On today’s Best Deals episode of The Real Estate Nerds Podcast, we will hear about some of the ways investors can capitalize on tax strategy. Dave Foster’s best deal story is an example of exactly that, and he is all too keen to share his methods with our listeners.
Tune in to Episode 46 of The Real Estate Nerds Podcast now to hear the full conversation.
Listen To Episode 46 of The Real Estate Nerds Podcast Now
Dave Foster on 1031 and Tax Free Investing Tactics
Our host and attorney Scott Smith welcomes Dave Foster. The two investors chat about Dave’s background and the strategy that led him to a string of best deals.
- [1:00] Dave has been a “deal junkie” for over a quarter century. He began investing in Denver following economic collapse in the 1980s. He describes this as a cowboy era rife with both booms and busts.
- [3:45] Scott probes Dave’s strategy further. Dave bought his first fix-and-flip in 1996. It was a success until tax time came. The amount of tax liability lowered the overall quality of the deal.
- [5:30] Dave points out some of the larger context of his story involving 1031 Exchanges and tax-free treatment. He describes how he was able to capitalize on saved tax dollars, putting them instead toward the growth of his portfolio.
- [9:00] Scott and Dave dive deeper into his 1031 strategy. He includes a type of tax exemption that, when combined with a Tax Code update in 1987, allows for substantial savings. The exemption applied to primary residences.
- [12:00] Dave explains how he was able to capitalize on these tax exemptions by moving into his investment properties every couple of years to convert tax deferred dollars into tax free dollars.
- [13:30] Scott points out how Dave’s strategy is particularly smart in an appreciating economy. It has worked out for him. Dave currently lives on a sailboat–giving this investing story a somewhat idyllic ending.
Lessons Learned From Dave’s Strategy
Brian and Scott conduct a quick post-mortem to see what other investors can learn from Brian’s mistakes with this property.
- [14:00] Scott points out that these are basic investment strategies anyone can take advantage of, even with a smaller portfolio.
- [15:20] Dave points out that setting up entities and hiring an appropriate team of professionals can be essential for real estate success
- [17:00] Scott and Dave share about BiggerPockets, and the tools this online community offers investors. Scott regularly contributes asset protection content to BiggerPockets.
- [18:43] On the topic of asset protection and long term real estate success, Dave comments: “Having great people on your team is so huge.”
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Connect With Dave Foster
Connect with Dave on hard money lending or 1031/tax free investing via his web site, The1031Investor.com or by phone at 850.889.1031.
Thank you for joining us on today’s episode of the Real Estate Nerds Podcast. For even more free educational resources on real estate investing and the law, check out the Royal Legal Solutions blog. You can also reach our host Scott Smith directly, connect with him on LinkedIn, subscribe to the Royal Legal Solutions YouTube channel, or join our investor community on Facebook.
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Hosted by Scott Smith, Lead Attorney and Founder of Royal Legal Solutions
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About Dave Foster
Dave Foster is a successful 1031 investor who teaches others methods for minimizing tax liabilities to maximize real estate earnings.