Getting Started with 1031 Exchanges with Dave Foster

Dave Foster  00:00

The 1031 exchange allows you to go from any type of investment, real estate to any other type. You can sell commercial, buy residential, sell residential buy raw land, you can go from active where you have to manage to passive, where it’s managed for you. Welcome

 

Greg Lyons  00:17

to the passive income brothers podcast.

 

Tim Lyons  00:20

Here we take the fear out of real estate investing using real life stories of everyday successful investors. Let’s go. Welcome to another episode of the passive income brothers podcast. My name is Tim wind. And today I’m joined by two rockstars, one of which being my brother Greg catering today, Greg,

 

Greg Lyons  00:35

Tim, that intro never gets old. And I appreciate it every time, mostly because there’s not a musical note in my body. But to call me a rockstar, I’ll take it,

 

Tim Lyons  00:46

you will have to take it. So today we have Dave Foster, and he is going to drop a lot of knowledge. So I highly suggest to pull the car over and get the notebook out sharpen those pencils, because this is a very powerful tool. We’re going to be talking about the 1031 exchange today. And sometimes, especially me in the beginning of my journey. If I heard 1031, or I heard taxes, or I heard the IRS code, I’d probably stop the podcast and go find the different podcasts that wasn’t as boring or I don’t know what I’m talking about. But I highly suggest you really listen because Dave’s gonna drop a lot of knowledge bombs. So without further ado, Dave Foster, welcome to the pessimistic brothers show. Wow,

 

Dave Foster  01:28

I’m so glad you had that last sentence. Almost put myself to sleep there.

 

Tim Lyons  01:33

Oh my god, you kill him say this is what I love about this stuff. So Dave, I’ve heard your story a number of times, anywhere from bigger pockets to entrepreneurs on fire with John Lee Dumas to short term rental shows, Hartman syndicator shows, you know, every time I hear it, I think I grab one more piece of knowledge. So can you kind of just bring the listeners through the story about why you and your wife got into real estate and how you discovered that? 1031?

 

Dave Foster  02:01

Yeah, absolutely. You know, they say experience is the best teacher. And if it doesn’t kill you, you learn, or you learn the next time or the next time. But as of what that’s what’s been so gratifying to me is that this is a tool that we’ve actually used. It’s not something that’s on a shelf. It’s not something like you say there’s just pouring knowledge, we use this thing. And so now we provide it for others as well. But yeah, the story, the backstory is that in the mid 90s, we were dinks. You guys know that term, still? Double income, no kids, pressure cooker careers, we’re having fun. And this magical moment app, or first child was born. And all of a sudden, my gosh, when you start having kids, you throw away the TV, you just all you want to do is just hanging out with that little guy. And we realized at that moment, a long time ago, that the greatest commodity that we had the most expensive commodity was time. It wasn’t money. So the idea was okay, we’re making money. That’s not the problem. The problem is how we make time. And time is freedom, freedom to live the life we want, and spend it with our family. So we started to research ways and we figured, gosh, you know what, it’s no cheaper than living on a sailboat. The rent of the land is free. And the sale doesn’t burn up gas. Why not? It doesn’t matter that my wife was a Minneapolis girl. I was a Kansas farm boy. And we were living in Colorado, where if you’ve done any geography at all, you know that during a coastline anywhere there, but we said act let’s go sailing. So and then because I really believe in the ready firing process. We said cash real estate investment out against there. Let’s go. So we went we bought a duplex, fixed it up, sold it did magnificent it. So I went to talk to turbo Andy, my accountant who said Dave, you forgot you’ve got to sign a partner Nick knuckles, Sam. And Uncle Sam is going to make more money than you do on this deal. That just ain’t right. You know, so we’ve got to find something that’s gonna accelerate the process. So right at that moment in time, then you’ll probably remember the history. Section 10. Three once been a part of the code since 1920. But in the mid 90s, there was a huge court case settled, where the IRS now had to allow regular investors like you and I to do 1031 exchanges. And what the 1031 exchange does, is it allows you to sell that investment real estate and then go and buy new investment real estate Using the tax dollars, you don’t have to pay them to the government, you get to use them for yourself indefinitely. So all of a sudden, we saw way to make, you know our share, but then also us silent partner, Uncle Sam share for the benefit of our own portfolio. And so that’s what we started to do. And in the course of literally 10 years to the week, transitioned a portfolio, from Colorado to Connecticut to Florida, and ended up buying a 50 foot sailboat with tax free dollars, and moving on boarded and living for 12 years, while we finance that, with my private clients, and with our fleet of vacation rentals, all being done with 1031 exchanges. It just couldn’t get any better than that. And that’s what we’ve tried to make it a mission of helping others get their same place.

 

Greg Lyons  05:58

That is awesome. Now I am, of course a survival swimmer. So the thought of living on a sailboat for 12 years, is, you know, it gives me it gives me a little anxiety, but that’s okay. But to take it back to when you had your first kid, I had that same feeling when Connor, my son was born, I was a college basketball coach. And the one thing you don’t have is control over your time when you’re a college basketball coach, you know, I am now a recovering college basketball coach, thank goodness. But I kind of saw that where time is so important, and you only get 18 years with the kids at home really, it’s even less when they become teenagers. But kind of finding that way and finding your way into real estate is really cool. And the 1031 is such a powerful tool, whether you’re an active investor or a passive investor. But there are a lot of rules when it comes to 1030 ones. If you could just kind of give our listeners kind of the high level of some of the different rules and timelines there are with 1030 ones like can you 1032 If you sell your personal residence, can you use that a 1031? You know, what are some of the rules?

 

Dave Foster  07:08

Yeah, absolutely course, the thing you want to understand is you got to go back to 1996 when the IRS lost the court case, so just imagine a ticked off Internal Revenue Service, that’s going to have to let you do this. But they don’t have to let you make it easy for you. So that was where the new rules came into play. And there’s really six of them. And the iris is just very avid, if you don’t need all six, you don’t get the tax benefit. So it’s pretty important. But the most important one is that this is not something you can do by yourself, you have to use the services of an unrelated third party. In that jargon, they’re called a Qualified Intermediary. And their job is to document the transactions to hold the proceeds. Because the IRS doesn’t let you touch the money. It’s got to go directly from the seller, or from the buyer of your property to us, and then to the seller of the property you want to buy. You can’t touch the money. So the Qi is incredibly important. And then of course, their role is also to guide you through the rest of this maze of regulatory junk. So that’s rule number one. They have to be involved prior to the closing of the sale. So I mean, I get calls every month still from people who say David sold my property last week. I’m ready to do a 1031. The money’s at my title company. I can send it wherever it’s like. All you can do at that time is just cry with them. Because the opportunity’s gone. So the Qi is most important. That’s the one thing that’s gonna make your deal a success. timing wise, you mentioned that, yes, it’s pretty strict. You only have 45 days, from the date of the closing of your sale, to identify your potential replacements, and a total of 180 days to complete the process. Again, the guy originally that did it, because the court case took two years, there is no we’re not going to do that. You get 180 days. And by the way, you got to have your new property lined up in 45. So that can create some angst for sure. You’ve got to title whoever is non title or the taxpayer for the old property has to be the same for the new property. Dyer has doesn’t want to see any changing of that. And lastly, the reinvestment requirements and this is this one gets really tricky. So the IRS is willing to leave their tax in the game. You have to be willing to leave all of your profit in the game. Let’s say you’re assigned a property you put $50,000 as a down payment If you sold that property, you would have to pay tax what you just get that part back. You’d only pay tax on the rest of the profit. But when you do a 1031 exchange, and you decide to take money out, the IRS says you’re always taking profit. And you know, you’re not want to say, No, I’m taking back my original capital. Thank you very much. There’s no, you’re doing a 1031 You’re taking profit. So great pop quiz number one, who’s got nuclear weapons? And who doesn’t? The IRS?

 

Greg Lyons  10:33

So, damn,

 

10:35

who wins the argument? Yeah,

 

Tim Lyons  10:37

the one with the red pen always wins. Right? So the IRS?

 

Dave Foster  10:42

Exactly. So that is, that’s a very, very common one that people struggle with, is you have to understand what your investment parameter. And the last thing and Greg, you alluded to this, Tim 31 is only available for property that you have held for productive investment use. So things that don’t qualify, if it’s not real estate, it doesn’t qualify. And this is going to fit into somewhere you’re knishes. Secondly, your primary residence, even though it’s relevant, real estate, does not qualify, because you’re not holding it for investment. And thirdly, properties that you bought, with the intent of reselling, do not qualify, reselling your intent is to sell not to hold. So, you know, the common term is fixing flippers, right? If you buy it to fix it up and sell it, that doesn’t qualify for temporary one. But if you buy it, to fix it, and then hold it, and then sell it after, say a year, that qualifies, because these are two different intents. That’s about the one minute overview of 10,000 pages of case law. Congratulations.

 

Tim Lyons  12:02

Well, yeah, I mean, that’s really powerful, right? Because it can seem overwhelming taxes are overwhelming to the majority of folks anyway. Right. And whatever you don’t understand, you tend to just shut down and pivot in the in the other direction to whatever is more more safe and comfortable to do. Right. So having a Qualified Intermediary like yourself, right, Dave Foster, just so everybody knows he works as a his own company as a Qualified Intermediary to facilitate these types of transactions with investors. Now, the best time to talk to Dave, like he said, is not the ready, fire, aim. Ready, Aim Fire. I mean, whatever it is, you know, it’s really fun. Yeah, ready fire aim. You know, you haven’t get in touch with these folks, as you’re thinking about selling Hey, Dave, I’m thinking about selling my rental properties, my rental property, whatever it might be, what are the things that I should be looking for, and I’m sure Dave has a checklist that you can email right over to you, and then keep you accountable, keep you on track to do the things you need to do so that you can stay within these guidelines, the 45 day identification period, the 180 day closing period, not touching the money. And there’s also an like, I don’t know that we need to get into today, Dave, we might have to do a webinar on this just to highlight this. But there is ways like taking boot, right? There’s way that you can take some profit out, right? And you can do multiple properties like so if you sell your duplex, you can buy maybe three different properties, right? So there’s always ways to do this is why you need a Qualified Intermediary. So Dave, can you take us through like an example maybe of yourself or take us through an example of one of your clients, right? And from maybe their first one or a success story of like to really clarify for the listener about like, in their mind, how would I do this if I own single family homes, and now I want to buy a triple net lease or now I want to buy an apartment building or now I want to buy, you know, something else? Can you take us through that? Yeah, absolutely.

 

Dave Foster  14:02

There’s a concept that I’ve just observed in myself, kind of like that caterpillar butterfly thing. There’s a metamorphosis. And there’s a life cycle, where you go from little grub to Caterpillar, to beautiful butterfly, as a real estate investor, from novice through experienced him in and each one of those stages, your needs change, depending on where you’re at in the lifecycle, what your goals and priorities are, and where you want to end up. And so you’re absolutely right, Tim, it’s so critical to always have, as Stephen Covey used to say, always begin with the end in mind, and then shape your journey to meet that in. So I’ll give you the overall of our story. But let me start with what I call the four ds of 1031 Invest State. And the first one I’ll give you, it’s D. Defer. Because what when you’re starting out, anytime you’re making profit on a real estate sale, you’ve deferred using a 1031 exchange. And what that does is a couple things. First of all, it allows you to get more capital to move forward to buy more real estate. Because at the beginning, we’re usually in growth mode. And so you always do first secondly, because every day that you don’t have to pay that tax is a day that the profit from that tax is in your pocket. It’s a form of compound interest, which Albert Einstein supposedly said, was the eighth wonder of the world. So as long as I can defer the tax, I’m making the money off of that deferred tax. And then I get to make the money off the money I made on the deferred tax, and it just keeps going. But it’s got to start with that first deferral, just like your IRA has to start with that first contribution. And then you try to keep it in there as long as you can. And if you can go your whole life, like we have, so far, we’ve been richly rewarded. If you can even go just a year. If you defer $50,000 in tax for a year, that could be $4,000 in your pocket, instead of the IRS. It’s not insignificant money. The second D of 1031 Investing, I’ll also give you, and then there’s a test coming up. The second D is differ. Because the 1031 exchange it you’re gonna love this, because it speaks exactly where you’re coming from. The 1031 exchange allows you to go from any type of investment, real estate, to any other type. You can sell commercial by residential, so residential by raw land, you can go from active, where you have to manage to passive where it’s managed for you. And you can go from any location in the country to any other location in the country.

 

Tim Lyons  17:19

Hey, Dave, real quick. The first deal was deferred the second day, is that also differ? Okay, I do want to make sure that I got my pen and paper up. Well, you know, I’m just so I’m making sure I’m writing the notes that

 

Dave Foster  17:33

Greg’s not he might forget. Yeah. So yeah, different differ. The beauty of this is that, generally, we never want to end with the same times where I might love collecting single family rentals when I’m in my 30s. But when I’m 60s, I don’t want to be answering those tenant calls. So the idea is to shape it into something where you make more money doing less work, or into something or as you go through real estate market. Will you see this come full cycle avidly. If you were invested in the Bay area of California, in 2012. You are no longer watching podcasts. You’re sipping umbrella drink somewhere. But who knew that in 2015, Austin, Texas, was going to become the eastern suburb of San Francisco. So Tim three one allows you the ability to sell, say maybe you’re in California, where appreciation is high, and go buy in Omaha, where cash flow is king, or go buy in Austin, where it still hasn’t risen. But he is rapidly rising. Again, you’re positioning your portfolio into the locations and the types that you want. Okay, question of the day. What’s the third D? differ? Yes, it is. Because it’s a teacher’s

 

Greg Lyons  19:00

pet. Such a teacher’s pet. See how

 

Tim Lyons  19:03

I did that buddy. And you see how I was paying attention? I was.

 

Greg Lyons  19:07

Alright, well, I must have been asleep. So anyway, keep going. We’re gonna defer for a third time.

 

Dave Foster  19:13

All right, we’ll give you a chance to Greg Don’t worry. So as we go through that lifecycle, again, speaking of active capacity, we start to want to shape things with the end in mind. This is what’s going to blow your mind. And it’s part of our story. Because you can transition from active into passive, you can also start to slowly convert those from totally tax deferred into partially tax free. And the way that you do this is by doing a 1031 exchange into a really nice property, using it for investment for a year or two and then converting it and moving into it. Then you move into that property, it now becomes your primary residence. And there is section 121. Write this one down, because it’s huge. That deals with your primary residence, it allows you, when you have converted a property, from investment to your primary, using it in three, one, once you have owned it for five years, once you have lived in it for two out of the previous five, then you can sell it and take a proration of gain tax free. So let’s say you did uh, let’s say you want to retire in Florida. So you sell a Cincinnati rental, you go buy something nice in Sarasota, Florida a couple years later, you move into it, and retire. You live in it for three more years. And then you say, You know what, I really want to go to St. Petersburg, you sell that? Did you order for five years? Yep. Did you live in it for at least two out of the previous five? Yeah, you lived in it for three, record for two, I lived in it for three, you would get to sell it and take three fifths, or 60% of the gain tax free. You are converting that game from tax deferred to tax free. Now, our story all happened prior to 2008 with this part of it. And prior to that you didn’t have to prorate you got the full thing. And so that’s what we started doing. We would convert a property in Denver from 1031 into our next primary residence, we’d sell our old primary residence, all of that was tax free. We’d live in that new property for two years, and then sell it and it was tax free. And the money went into the by the book, Getty. And so we and then ahead of moving to Connecticut, we 1031 our portfolio to Connecticut, it did the exact same thing. And then when we realized that when we had been praying for sailboat water, that we forgot to ask for warm sailboat water. We added to Florida, but did the same thing. We moved our portfolio ahead of time, and then converted properties down there into our primary residence. And that’s how we were able to buy the boat with tax free dollars while everything else stayed tax deferred. So that’s the third D. All right, Jim, let’s give Greg a chance. Greg, what’s the fourth? D? Oh,

 

22:41

come on, buddy.

 

Greg Lyons  22:42

I know I was this is going to be a real dekat and answer. But how about differ?

 

Dave Foster  22:49

Wrong. Give me a beer for that one. By the way. It’s actually die.

 

Greg Lyons  22:59

Oh, I wasn’t planning on doing that today. So I don’t.

 

Dave Foster  23:05

It’s not my favorite option either. But we’re all in there. But here’s what happens when you die. Your real estate goes to your heirs, and what is called a step up in basis. Which means they get it as if they paid market value work on the day you died. So all of that game, all of that deferred tax is not paid by anybody. It literally disappears. And your heirs get to start over. We’ve got I’ve got one family in Connecticut that were on their third generation. We started doing exchanges for granddad. And then when he died, all of his property went to his son, his son got it tax free. But a couple years later, guess what? He needed to start doing 1031 exchanges again. And so he did until he died. And now his children have all that real estate that they got tax free. And we’re doing 1031 exchanges for that. So with three generations on that portfolio, they have never paid a penny in capital gains tax. We have never paid a penny in capital gains tax, but I’m still living so the last step will be when I go, my heirs will get it now. Be careful because your children may express a sudden desire to go into a medical field to learn how to unplug you. Just be careful about that. But the idea is guys that to those people who want to say, Yeah, you’re gonna have to pay the tax anyways. It’s just deferred. My answer’s no, you don’t have to pay a tax. You can defer it throughout your life into the real estate. That is perfect for what you want to do. Have right at that moment, you can retire in it, you can turn into tax, cash IRA, tax free income, as well. I’ve got a real Trinsic BPH has three identical condos, side by side that he did 31 into, he moved into the first one, he’s living in it now, once they’ve lived in it long enough that it’s time to move, they’ll sell it, they’ll take that portion, tax free, he’ll pay a little bit of tax. But when I asked him if he was okay with that, he said, shoot Dave, you’re gonna have to go back groceries or deliver pizzas. For your W two income, I’ll just take this, okay. Where’s he going to move into the next one, and into the next one, his retirement is set, and it’ll be tax free. And then when we die, our heirs get into the tax was way anyways. So that looks to me like it’s a big win win.

 

Tim Lyons  25:58

One of the biggest things we’d even talk about Dave is while you’re going through this process, there’s a cash flow, current pay cash flow component to this, right. So we’re always big in we don’t buy anything unless it cash flows on day one, right? So you can see very quickly that if you start off with 100 grand, right, and then say all of a sudden in, say, five years use you double your capital, and you sell the property for 200. Well, if you do a 1031 exchange, you don’t pay any tax, you take that whole 200, right, and you go buy the next property, right, and now you’re kind of maybe looking to double your cash flow, and then 200 becomes 400 403, maybe you can compete, potentially become 800. And you can see how you can double, triple, quadruple your cash flow while you’re on this journey. And we’re not talking to get rich quick, you know, two, three years, we’re talking time in the market, right? This is time in the market. But what’s so powerful about this to me is it’s the education and then the action. And it’s aligning yourself with the professionals like Dave foster to say, look, I have capital, I had a taxable event, I have an inheritance, I do well on my w two, what have you, I wanted to get into the real estate game, teach me everything you know, right. And so his website is full of resources. He’s full of resources. And it’s aligning yourself with those professionals. When you’re building out your team for being a real estate investor. Like we always talk about in the attack, CPA that understands real estate, you need a realtor, you need an insurance guy, you need an attorney. And now you’re going to need a Qualified Intermediary for when you start to do this process. And I love how you laid out the four DS, even though it confused the crap out of Greg and I in the beginning. But it’s once you’re on the 1031 train, you very rarely get off, right, Dave? It’s deferred, deferred, defer and die, right. But that’s kind of part of the process. It’s part of the planning that you can do with your attorney with your family to say, look, we have built this portfolio. And when this happens, you guys get to step up and basis. So I love that. It turns out Dave, have become one of my favorite topics to read about listen to podcast about go to conferences about because when you align yourself with the IRS code, because the IRS code is nothing more than a roadmap of incentives, right. And if you understand those incentives, and you understand the process, you can build incredible wealth and live on a sailboat in Florida, like Dave did with his family.

 

Dave Foster  28:29

I mean, you said it exactly right. And that was exactly what a mentor of mine once said, he’s a Dave, the tax code is not a way for the government to make money. When you think about that, he has never met a tax they didn’t buy, because they love the money. But why is it so complicated? Because everybody writing the code puts in the little nuggets that they want to incentivize people to do. And let me assure you they want even though they keep the president keeps talking about limited and taking it away. They wanted a tax code. It started originally for farmers who were trying to grow our agribusiness industry, the 20s. And if they sold their farm to go buy a bigger farm, the taxes would not leave them enough money to go buy the next farm. So things were stagnating because they couldn’t go bigger. And against what those guys wanting to get into farming. couldn’t buy the smaller farms. So the 1031 is exactly what you said. It’s an incentivized her to keep your real estate moving forward and old. By the way, my favorite calculation in the world is the IRR. Are you guys familiar with that one? Internal Rate of Return and it is the sum of all those cash flows that you’re talking about. But what’s really cool is for the listeners today, you It’s not just the cash flow from income. It’s the cash flow comes from when I sell one property and by two, using the 1031. It’s the amortization of those loans, because the tenant is paying them down, that goes into the IRR. It’s the tax, I kind of, I tweak it a little bit to have the tax write offs that I get from depreciation, because I get that pretend game as well. And it’s also the benefit of appreciation. Because I’m 1030, wanting my new properties are now continuing to appreciate. Hey, Dan, we

 

Tim Lyons  30:38

just talked about that. Yeah, can we jump into that one topic? Because I think this is also a very scary or I don’t know the word I’m trying to say you’re but the depreciation, right? So when you’re a real estate investor, you can take depreciation and use that as a quote unquote, write off against your rental income, right. And if you sell your property and you’ve taken depreciation during the whole period, when you sell it, and you don’t do a 1031, not only do you have maybe a capital gain tax, that might be due, right. But you also have something called depreciation recapture where the federal government can kind of claw back at the close, right at tax time. Yeah, you know, some of that the depreciation, can you dive into what happens to that depreciation in a 1031 exchange,

 

Dave Foster  31:24

it gets deferred, just like, again, I depreciation is, it’s the worst game of pretend the IRS has ever played. Because they’re pretending they’re giving you a gift. They let you pretend your property loses value. So you get a tax write off. And you think that’s really nice of them. How awesome. But when you sell, they do make you pay back. And it’s at a higher rate than capital gains. So you have to pay it back. And so, but you can’t always take all of it. So it becomes what the IRS calls suspended, where you’ve taken it, but you haven’t got the benefit of it. But when you sell, you still have to pay it back. Now, doesn’t that start to set like that a right? Here’s where it’s even worse. You say, Well, wait a minute, since I’m at this income level, or because I’m a passive investor, I’m not going to get this much benefit. So I just won’t take depreciation. When you sell your property, you’re going to have to pay back. Whatever depreciation you took, or whatever depreciation you could have taken. And didn’t. That doesn’t want to make you raise a one finger salute to the IRS. I don’t know what does. But that’s the game. But you’re absolutely right. In the 1031, exchange, all of that depreciation is passed forward as well. So you don’t have to pay it. That’s

 

Greg Lyons  32:55

good question. That’s the powerful part of a 1031. We have listeners in almost all 50 states, we have international listeners. And we have people at the top of the tax bracket and the bottom of the tax bracket, right? We have all sorts of listeners. We’ve thrown a lot at people today, right? So as you see people coming through your business as a Qualified Intermediary. Who are the people coming through? Is it just big corporations? Or is it just everyday people who takes advantage of the 1031,

 

Dave Foster  33:27

you would be amazed to know that the average size of a 1031 exchange sale is a little Hunter 400,000. This is not rich, fat, cat, corporate city. Now, any taxpaying entity can do a 1031 exchange. So yeah, we have large corporations doing it. But my favorite exchanger of all time, was a lady who was selling a lot in Cape Coral, Florida. And she had literally made about $10,000 on it. I mean, by the time she paid for exchange, she was going to shelter about eight or 900 bucks. And I asked her Are you sure about this? You know, she goes, Dave, that’s my $800. You bet. I’m gonna do it.

 

Tim Lyons  34:16

Yeah, that’s right.

 

Greg Lyons  34:18

I love that. Yeah.

 

Tim Lyons  34:20

So Dave, we’re gonna have to have you back on because in the interest of time, I think I got about 10% of the questions that I want to ask you. So we’re gonna have to maybe quickly rescheduled back on.

 

Dave Foster  34:30

I’ve got actually got a book coming out in about 60 days. Well, when you hear this show, but why don’t we schedule something, we’ll come back and answer the rest of your questions, and we’ll get that out. Yeah.

 

Greg Lyons  34:45

Is the name of the book defer?

 

Dave Foster  34:48

You know what, I forgot to use that word, of course.

 

Tim Lyons  34:54

I love it. So Dave, what’s jumped into the last three questions that we ask every guest and The first one I’m sure. Okay, yes, yes. The first one, Dave, I’m sure this is something that you’re passionate about talking about. And when you’re at a cocktail party or dinner party, or you just have them in town, people might come up to you and say something like this. Dave, I understand that you’re into real estate and everything. But isn’t investing in real estate, too risky. What do you say to somebody like that?

 

Dave Foster  35:26

There’s only two groups of people in the history of the world who have ruled the world, always. And that is the banks and the landowners. So, banking is too complicated for me. How many choose to be a landowner?

 

Greg Lyons  35:47

You know, I think that was the simplest answer we’ve ever heard the most succinct answer I’ve ever heard. Yeah. And I mean, that’s But He’s not wrong. He’s not wrong. That’s for sure. So they have a love that one. And the second question comes from a de facto mentor of ours, Robert Kiyosaki. And he said that savers are losers, and debtors are winners. What does that mean to you?

 

Dave Foster  36:17

Well, not sure that I buy into that, totally, I get what Robert saying. And that is that when you save, you’re at the mercy of the bank, or your mattress, and you’re just not going to make the returns. Could depth as they call it, is absolutely essential for growth. But also tell you this that in my life, saving, let’s be sleep. And I think it’s a balance between the two. I’m not anti debt, but I am anti growth at any cost. Because that jeopardizes because remember, Craig the commodities want time, freedom. And that doesn’t mean have to watch your debt levels, and refinance it or lose it all. And oh, eight, you know, I lost a few zeros in Oh, eight. And it was all because of debt. So not saying that’s bad, but manage it, well manage it well, and you will be a winner. Because the end goal is time and freedom

 

Tim Lyons  37:19

of that. Yeah. I mean, listen to especially with what we’re going through this week with Silicon Valley Bank and Signature Bank and a little bit of uncertainty out there, if you will, you know, there’s a case to be made for putting your money soldiers to work and maybe levering it up with some debt. Only the good debt though. Dave, let’s hop into the third question from a guy named Jim Rohn. And he says that a formal education will make you a living and a self education will make you a fortune. I think this is perfectly teed up for you go. Yeah,

 

Dave Foster  37:54

you know why? Because a formal education is going to teach you what they want you to learn. A self education is going to teach you what you want to learn, which means you’re going to be doing, what your passion is. And whether you’re doing what your passion is, you’re going to be passionate about it. My wife joined me in the business years ago, and she’s a damn I just I love to talk to people, because we did it. So that’s what makes a great career for your great living, is doing what you’re passionate about. Because you’ll do it better. By the way, if you’re not passionate about, I can’t remember the guy that sent this once. But he said, If you do something you’re not passionate about. First of all, you’re gonna suck at it. And secondly, you’re gonna burn out. So you’re not going to be able to do it as long. So I think that’s horrible. Yeah. Well, Dave, I mean, I’m fired

 

Tim Lyons  38:53

up. I don’t know about you the listener, but I’m ready to do some push ups in the aisle way. Because I love talking about this stuff. I love talking about 1031, exchanges, taxes, everything. And I’m just so happy that we had the opportunity to finally connect with you and to highlight you and the 1031 exchange, but if people want to learn more about you or how they can, you know, work with you, what’s the best way for people to do so. Or

 

Dave Foster  39:17

if you’re having trouble sleeping at night, simply go to the Tim three one investor.com Th e 1031 investors.com. Actually have a 32 part YouTube series. All in my nice Barry White go to sleep voice. So you’ll have no problem learning a couple of things and ended up having a good night’s sleep as well. But that’s the best way to connect with us. calculators, the YouTube series, consultations, were there for you.

 

Tim Lyons  39:47

Awesome. And you know what, obviously there’s a new book coming out. So guys, I highly recommend check out the 1031 investor.com Connect with Dave and Dave, we will have to have you back on but for now. We are great for your support, and we will look forward to seeing you again next week. Thank you for listening to another episode of the passive income brothers podcast. We would be grateful for your support of our podcast by giving our show a five star rating and review and subscribing to our show on your favorite podcast platform. Don’t forget to take inspired action after listening to this show, so that you can start building out your passive income streams. Finally, head on over to city psycap.com to connect with us and find out more information about how to get started passively investing in real estate