The moment you know more about the property owner’s fact pattern, property, micro-location, or problem than they do is the moment you begin adding value.
I remember making 200–250 cold calls per week at Marcus & Millichap in 2007 trying to win multifamily property listings and hitting a brick wall. I’d hear, “No, not interested, find me a property to buy first and then I’ll list with you,” “I’m already working with another broker,” and the occasional, “lose my number.” It was frustrating and embarrassing at times.
A Water-Cooler Epiphany
One of my office mentors told me at the water cooler to dive into the details of the property owners I was asking to serve, and the rest would follow. I asked him to repeat that slowly to help me understand at a deeper level.
This was my moment to learn. He repeated the statement and then said something that has stuck with me ever since. He said, “The moment you know more about the multifamily property owner’s fact pattern, property, micro-location, or problem than they do is the moment you begin adding value. Everything else is just a waste of their time.”
I declared to myself on the spot that I would commit to a higher level of excellence and become an expert in all things solving Sacramento Multifamily Property owners’ problems. During this journey, and after witnessing the financial pain from the 2008 crash, I focused on one of the frustrating problems of the 1031 exchange, which was a limited time to find and purchase a property — 45 days to identify and 180 to close.
Selling high and buying low made sense; however, at times the 1031 exchange made this difficult, and in 2008 this meant some lost half of their equity, and some were foreclosed on. The way I have come to solve this is through the Deferred Sales Trust, which was my second “water-cooler epiphany” moment.
Increasing the Value of Your Professional Practice
As a business professional, you are likely looking for new strategies to solve problems and add value to your clients as a crypto, real estate, financial, or tax expert. However, not just any strategy will work. Your strategy should be of significant use to your clients. It must be legal, backed up by evidence, have survived IRS audits, and have been put to the test and passed. It must enable you to practice ethically while complying with your professional responsibilities.
The Deferred Sales Trust (DST) is the tax deferral unicorn you may have heard about.
The DST is a trust that allows you to delay the capital gains tax on the sale of your cryptocurrency, real estate, stock, business, or other highly appreciated assets. Who is this for? Anyone who has an asset worth at least $1 million net of all closing costs and has at least a $1 million gain. It works for individuals and can be used by any legal entity, such as an LLC, C-Corp, S-Corp, LP, etc. It also works for what the 1031 exchange does not, such as artwork or a primary residence. Its legal track record includes over 12 no-change and no-finding IRS audits in more than 25 years. There have been thousands of closes and it continues to grow in popularity.
The following professionals can benefit from adding the DST to their practice:
- CRE brokers
- CRE syndicators
- Luxury realtors
- M&A advisors
- M&A attorneys
- Business brokers
- Attorneys for taxation and/or estate planning
- Investment consultants
- Financial advisors
- Professionals in M&A
Advantages of Adding Value with the DST
I remember landing my first meeting with a billionaire in Sacramento, California. It seemed like he owned a large percent of Northern California apartment buildings. He owns thousands of multifamily units and used to be a dentist in Palo Alto, California.
This man started with a fourplex and lived the 1031 dream of acquiring and buying more units over a 30-year period. He told me, “If the Deferred Sales Trust is real, I want to know about it. Come and meet with me and my family to go over the benefits.”
Being able to provide new and fresh solutions to your client’s capital gains tax and estate tax challenges gives you a distinct advantage over your competitors and can unlock new clients that you previously may not have had a chance to serve. Without the DST, I would not have landed that meeting and the chance to serve this client with his capital gains and estate tax needs.
Along with helping you win new business, using the DST to add value to your practice will help you serve your existing client base and attract your services or investments to a wider range of customers/investors.
Bonus DST Benefits
Aside from deferring capital gains taxes, the Deferred Sales Trust offers your clients the following advantages:
- Eliminating the need for the 1031 exchange — no more rushing around to overpay for a property ever again.
- Saving a 1031 exchange that is about to fail, even after the forty-fifth day of identification.
- Purchasing real estate when the timing is right.
- The opportunity to move funds outside of their taxable estate.
- The opportunity to retire from the toilets, trash, and liability that comes with active business or real estate ownership.
- The opportunity to sell Bitcoin or other crypto assets and invest in real estate.
- The possibility of obtaining more consistent and higher cash flow.
- The ability to design a payback plan and collect payments in installments as and when required. This includes the flexibility to structure principal and interest payments in any way that they want.
Ready to see if this is a good fit for your situation? Schedule a no-cost consultation with an exclusive DST trustee to learn about all the benefits of the DST. Goals for the meeting:
- Hear your story!
- Understand your clients’ financial and investment goals.
- Evaluate if using the Deferred Sales Trust makes sense for your practice goals and is suitable to help your clients sell their highly appreciated assets.
Happy tax deferring!
For more information, check out: How to Defer Capital Gains Tax When Selling Your Cryptocurrencies
About the Author:
Brett Swarts is considered one of the most well-rounded Capital Gains Tax Deferral Experts and informative speakers in the U.S. He is the Founder of Capital Gains Tax Solutions, is an exclusive Deferred Sales Trust Trustee, host of the Capital Gains Tax Solutions podcast, and an eXp Commercial Multifamily Broker in Sacramento, CA.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.