Turning $50K into $1.5M With the "1031 Exchange" Strategy w/Brandon Turner

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Turning $50K into $1.5M With the "1031 Exchange" Strategy w/Brandon Turner

Рет қаралды 37,893

Күн бұрын

You’ve heard wealthy real estate investors talk about the 1031 exchange, but what about the “lazy 1031 exchange”? With a regular 1031 exchange, you can exchange one property for MANY and turn your small real estate portfolio into a booming passive income-generating machine. But, with the “lazy” 1031 exchange, you don’t have ANY of the time limits or stress that come with the traditional variation.
A “lazy” 1031 allows you to put your hard-earned capital gains into a COMPLETELY passive type of real estate OR buy more active real estate at any point throughout the year. Thanks to the massive tax benefits like depreciation, you’ll still be able to pay fewer taxes while growing your real estate portfolio to new heights. But how does the “lazy” 1031 exchange work, and who can use one?
“Beardy” Brandon Turner is back with BiggerPockets to explain exactly how you can take advantage of this too-good-to-miss real estate strategy.
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Here’s the “Lazy 1031 Exchange” and How To Do It:
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What is a 1031 Exchange in Real Estate?
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How to Find a Replacement Property Fast With a 1031 Exchange:
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00:00 The Beard is Back!
01:32 Turning $50K into $1.5M!
03:48 Turn 1 Property Into a Portfolio
06:16 The "Lazy" 1031 Exchange
09:53 Get BIGGER Tax Benefits
11:37 Retire Sooner Than You Think
13:12 ptimal Times to Sell a Property
14:49 Connect with Brandon!

Пікірлер: 120

@davidstephens9594 5 ай бұрын

I agree that the video didn't clarify the difference between regular 1031 and lazy 1031, but the comments cleared that up for me. Thanks, everyone.

@keystonecpas 5 ай бұрын

happy to help and we apologize it was not super detailed in the video 🙂

@SerenaLChan 5 ай бұрын

Is it just me or did I miss how is traditional 1031 different from a lazy 1031?

@baischgolfer 5 ай бұрын

A “lazy 1031” isn’t actually a 1031, it’s just using alternative methods to offset taxes you would otherwise have to pay on the sale of a property. For example, taking the gains from the sale and buying a mobile home park, then using cost segregation/accelerated depreciation to offset the impending tax bill from your property sale. All this being done during a calendar year, of course.

@MrDomemi 5 ай бұрын

Not just you...guess I've also got too used to David's extreme clarity in the podcast 😂

@davidwilson6033 5 ай бұрын

Thanks for that explanation! They never explained the lazy 1031 -which was the TITLE OF THE VIDEO! 😂

@baischgolfer 5 ай бұрын

No problem! She did briefly outline it from 6:38-6:50 in the video, but it wasn’t extremely clear or particularly detailed.

@keystonecpas 5 ай бұрын

@@baischgolfer Thanks for the comment! 😃

@albforever 5 ай бұрын

Thanks for this illustrative video. The past year has been amazing for my finances. I've been able to cross the $900k milestone with the help of a financial advisor who trades stocks for me. It's always good to work with a pro.

@rodriguezolson4290 5 ай бұрын

You make a great point. My FA, Ann Marie Celentano equally handles my trades and it’s been awesome. My 160k has gradually grown to 935k since then.

@outstandingsensei 5 ай бұрын

Thank you for recommending. I searched on google for this Ann you mentioned, she is competent and well licensed. I'm intrigued.

@DanielDoesRentals 5 ай бұрын

Great video! I have also heard this strategy referred to as "The Golden Hamster Wheel". I am pretty sure these two terms are talking about the same thing. This video did not really go into details or an example of the lazy 1031 though. From my understanding... basically, if you sell a property for 200k that you paid 100k for you would have 100k in gains to pay on. You would then find a property that cost 200k and then through bonus depreciation and cost segregation get 50% in depreciation. This will offset your 100k gain. This would all have to be done in the same year, and there would likely be some depreciation to recapture as well, but this example makes it simple to understand!

@zacharyzero 5 ай бұрын

Thanks! Yeah their explanation was pretty bad.

@DanielDoesRentals 5 ай бұрын

Welcome!@@zacharyzero

@davidwilson6033 5 ай бұрын

There was no explanation whatsoever! In 16 minutes? Thanks Daniel!

@keystonecpas 5 ай бұрын

Thanks for the great explanation to help us clarify this part. Next time we will spend more time on the definition of it ☺

@keystonecpas 5 ай бұрын

@@zacharyzero lol! Sorry...I dont know if our explanation was edited out or if we just got excited talking about the details in our minds

@KacyDaGameNerd 5 ай бұрын

Take a shot every time they say "1031" without explaining what a lazy 1031 is.

@keystonecpas 5 ай бұрын

@vinceliu605 5 ай бұрын

How could you offset capital gain with passive loss (from depreciation)?@@keystonecpas

@smiler0616 5 ай бұрын

Wow! There's 16 minutes of my life that I'll never get back! I've got the utmost respect for Brandon and Amanda, but, my God, I've never heard two people talk so much about something without actually talking about it! I still have no clue what a "lazy 1031 exchange" is. I can only assume that you're 1031 exchanging your profit into a syndication instead of finding your own property to reinvest in. Correct?

@keystonecpas 5 ай бұрын

😅Thanks for your comment and sorry we didnt spend too much time in defining the lazy 1031X. Brandon and I talk about it so much that I think we just skipped the foundational basics. We briefly outlined it from 6:38-6:50 in the video. Lazy 1031 exchange is when you sell a rental in a normal transaction and you simply buy more rentals in the same year and use depreciation from the new properties to offset the gain on the sold property. It can be a syndication or any other direct owned real estate that can provide tax losses (ie SFR, apartment, commercial RE) 😃

@HappyPenguin75034 5 ай бұрын

@@keystonecpaswhy same year? Oh you get full year depreciation even if buying in December. 😮

@amandahancpa 5 ай бұрын

@@HappyPenguin75034the same year so that the tax loss in that year can offset the gain in that year.

@richardramdin1864 5 ай бұрын

Brandon where have you been nice to hear from you, I bought my first property in August because of the fire you lit under my ___ you are the best motivator an I thank you peace ✌️

@grammarx 2 ай бұрын

It's not true that the new property needs to be of equal or greater value. Costs incurred to sell including rrenovations and closing costs can also be included in that total cost 1031 exchange capital gains offset.

@TJ-th9hw 5 ай бұрын

Great content on 1031 exchange with BT. Thanks Amanda & BP for having BT on!

@keystonecpas 5 ай бұрын

Aw....happy to help!! It is always fun recording with Brandon...he gets so excited about RE and taxes. 🤣

@customhomebuilder 5 ай бұрын

Didn't get how a lazy 1031 is different. How do you get around the 45 day rule etc?

@keystonecpas 5 ай бұрын

Lazy 1031X means you sell a property in a normal transaction and then you separate purchase more rentals in the same year and use the rental losses to offset the gain on the sold property. As long as it is done within the same year, there are no 45 day rules that you see in a traditional 1031X.

@yourneighbormike924 5 ай бұрын

@@keystonecpas thank you for explaining this. I was lost too.

@Johndoe-qn9jr Ай бұрын

must it be rental and how do you get money out of it i understand you can built wealth but how to get money from it in meantime ? Thank You

@keith62970 5 ай бұрын

Oh yeah we recently used the traditional 1031 and it was way too stressful.

@keystonecpas 5 ай бұрын

A great tip is to start shopping for replacement properties before you list your existing one for sale. You may even be able to get the replacement under contract prior to closing on the current property. Also...look into a "reverse 1031" exchange. That can work well in some instances.

@anjelicavasquez239 5 ай бұрын

The way I clicked so fast when I saw Brandon pop out 🎉

@keystonecpas 5 ай бұрын

aw...so sweet!

@papajoe5331 29 күн бұрын

can you sell a home which was purchased on a 1031 and payoff another home which was purchase on 1031 .... to be debt free?

@ryanshort6021 5 ай бұрын

Brandon always has amazing positive energy

@keystonecpas 5 ай бұрын

That he does!

@rileyworstell3604 5 ай бұрын

Would this strategy still work if bonus depreciation is being phased out?

@amandahancpa 5 ай бұрын

Yes it could although make sure you run the numbers with your CPA to see how much depreciation your new property is expected to generate.

@ivanov568 2 ай бұрын

Legally a “lazy 1031 exchange” does not exist, false advertising for their syndicate/PrivatePlacement… What they are most likely referring to is a cost segregation study, where you can depreciate certain items extremely fast and combined with bonus depreciation ( it was 100% 2 yrs ago) you would have a HUGE enough passive loss to offset your capital gain. Which asset classes depreciate the fastest? Mobile homes, storages (thats why you see so many)…

@extendandmend4871 5 ай бұрын

Great episode, love all the upbeat positive energy 🎉

@keystonecpas 5 ай бұрын

Thanks! glad you enjoyed watching Amanda and Brandon!

@juliewilhelmi5791 5 ай бұрын

Wait! So what is a lazy 1031 exchange?

@keystonecpas 5 ай бұрын

@hunter_lott_ 4 ай бұрын

Is this just an internal term for an UPREIT? Or is this different?

@marylouisone 5 ай бұрын

So Brandon why selling instead of refinancing ? Keep properties that are producing and aquiete new ones?

@amandahancpa 5 ай бұрын

My perspective is if the property is worth keeping, then that is generally better to tap into the equity vs sell. But if the property is no longer worth keeping, then consider tax deferrals like 1031x or lazy 1031x to bring down the tax bite

@douglashunter5756 5 ай бұрын

How does this compare to taking a cash out refi to take the equity our for another investment without having to pay taxes while still maintaining ownership of the property? Seems like I would want to keep ownership the property I pulled equity from instead of selling it.

@keystonecpas 5 ай бұрын

Yup...that is my personal preferred way and even better than a lazy 1031X. The lazy 1031 works well for investors who no longer want to own that original property.

@pandamama4094 5 ай бұрын

Whose here to see Brandon ❤

@keystonecpas 5 ай бұрын

me 🙋‍♀🤣

@lifeofkeasy8836 5 ай бұрын

With the lazy 1031 does all the proceeds need to usedin new purchase as in the regular 1031?

@keystonecpas 5 ай бұрын

There are no requirements in the lazy 1031 exchange since it is simply an offset strategy. The more rentals you purhcase, the higher the potential depreciation on the new property and thus the more tax offset may be available.

@johnnyb33good21 5 ай бұрын

What If instead of selling your asset and paying commissions and closing costs, you just did a cash-out refinance to harvest some of the equity and redeploy into another income producing asset?

@keystonecpas 5 ай бұрын

Love love love that too! I think that is where Brandon was going with this "return on equity" example. I personally just love to tap into the equity by not selling so I am totally on board with your thought process here.

@davids2530 5 ай бұрын

@@keystonecpasplease discuss the tax ramifications (e.g. limits on deducting mortgage interest if it’s not the initial purchase mortgage)

@amandahancpa 5 ай бұрын

@@davids2530gap to help. Under interest tracing rules, whether and where you deduct interest will depend on what the loan proceeds are used for. From a simplistic perspective, if you refinance out of a rental to purchase or rehab another rental, then the associated interest would be deducted against rental income. Alternatively, if you refinanced out of a rental property and use the proceeds for personal expenses, then often times the associated interest would be nondeductible personal items. Definitely consult with your tax advisor for anything that may apply to your unique situation.

@HappyPenguin75034 5 ай бұрын

@@davids2530a mortgage is a mortgage. Tax deductible.

@ParkDari 3 ай бұрын

I am trying to 1031 into a partnership but i will get a tax attorney because every time i look at it it seems like it has to be same entity to same entity

@suleimankhader 5 ай бұрын

I usually ignore fan of you guys, this was super important topic for me, however i felt most of the video was talking about how 1031 is bad, then you rush when spoke about the lazy one, for someone not super smart like me i would love more explanation please 😍

@amandahancpa 5 ай бұрын

1031x is not bad at all. It is a pillar strategy still. Lazy 1031x is for investors where the usual 1031x rules are t practical or when a 1031x attempt fails. We briefly outlined it around the 6:40 mark in the video. Lazy 1031 exchange is when you sell a rental and simply buy another property within the same year to use the new rental tax losses to offset the gain on the sold rental.

@jwyn3085 5 ай бұрын

@@amandahancpaso to be clear. You’re just selling a property normally. Then buying another property before the year end that’s expensive enough to bonus depreciate and offset the gain from the first sale?

@amandahancpa 5 ай бұрын

@@jwyn3085correct. So if you are talking real estate then it can be directly owned properties or assets in a syndication. This strategy can also be used when you invest in non real estate assets like passive businesses because assuming your rentals are passive, then passive losses from any other activities would be able to offset the gain on a sold rental. An example can be investing in a laundromat passively that kicks off depreciation

@richard9827 5 ай бұрын

The discussion about what a lazy 1031 is starts at 6:38

@gerardodesarden2766 4 ай бұрын

Too fast - slow down and explain the concepts clearer

@ldavidson6853 5 ай бұрын

Brandon!!! Omg... I am crying. I didn't know how much I missed seeing you! Glad you're just busy getting richer...lol.

@cliffpriddy5244 5 ай бұрын

You guys never explained what a lazy 1031 actually is or how you can stretch it out 1 year

@keystonecpas 5 ай бұрын

We briefly outlined it from 6:38-6:50 in the video. Lazy 1031 exchange is when you sell a rental in a normal transaction and you simply buy more rentals in the same year and use depreciation from the new properties to offset the gain on the sold property. Because rental losses from one property can be used to offset the gain on sale of another rental, it helps to reduce the capital gains taxes as long as it occurs within the same tax year.😊

@taebball 5 ай бұрын

It seemed like you can 1031 into a syndication deal until it was time for you to pull funds out to get something else?

@keystonecpas 5 ай бұрын

Some syndications are set-up to be able to take 1031 exchange money. If you are planning on selling a rental and want to exchange into a syndication, be sure to ask the sponsor if they are set-up to take exchange money. If they do not, you can look into the lazy 1031x method.

@beavsqueeze 5 ай бұрын

I possibly have 300k in equity in downtown Nashville in one property. However I average 30k gross income off of it. Yes, I'm looking for more. Currently looking in rust belt area. Help. Thanks.

@keystonecpas 5 ай бұрын

If you want to keep the existing property and expect to have good continued cashflow and appreciation, then consider a cashout refi vs selling it. No taxes on refi proceeds and you can also deduct the interest on the loan as long as the proceeds are used to purchae more rentals =)

@tinachxx110 5 ай бұрын

Why would you have a year to figure out a 1031? I thought it’s 45 days you need to identify it

@keystonecpas 5 ай бұрын

In a lazy 1031 exchange, there are no traditional timing requirements. The important part is to make sure the new property is purhcased and placed in service in the same year the original property is sold.

@buildingAbiz 5 ай бұрын

So if you do a 1031 do you NOT get to do the depreciation of the next properly? If so then why not do both instead of just taking the tax hit and using the depreciation of the next property to eat up that loss. Because couldn't use use that 1031 to not take the hit and then use the deprecation to offset future gains that you make on the next property income?

@keystonecpas 5 ай бұрын

It depends on a lot of factors. If you do an even exchange (ie sell for $500k and buy one for $500k) then you get carryover basis. in other words, continue the depreciation basis from the originial property. Alternatively, if you trade up (ie sell for $500k and buy one for $800k), then you will have carryober basis and new basis to take more depreciation. Yes if you just sold a proeprty, you can buy more rentals and use those losses to offset the one already sold. That is the concept behind the lazy 1031X.

@buildingAbiz 5 ай бұрын

@keystonecpas ok thank you for the clarification :-)

@keystonecpas 5 ай бұрын

happy to help 🙂@@buildingAbiz

@pa60pilot 5 ай бұрын

How is the “lazy” 1031 exchange any more benefit than a standard 1031-exchange and subsequent property purchase? You still owe the capital gains and depreciation recapture on the disposed property (non 1031-exchange scenario). Yes you benefit from depreciation from a newly acquired property, but you’d have had the same benefit if you bought a replacement property with a 1031-exchange, and you’d not need to offset the sale of that property. That depreciation could be used to offset other income. I’m missing something here. Is this just a click-bait theory that doesn’t actually hold up?

@amandahancpa 5 ай бұрын

The lazy 1031x is not “better”. If you can meet the timeline, purchase price, and equity requirements it is better to do a 1031x. The lazy 1031x is an alternative for investors who don’t want to or can’t do a 1031 (ie can’t get new favorable financing, want to get more passive by moving money into syndications, etc.). It is a way to still offset some of the taxes using this offset strategy. We also have clients use this when there is a failed or partially failed 1031x to rescue some of those tax dollars 😊

@pa60pilot 5 ай бұрын

@@amandahancpa Thanks for expanding on this Amanda. This fits with my previous understanding.

@AberrantArt 5 ай бұрын

What is a "Lazy 1031"???? 🤔

@keystonecpas 5 ай бұрын

Lazy 1031 exchange is when you sell a rental in a normal transaction and you simply buy more rentals in the same year and use depreciation from the new properties to offset the gain on the sold property.

@AberrantArt 5 ай бұрын

@keystonecpas what happens with depreciation recapture? Second part is, If you depreciate a property and sell it using 1031 exchange, you'd still have depreciation recapture, correct?

@keystonecpas 5 ай бұрын

@@AberrantArt yes there is deprecaition recapture but with a lazy 1031X strategy you may be able to offset some of that. If you do a 1031 exchange correctly, it is possible to have no depreciation recapture.

@AberrantArt 5 ай бұрын

@keystonecpas so it sounds like original 1031 is superior. Is that correct?

@amandahancpa 5 ай бұрын

It really depends on what the investor is looking for. If looking to trade into similar asset class and not stressed out on timelines and keeping all the equity in the deal, then 1031x is more straightforward. Otherwise lazy 1031x may be better for investors who don’t want to be stressed about timelines and meeting all the purchase and equity requirements.

@dstorm2.02 5 ай бұрын

Lol. Sounds like lazy 1031 exchange give me Grand Cardone Vibes. Put your money in my funds and mine it for you. Cant knock Brandon hustle, love info. Great episode.❤

@keystonecpas 5 ай бұрын

Actually, the concept of lazy 1031X is not just limited to syndications. For example your replacment property in a lazy 1031X can be an apartment you own 100% or a mobile home park you own 100%. I feel we mainly see syndications as the replacment asset because ...well...some investors want to be more hands-off but still want to own RE. In other words "lazy"? lol!

@robba8997 12 күн бұрын

He is an OPM guy, like other richers. They don’t say s…

@realestateguru8769 5 ай бұрын

Reverse 1031 exchanges also are a viable option

@keystonecpas 5 ай бұрын

Yup reverse 1031 exchange definitely takes some of the stress out of a traditional 1031 exchange. This is especially helpful in a sellers' market.

@davidrobinson1201 4 ай бұрын

A reverse 1031 exchange can cost quite a bit more to do as they have to park the property usually in a LLC they form for that holding purpose@@keystonecpas

@micahwatson9017 5 ай бұрын

Still don't know what a lazy 1031 is...

@keystonecpas 5 ай бұрын

@annaanna4862 3 ай бұрын

Stay away from Brandon Turner ODC fund - invested 2 times with him 2021 and 2022 . Both properties are sinking ships: totally mismanaged and bought overpriced. He is a bullshitter marketer. Now he is not a CEO of ODC, stepping away. He is slowly crawling away from resposibility. SCAM.

@brucebanksshow 5 ай бұрын

I don't understand how Brandon sleeps at night contributing to making the people that live in his trailer parks unaffordable. They have to abandon homes because they can't afford the rent that his company ends up raising. Who knows how many homeless individuals have been caused by his real estate company

@HappyPenguin75034 5 ай бұрын

Greed will get paid back at death.

@davidrobinson1201 4 ай бұрын

I would imagine his syndication improves the mobile home parks justifying the raising of rents. Or it is possilble that these parks have not stayed up with inflation in the raising of rents and it is time for rents to increase (something a prior owner didn't bother to do). I wouldn't accuse Brandon of "contributing to homelessness".

@brucebanksshow 4 ай бұрын

@@davidrobinson1201 it's the cheapest type of rent that exists in the United States. If his company targeted owing mobile home parks because he knows the renters can't leave(which he admitted) then yes it's predatory. He talked about how the trailers are expensive to move and if his company raises the rent most likely those that can't afford the rent will just abandon their home because they can't pay the moving cost. Then he takes those trailers for free and rents them out. It's really disgusting how he talked about it.