how are you doing? Hey, great to be here

 

Again, and quite an honor to be the first one to be a two-timer.

 

It really is right? When we only have you know, 20 episodes or so launched. It actually really is but well what’s really unique about that is you’re in Santa Rosa I’m in Sacramento, right? We’re just, you know, a couple of hours away from one another, and you’re in the multifamily space. That’s where I started my career at Marcus and Millichap. There’s a lot of synergies here. And we have after we talk a little bit, we’re going to talk about a deal that actually Brian and I are serving a co client together with the stress of the deferred sale. So that’s a little sneak peek. But in the meantime, let’s dive right into what you’re seeing right now in the marketplace, and what are some of yours, I guess you could be my predictions or anticipation for opportunities coming up?

 

Well, obviously, we’re in the midst of the COVID 19 pandemic, right? So that through the economy and real estate into a bit of a tailspin because you have business closures and job losses, and you know, job losses resulting from the business closures are resulting in some economic distress and real estate and businesses that are closing are creating economic distress in real estate if they occupy commercial space. So it kind of put real estate, a bit in the crosshairs And right now, we know it Seeing distress starting to materialize especially in the hospitality sector. I think that along with Office to a bit lesser degree and retail maybe to a greater degree, being pretty negatively impacted by what’s going on, which ultimately is going to result in a pretty long and lengthy recovery for those sectors. But at the same time, I also look at residential assets and you know, apartment complexes, single-family homes, the residential sector seems to be holding up remarkably well, so far, to all of the chaos, I think it’s going to deflect the worst of the damage. But, you know, make no mistake there, there will be damage in those sectors, it’s going to cause some limited distress. And that’s going to result in some buying opportunities. And I also think that once we kind of pull through this cycle, some strength will return in some markets more so than others and just gives us a chance To You know, take advantage of some of those demographic shifts that are resulting in rent growth. At the same time we can take advantage of a negative economic cycle to present some you know some pricing adjustments and buying opportunities and it’s not too often you can put both of those two factors in play at the same time. So it’s an exciting time right now.

 

It really is. And I’m curious what you think so we both live in California we’ve mentioned here in Santa Rosa I am in Sacramento and I you know, California apartments have been through the roof for really, a while now at least the last two to three, four years I’ve had a tough time having any clients actually purchase in, you know, California and when they sell that’s part of why we did the deferred sales just because I have a tough time having them 1031 and getting buried and overpaying for the property. So let’s focus on California for a second and multifamily and share it with those listeners. What your take has been on the valuation and the pricing for multifamily in California

 

well, I think it’s a great time to sell, sell, sell and get out of your California assets, give Brett your money so that he can save you for some taxes. But I just can’t find any reason to own California real estate right now personally. There. It’s not the economy that I’m as worried about. I’m not as concerned with COVID. And the results in California that recovery forecasts, in terms of rent growth in California are pretty robust. But the continuous drumbeat of regulation, rent control, eviction control, all of that stuff is gonna make investing in real estate here pretty undesirable if any of that actually takes root, making matters worse from the other side. At the same time, regulators want to limit how much you can charge. They also want to increase how much you pay by rolling back elements of Proposition 13, creating a split property tax roll, which would increase commercial property taxes significantly. So I just think that before any of that all comes to a head sell now while values are still really high and deploy that money to states that actually want your business and want your money versus states that really don’t want your money.

Yeah, to be honest, it’s just a matter of mathematics and regulations right and in a certain point, these prices you go you know, these four caps these five caps where the rents have been you know, highly pressed up you go when is all the regulation and all the challenges and all the all these companies are leaving California When is it going to catch up with him right? And I don’t want to be that I don’t want to be the person you know, sitting in the chair when the music stops or losing that chair, you know, like musical chairs going around, like sell now right? diversify, now get out of California. So that being said, you’ve owned and I think have managed, you know, thousands of units, right? And you got out of California A while ago. So talk to us about where you think the opportunities might be coming to a And then be what markets are you focused in? And what is that going to look like, by the way? Because I, I get a sense that it’s not gonna look like what we did in a way when we were a bank would foreclose and then someone would take I get the sense it’s going to be more like working out between a seller and a bank and maybe you know, having the bank take a little bit of haircut and the seller taking a little bit haircut and kind of just repositioning the paper, but what is your take on what we’re going to see here?

Well, I think, you know, in terms of California, you know, not not a lot good is going to happen. But there I was studying rent growth patterns across the US and ran across a lot of really interesting data. And you know, from what I’m finding from my analysis of the raw data is that markets in Arizona, Nevada, Florida, the Carolinas, and Tennessee and Georgia, are going to outperform not only the country but almost everywhere. intermixed with some of those high performers, though, are some of the usual suspects like San Jose, San Francisco, Seattle. And some of the Central Valley California markets like I’ve seen, not only Central Valley but like Salinas, Fresno, Bakersfield. Some of those markets are scoring pretty high in post-COVID recovery rent growth forecasts. The difference that I see though is that the first group of states that I mentioned, are business-friendly states, their states where people are moving to not moving from their states that have landlord-friendly laws, which mean that you know, you’re going to have an easier time managing your real estate business in those states. Contrast that to California, which while some California markets are right up there in terms of post COVID recovery, rent growth, you still have the threats of all this over-regulation and increased property taxes, if with any proposition 13 rollbacks that may come into play. And at the same time, you have that threat, you have the parallel threat of, you know, mass move-outs. I mean, if you don’t know someone that’s moved out of California, I guarantee, you know, someone that wants to move out of California, and everybody talks about moving out of California, whether they actually do or don’t. The question is, how many people do you know that talk about moving to California, and that probably not very many, and neither does u haul or Penske who are the truck rental companies that put out statistics on where the one-way rental trucks are going. And they’re not going to California in our home state. Brett. They’re going to places like Arizona, Texas, Georgia and Florida and the Carolinas, that’s where they’re going. I like to say that if you want to make money in real estate, you have to go where the population is going and if you go where they’re leaving, that is a really risky place to be. So despite the fact that post-COVID recovery forecasts are strong in California, all of this other noise, it increases the risk that you’re going to accept in order to hopefully achieve those returns.

Yeah, so well said if you could write a few books on that alone. So now let’s dive into the opportunities now. Right? So we kind of got the basis of what’s going on the land and the landscape here, but walk us through again, how much do you anticipate what kind of distress we’re gonna see? What is it? What’s it gonna look like as actually executing and being able to take advantage of what we might see.

 

So I’ve been through a lot of market cycles. In the 30 years, I’ve been investing in real estate and the deepest one and is the most recent one, and that would be the 2009 great financial collapse or I actually call it the 2005 great financial collapse because that’s when it really started the seed where the fuse was lit in August of 2005. And it just burned really slowly until about oh 70809 when the bomb exploded. That’s what people think of when they think of distress and distressed real estate. They think I saw prices go down 30 to 60%. In various markets, I saw deals to be had everywhere for sale signs on every corner, distress everywhere opportunities, and we’re like drinking out of a firehose. That’s what people think about. I don’t expect to see that this time around. If you’re looking for that as a barometer for the amount of distress, you’re going to be, sadly, and sorely disappointed. Overall, and fundamentally, the real estate economy is performing fairly well. The challenge, of course, that we have is, is through job losses from COVID. That’s temporary, it’s gonna create some real distress. Now real distress means an individual owner. That overlapping Average is going to have some difficulty making their mortgage payment, they get foreclosed, or investors lose all their investment, the bank just cuts their losses and sells. Those are going to be few and far between. But they’re going to be out there. The challenge is, you’ve got hundreds of billions of dollars sitting on the sidelines, waiting to buy those opportunities if they just come down ever so slightly in price. So they don’t you know, you’re not going to see these 20 and 30 and 40 and 50 and 60% price reductions, but you might see a 3% or 5% price reduction, you might see some slack and cap rates, you might see some markets like Las Vegas that were disproportionately affected because of the high concentration of service sector employees. It’s creating some negative rent growth there for a couple of years. It will lower noi at commercial properties, and at the same time have cap rate decompression, which will result in some change in value. Followed by a pretty robust recovery that’s going to bring it back. So the question isn’t really you know, how many properties are going to fall into stress, it’s really how many owners can just hang on to get through the other side because they were properly structured and leveraged, versus how many of them were improperly structured, that end up imploding. And I don’t think it’s going to be anything like what we saw in the great financial collapse

 

Yeah, I think that’s so well said improperly structured and leveraged right taking on too much debt and maybe I guess it’d be a writer too much. But maybe clarify that and but also maybe clarify properly what is it about practice capital in the way you guys structure it to try to be as you know, sound as possible?

 

Yeah. So as far as leverage goes, the other thing that kills everyone in this business, you look back to, you know, the great financial collapse of the people that lost their property, whether it was the homeowner at the corner, or whether it was the commercial property owner in downtown. In almost every case, those people were over-leveraged, meaning they owed too much money on the property. And, you know, for us in our business, it was great. We bought about 600 properties during the great financial collapse at foreclosure auctions. And I can tell you out of the thousands and thousands of properties that we followed and tracked through the foreclosure process or bought almost at least 98% of the cases, at least, if not way more, they were encumbered by more debt than the property was worth. And that meant that the banks were selling and cutting a loss just on the principal balance of their loan. So you know, nowadays you don’t see that quite as much but that’s the big risk of having too much debt and people borrowing too much. So where you saw this in the multifamily space is people that were using high leverage bridge debt 90% to cost money. Financing their improvements, that sort of stuff. And doing that portfolio-wide. You know, some sponsors, you know, we have a couple of properties that we have under that debt structure for a specific reason. But some people built an entire portfolio on that kind of debt. And if they have, you know, half of their portfolio starting to go into negative cash flow, there’s no saving it, and they’re going to implode.

 

So that’s why wait, what you’re saying is they’re cross-collateralized with bridge financing across multiple properties. And, and that’s how they built this. And if even just a couple of things start to go, then it’s all gonna go.

 

Sometimes they are cross collaterals. I’ve seen that but generally, they are. They’re not even sometimes they just get 90% debt at a high-interest rate. But they repeatedly do it over and over and over again. So they buy all the properties in their whole portfolio or finance that way. These notes are going to start coming due in a year, maybe two years from now. And they’re in negative cash flow because they’re still suffering from, you know, tenant losses and evictions, and that sort of thing. And then they, you know, have a higher interest rate and they just can’t get out of it, there’s really no escape. So, you know, that’s, that’s one element of using improper debt. But improper structure comes from a lot of different ways. You know, one is these loose-knit partnerships of groups that kind of get together to go buy deals, and they’re not really a company, they’re just a bunch of different jayvees buying, quote, unquote, deals. And you know, these partners, you know, they haven’t been in business together for very long or even on very many deals, they might not be in all the same deals together. And when things start going south, and the going gets tough, that’s when people’s character really shows through and, and then they start falling apart. And now you know, the guy that was really the one that knew what he was doing, he’s gone and you’ve got these other guys that have no idea what they’re doing or left at the helm of a sinking ship. They don’t know how to navigate their way out of it. The other structural error that I’ve seen is people taking on way too much-preferred equity, where they say, you know, you have a preferred class of equity stock that gets a guaranteed return. And then your equity investors are subordinate to that. And that’s a difficult challenge because if the values don’t increase, and you can’t refinance your way out of that debt, you could be stuck with them taking over the project and kicking your investors out. So that’s another way people can lose money.

 

Okay, make sure I capture that. So one of them would be just lack of track record for the core principles are the people that you’re entrusting your wealth with, right? To be their limited partner or silent partner on the side. And they it is as this distress starts to come, right. Let’s like Warren Buffett, when the tide goes out, you see who’s been skinny dipping, right? If they don’t have this core foundation of this company, it’s this kind of, you know, put together if you will, as a startup company. And then the main core person leaves, then it becomes a very difficult right to continue this, this, you know, deal this opportunity that they were chasing right. So that’s a fair summary there.

 

Yep, that’s right, exactly. And the second one,

just the actual structure of the deal means it’s not incentivizing for the operator. He’s counting on pre appreciation and the ability to refinance. In other words, the preferred equity or the guaranteed equity, right? It’s a big promise. And as long as things are going well, and the tide is still rising, then we’re good. But as soon as it goes back out the sponsors are going, I’m doing all the work. I’m giving all my money away. I made a bigger promise than then I should have. Right or could have right. But I was banking on things continuing to go great. And now he has no incentive to keep it going. And Is that a fair summary of that one?

 

Yeah, that’s a fair summary of one element of it. But there’s another element to where sometimes the investor that has the preferred position actually has takeover Control rights. So if, if they don’t get paid, they’re guaranteed return, they can kick the sponsor out. And they can kick out the subordinate equity investors as well and take over the property. So then the investors that were investing in the common equity, completely lose their entire investment, and have completely lost control of it. So there are two components to that where the sponsor can become disinterested, or the sponsor can just flat out get kicked out.

 

Yikes, that’s even scarier than I thought. So now let’s put it back to practice capital and these potential opportunities, right? So fast forward six months, you know, a year from now three months, you find a deal three to 5%, you know, off of what it might have been, you identify it and probably Arizona, Texas, Florida, Tennessee, the Carolinas, and now you’re going to purchase it, what would be the way that you would purchase it and by the way, we’re going to be talking about credit investors. Okay. I think I believe that’s the way Brian positions it but just give us that kind of overview without, you know, divulging too much where it’s going to put any of us in trouble.

 

Right? Well, we recently launched a fund, which is a fund using the 506 c exemption, which means that we can actually advertise it as long as we only accept accredited investors and we prove the accredited investors are in fact accredited, which for the first time, this is only the second time we’ve ever used this exemption, by the way, but I had that book that came out recently. And we just felt that with the exposure that the book brought, it was safer for us to use the 506 c exemption just to make sure we’re staying on the right side of the law. But it does present me the unique opportunity of being able to talk a little bit more freely about what we’re doing instead of basically having to speak in tongues, about our real estate opportunities because we can’t advertise them. But what we’ve done is we’ve launched a fund, we’re raising 25 million to acquire multifamily assets in those markets that I mentioned to you, we might raise a bit more than that depending upon demand. But the fund’s objective is to acquire, you know, in growing markets that have population growth, that inward migration and movement, we want to be in front of the demographic cycle, which is you know, that that population movement and not as focused on the economic cycle because we already know we’re in an adverse economic cycle. So if we can find the right markets to invest in and we believe that we have, our objective is to use the temporary pricing dislocations that we’re seeing in the market, small as they may be, to our advantage to acquire in those in those really strong growth markets. So we figure this fun will get us through our 2020 acquisition platform and then you know, maybe next year we’ll do another one, but our objective is to look at that kind of Hundred unit nut Class A-minus through class b minus a multifamily acid in those in those strong markets.

 

Awesome. So let’s talk about the other fun that you have, which is hard money lending. And then let’s connect the story here with a co client, which we promised the listener. So, talk to us a little bit about what that has been and how that’s worked out so far.

 

Yeah, we have a lending company that, you know, some may call it hard money lending, some may call it private money lending, whatever you may call it, we make loans to real estate investors through our subsidiary Riverbend lending. This company does fix and flip loans, commercial property bridge loans, and that sort of stuff. And the way we’ve funded those loans initially is through an investment fund that we created for our investors to invest in. It’s been a great fixed return kind of coupon fund. For our investors, the reason that we did it was because we have a variety of needs from our clients where you know, some people they want that, you know, to 18% IRR hair on fire, risky, you know, opportunistic type of investment return, we have some that just kind of want that steady as she goes, you know, low teens type return on value, add stabilized assets, and we have some people that, you know, just want to coupon, you know, they just want a fixed return just like a CD, that type of thing. And we wanted to be able to offer investment products throughout that spectrum for our clients to satisfy their needs. And this fun, just satisfied that particular need for that coupon style. fund. Excellent.

Yeah. And so to that point,

 

I think I could call Brian, by the way like 10 years ago or five years ago when I was really focused on multi The only brokerage and, and was calling a lot of cold calls. But I don’t think I can. I don’t think you were buying or whatever that was at that point. But the point was back up, I spoke with a gentleman. His name is Dave. He’s actually a co client of ours now. And so about a year and a half ago, I sat down with him. He said, Yeah, you know, Brian Burke, remember the name because I’ve invested with practice capital at the time, he told me a little about that. So he’s kind of actually been a long term client of yours. But fast forward, he’s selling a $7.6 million property in Georgia 128 units. And his exchange is failing, right? And he can’t make sense of the numbers, and COVID-19 hits. And so he’s past his 45-day identification. And he’s like, you know what, this deferred sales trust looks a whole lot better now that COVID-19 is not here. And he’s done hundreds of sales and numerous 1031 exchanges. So for the first time ever, he did a deferred sales trust. He put 3.1 million into this trust. And the cool part was he’s like Brett, I there’s a place to practice capital. Remember that? Yeah. So a big percentage of that went with you guys and he was getting the 6% For him, he wasn’t like a stockbroker guy right? He doesn’t like stocks, bonds, or mutual funds. He’s not big on that. And but he is big on real estate right and so he was able to do what people might think is not possible self safe to fail 1031 exchange, pay off all the debt and then move it into something that’s a little more predictable, a little more diversified. Also very passive for him he literally has to do no more toilets, no more trash, no more liability. And it’s been a real nice seamless fit. So would you just speak to a little bit about that and maybe some misconceptions when it comes to people not thinking outside the box and or what is a way that you vet things to make sure that people are asking the right questions about things that are new and maybe have never heard of?

 

Yeah, you know, it’s interesting because I get a lot of questions from people wanting to know if they can invest 1031 exchange funds into our syndicated offerings and the answer has always been no, you can’t do that. It’s not like-kind exchange. Real Estate for shares in an LLC. So, you know, it’s always been a bit of a challenge. In fact, I’ve had two people just today ask me this question if they can invest in 31 exchange money into a syndicated offering. And, you know, I’ve heard about a variety of ways that 1031 exchanges can be utilized and manipulated to invest in things you wouldn’t think that they would be able to invest in. And I’ve always dismissed it essentially, as a bunch of bunk, that, you know, somebody’s got some black box that, you know, who knows if it’s even legal. But I’ll tell you, you made me a believer when we got the wire from our mutual client who made this work and it was a real eye-opener to see that there are ways that people can use the regulatory framework, if properly structured, to invest 1031, exchange dollars and things that you would not think we’re like-kind to what they exited from. So it was very impressive. I gotta say, You are the first one I’ve seen pull this off and I’m, I’m pretty. What do you call it hesitant to believe in a lot of these kinds of things? So it’s a, it’s a major feat for me to say, Wow, this actually really worked and it was really cool.

 

Well, thanks for sharing that. That means a whole lot coming from you and your background and And likewise when I was doing 1031 exchanges with clients and multifamily properties, and I still do, it took a while to like, does this really work? And I liken it to liking riding a bike right the first time you ride a bike, it was a bit wobbly, but once you ride the bike, it becomes comfortable. A lot of my clients the first time they did a 1031 exchange even in the 1980s people were like, is this thing legal? Does it work? You know, and how does it work and skepticism but now fast forward? There are so many exchange companies educating people it’s second nature now. And the last part about that just to clarify too, so we’re actually not doing 1031. Right? So you’re absolutely right on your structure, especially in California dropping swaps or trying to do, you know, fancy ways to trade real estate in the non like kind of two shares of an LLC. We also believe those don’t work well. That’s why we’re not using that tax code, that’s IRC 1031. We actually use a different tax code, which is called IRC 453, which is known as an installment sale. And so we liken this to the old blockbuster is like 1031 into the Netflix and as a seller carry-back as soon as you go into that mode, you no longer have to do like-kind, right you can put it in stocks, bonds, mutual funds, hard money lending into a business, develop real estate, we just closed the deal and Alabama $2.6 million sales $600,000 of a liability deferred, and these guys were in the marketing business and they actually want to be in the multifamily development business and guess where they’re developing real estate. They’re developing ad units with the deferred sales trust funds that they would have paid to the government instead Tennessee, okay, that’s where they identified as a great market to develop. So it can be done, it has been done, and we just can’t get the message out fast enough. So I appreciate that. Any thoughts on that? Or any follow up on that?

 

Well, my thoughts are that that’s just really, really cool. You know, it opens up a whole world to people. And, you know, this, this may not have mattered in 2009 1011 and 12, when people weren’t selling highly appreciated real estate, they either weren’t selling it because they had no equity, or they weren’t selling it because they didn’t feel that it was a good time to sell. But for about 2014 on when we started to notice an increase in people looking at 1031 exchanges as a result of the fact that they had equity in their real estate and we’re realizing their return on that equity was infinitesimally small, they are earning nothing, they had millions and they were earning like a half a percent on the equity when it’s sitting there. And this highly appreciated Real Estate, and they needed a way to unlock it. And, you know, 10 years ago, it didn’t matter. They didn’t need a way to unlock that. And they wouldn’t want to even if they had away. So it’s very timely, what you’ve been able to put together for people. And like I said it made me a believer when the wire hit our account.

 

Yeah, absolutely right until the deal closes. It’s not there. And it’s not real. But what’s cool is thousands of closes now 25 year track record, and we literally have some of the best tax attorney CPA and financial advisors we work with. But that being said, I want to put this stat to you too, just to think about Brian, it’s the baby boomers, it’s According to the American Bankers Association is about $17 trillion. That’s going to pass from one generation to the next in the next 20 years. And it’s known as the largest wealth transfer in the history of the world. Okay, and so think about 17 trillion is probably upwards of 20 trillion now with where the stock market’s gone. But all of that wealth is going to transfer and talk about government regulation and what that could mean if people are actually paying tax on that, which is massive or using a tax deferral strategy. So that includes primary homes. That includes highly appreciated stock right at 1031 only works for investment real estate, right? And we just did a deal in Cupertino’s $3.1 million sales and we helped her for $400,000 above or 121 exclusion. So can you speak to just if what we’re saying is true, which I’m a believer and you’re more of a believer every day, but just outside of the commercial real estate world, a lot of folks are just focused on people 1030 winning into their syndications as an as another deal, right, which they may or may not be able to do? But if you could open up like, you know, for example, a Bitcoin case right now $5 million Bitcoin case, we’re doing a $1 million Tesla stock sale, we’ve done Netflix, okay, stock sales, but if you could open up all of those other asset classes to essentially sell move into a deferred sales trust and then either fund into, you know, your LLCs or fund into your hard money lending. What would that mean? When it comes to the $17 trillion wealth transfer?

 

Well, my joke would be that it means you’re going to bankrupt the US government by withholding all their tax money. But you’re certainly going to empower the people that otherwise would have paid to make some significant investments. That’s for sure. So, you know, maybe that’s one of those, what goes around comes around kind of deals, right?

 

For sure. right into that point, right. Why doesn’t the government allow this right? Why don’t they just cut us off? And with the 15 IRS audits, they’ve gone through that? Well, it’s the study of macroeconomics, they actually spur economic growth, which spurs job growth, which spurs more tax revenue. So it’s in their favor to do that. And it also to, you know, Joe Biden, I don’t know if you saw this, but recently he’s campaigning to announce that he may take away the 1031 exchange, right? Yeah, I’ve got a number of texts from people and they’re like, hey, Brett, you’re in a great position. If he gets elected, and this goes through and I’m like, yeah, we’ll see. But, to that point, IRC 453 goes back to the 1920s. In the recently put it in as part of, you know, the depression everything was going on, that they wanted to make the people have the ability. It’d be the banks, right? So IRC 423, as a seller, was carried back. And so when you do that you can keep the economy going, think about oh, wait when the banks or everything is kind of collapsing. If the government has to become the bank, guess what happens? It’s not good for anybody, like everything kind of stops. So they want to incentivize private companies and private banks. And then also people in case something like a COVID-19, or like, the 2009 crash, right happen, that people can still do commerce, and they’re still incentivized to sell without getting wiped out by the tax by carrying paper. Right. So does that make sense? Brian?

 

All do, yeah. And in fact, you know, we used to talk about this back in the late 80s and early 90s. When I first started investing in real estate, I remember the whole installment sale method to try to convince a seller to sell their home because they could sell it to you and carry back the loan. And they wouldn’t have to pay tax on the wholesale at the time. And Gosh, I mean, that’s been around forever because we used to use it back in the day when I was just trying to struggle to be a real estate investor.

 

Wrap it up here so if someone wants to be accredited investors are going to go look that up. But assuming they are Brian, and what would be the best way for them to say yeah let’s check out what Brian has to offer, and admit even the hard money lending fund to what we know this place.

 

Well, the best, the best way if you want to learn more about the fund is you just, if you’re an accredited investor just visit the website invest with practice.com, and that’ll take you right to our fun landing page there you can watch the webinar that I just did earlier today on describing the opportunity and you can even express interest in investing in the investment right there on that website. And we can invite you into the data room to be able to learn more. If you’re an accredited investor. It’s a great way to learn about it. Of course, if you’re not an accredited investor you just kind of want to follow what we’re doing you know our website is practice cap calm, or I’m on Instagram at investor Brian Burke, you can find me there and you know we’re always talking about something that has to do with real estate somewhere along the line.

 

Yeah, we love it right and always learning always challenging always growing So Brian, I want to thank you for being on the show sharing your wisdom, so insightful and all your thoughts, and it’s been fun sharing this client here and I hope to bring you more deals and more capital, as, as the deferred sales trust business grows and if you’re listening right now and you’re selling a highly appreciated primary home business commercial real estate again cryptocurrency we’ve got dentists veterinarians optometrists cardiologist aliens highly appreciate it. We really would love the opportunity to show you what we do, go to capital gains tax solutions, calm schedule your FREE 30-minute consultation, download our ebook selling your business, real estate smarter nine steps. And with that, please share a rate review and subscribe We so appreciate it and make it a great day. All right, that’s it. It’s a wrap-around.

By Red

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