1031 Tax Deferred Exchanges & Overrated Opportunity Zones With Dino Champagne

1031 Tax Deferred Exchanges & Overrated Opportunity Zones With Dino Champagne

In today’s episode, Jason discusses how to grow your real estate portfolio with a little tax as possible. He goes through the basics of 1031 Exchanges. On the second segment of the podcast Jason brings on guest, Dino Champagne, Los Angeles Division Manager & VP at Asset Preservation Incorporated. They continue to discuss tax savings strategies and the complexities of 1031 exchanges.

Investor 0:00
communication has been just fantastic. And even after leasing a property Platinum properties are kept in contracts to check everything’s okay.

Announcer 0:10
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:00
Welcome to Episode 1119 1119. This is Jason Hartman, thank you so much for joining me today, as we discuss how income property is the most tax favored asset class in America. You know, you get great tax benefits as you own properties, but what about when you trade the properties when you sell them and you want to rebalance, if you will rebalance your portfolio? Well, you can do that for life with income property through the beautiful 1031 tax deferred exchange law. And I have done this many times as you probably heard me discuss on the on prior episodes, I am just about to engage in another 1031 tax deferred exchange from a large apartment complex that I own with one of our clients and we are selling that and we do not know what we’re going to buy yet, but we are going to be able to take all of our pre tax dollars and reinvest them. We can also split up and do our own things. We don’t have to stay partners. There is just a ton of flexibility with this. It is a wonderful, wonderful benefit. And you know, we haven’t really done a show on it in a while. So I’ve got our guest today who is an expert, and she will discuss that with us here in a moment. Make sure you have your tickets for the upcoming meet the masters of income property in Newport Beach, California, late March, and this is our 21st anniversary of meet the masters of income property. So we look forward to having you there. The room is filling up very, very nicely. We have quite a few ticket sales so far. And we still have early bird pricing. So take advantage of that at Jason Hartman comm slash masters again, Jason hartman.com slash masters and let’s go to To our guest and talk about 1031 tax deferred exchange. Welcome to meet the masters of income property investing. I’m your host Jason Hartman. The 2019 meet the masters of income property March 23, and 24th in Newport Beach, California.

Jason Hartman 3:22
What is the sort of the one trick, the hack the secret that really empowers people to success, income property, the most historically proven asset class in the entire world. Register today at Jason hartman.com. forward slash Mr. Early Bird pricing ends Friday, February 1. Let’s break this down and look at some of the strengths of income property. As an asset class. I found that this event is really helpful because I am totally a newbie to real estate investment and so I picked up so much information one of the great things about it is that it’s fragmented, right? embrace the fragmentation. Jason hartman.com forward slash masters. It’s my pleasure to welcome a returning guest back to the show. She has been a speaker at many of our live events over the years and our conferences. It is my friend Dino with API asset preservation Incorporated. They specialize in 1031 tax deferred exchanges, and they’ve done a few for me over the years. Dino, welcome back. How are you?

Dino Champagne 4:27
Thank you, Jason. I’m doing great. How are you?

Jason Hartman 4:30
Good, good. It’s good to have you. And one of the things I love about income property is it is the most tax favored asset class in America. There is nothing better when it comes to taxes. Not only do you get the tax benefits, hopefully everybody listening already knows about. But when you trade it, when you sell it, you can defer the gain indefinitely through this section of the IRS section 1031. That’s why it’s called a 1031 tax deferred exchange. In it is really a tremendous vehicle, you know, give us some of the basics. And I want to make sure we also touch on opportunity zones, because these two things really do kind of mesh together a little bit. So talk to us about 1031 exchanges First, if you

Dino Champagne 5:15
would, Okay, very good. As you mentioned, it’s an opportunity not to be confused with opportunities own, okay. But it’s an opportunity for a taxpayer when they’re selling their investment, real estate, to go ahead and defer the tax to grow their wealth. And they can do this by exchanging property in one geographical area, and then expanding into the out the United States. So that is one of the wonderful things and as a 1031 facilitator, I’m seeing like right now, a lot of individuals selling in one region and then redeploying it into different aspects, you know, different areas of the country. This is where someone can take the funds, and then invested in other areas that are going to grow faster, maybe or have more Cash Flow when you’re talking about doing a 1031. And I know that your investors are very familiar with the code itself, just to remind folks, that this may be new to them. In order to defer the gain on the sale of the property, there are certain rules and requirements that you have to meet. One is that you must have a Qualified Intermediary. And that’s my role in all of this. I’ll tell you, Jason, from time to time, what ends up happening is somebody will sell an investment property, and they will have forgotten to engage the Qualified Intermediary prior to the closing of the sale. When that happens. Now they have a full taxable event. And I’ll get a call a week later saying I’d like to set up an exchange I closed last week. At that point, it’s too late. So as a requirement for the deferral of the game, the taxpayer must engage a Qualified Intermediary prior to the closing of the sale property. Let me just ask you one thing about that.

Jason Hartman 7:00
Dino, isn’t there a reverse exchange where they actually can do that or is that different?

Dino Champagne 7:09
Well, the reverse exchange, it’s still a 1031, you’re just doing it in reverse. And what that means is that you’re closing on the replacement property before you have closed on the relinquish property. Now, when you’re doing a reverse exchange, the taxpayer cannot be entitled to both properties at the same time. So when somebody is considering a reverse exchange, I caution folks to make sure that they talk with a Qualified Intermediary, well in advance of getting themselves in a position where they can only do a reverse exchange, or that’s the only vehicle available because of the planning aspects of this. The challenge with the reverse exchange is where is the taxpayer getting the funds to buy the property because we as a qualified and immediate We do not provide the money, we merely provide a an entity where we’re physically going to go on title to the property. But the party doing the exchange needs to come up with the funds. If there’s a lender involved, it makes it very difficult in a reverse exchange, because the LLC that we create is going to be the borrower. And we’re going to require that the lender change language in their loan documents to accommodate us, and most lenders are not going to do that. So while the reverse exchange is available, more times than not, they’re not doable because of the circumstances surrounding the transaction itself. So if you can avoid a reverse, avoid a reverse. Okay, got it. Got it. Okay, great. So go on with what you were saying before I asked you about the reverse exchange, yet no problems once the property so you hopefully the individuals have engaged the Qualified Intermediary. The Qualified Intermediary is going to be communicating with whoever’s handling the closing of the sale property, we’re going to prepare documents, the documents are going to be signed by the parties doing the exchange, when the sale conclude so when the buyer brings in their funds, any closing costs, such as title Commission’s escrow transfer tax Qualified Intermediary fees, those are going to be taken out. If there’s any existing loans on the sale property that’s going to be paid off, then the balance of the cash will be wired directly to the Qualified Intermediary in an exchange rule number one, or should say Rule number two taxpayer cannot touch their funds that has to come to the Qualified Intermediary, right? So that also triggers the timeframe for the beginning of the exchange. Okay, so talk to us about those timeframes, 45 days and 190 days. That’s correct. But the 45 days is included in the hundred and 80 day period. And what’s important to also understand Jason is that when we’re talking about 45 180 days, they’re not business days, they are calendar days good to know good to know that easily in. And really, folks, these deadlines are very, very strict. The IRS is not gonna cut you slack for going a day over are they know there’s no reset, redo restart do overs. I sort

Jason Hartman 10:18
of wonder, though Do you know in the case of some natural disaster or something if they have, I mean, throughout history, they must have cut some slack a couple of times I met But no, maybe?

Dino Champagne 10:28
Yes, they have actually that’s why that’s one of the exceptions, Jason is that if you’re involved in a presidentially declared disaster, like the fires recently in California, yeah, if you’re involved in that, then you could potentially have an extension. But you already have to be in the exchange transaction. It’s not something that if your sale hasn’t closed, then you’re not going to get an extension because you haven’t, you’re not in the transaction in the exchange transaction itself. So there are times where you can have a nickel Tension based on a presidentially declared disaster. Okay, so I know the government shutdown is not a presidentially declared disaster, but yeah,

Jason Hartman 11:07
but it might be. Okay. So, you know, we kind of glossed over those numbers of days though, and you know, I refer to them but we didn’t really explained what they were one is the identity, what’s called the identification period. And then the other is the time in which you need to close the deal, right? So just go over those

Dino Champagne 11:28
real quick. So once the escrow closes, that starts the timeframe. You have 45 calendar days from the date of closing to identify any property or properties that you would like to acquire as the replacement property or properties in the exchange. After the 45 days, you have an additional 135 days to complete your purchase or purchases. So the exchange period from beginning to end is 100. Hundred and 80 calendar days. Very important understand that once you have identified and you are now past the 45th day, you cannot change that identification you can’t add or take away from any of the properties that you put in on that list. Right. But that’s the hard part. The part that does make that a little easier, not totally easy. They will not let you identify every property in the country, sadly, but you can identify more than you actually end up buying. Right? That is correct. Okay. Yeah. Okay, so there are three rules. in identifying you only get to choose one of the three. The most commonly used rule is the three property rule, where the taxpayer has the opportunity to identify three addresses. The dollar amount doesn’t matter. So if you’re selling for example, for $500,000, you might identify one property for 500,000, you might identify another one for 600,000, you might identify a third for 700,000, you can buy one of those three, two of the three, all three of the three, but you’re not required to buy all three properties, but you’re physically limited to three addresses. So what we see Jason for when people are selling, for example, out here in Southern California, and they’re going to different states where the price point is a lot lower. In that situation, they may be able to use the next rule, which is the 200% rule. Under the 200% rule, you can identify four or more properties. However, when you add up the fair market values of those properties, it cannot exceed 200% of your sale price. So if my sale price is 500,000, and identify five properties, then when I add up those five properties, they can’t be valued. More than a million dollars, and then I can buy whatever combination I need to make my exchange value. Okay?

Jason Hartman 14:07
No, do you know, you know, before you finish, can you just kind of put a bookmark as to where you were, you know, we didn’t get the beginnings tell the listeners, and I’m kind of sorry, we didn’t how incredibly significant This is. Let’s just pause for a minute and honor the huge significance of the 1031 exchange tax advantage because it’s a beautiful thing. So remember, you trade the properties, and you’re investing with pre tax capital. So all of your money gets to go back in the game. Can you share an example of how much that might mean to an investor because if you sell a business or a stock, or any other asset, you got to pay taxes on it, and then invest what’s left over, right with a 1031 tax deferred exchange. You get to reinvest the whole thing. eautiful beautiful,

Dino Champagne 14:59
but Do you have an example as to how much that tax might be? And if you could share that, that’d be great. Sure. In an example, where somebody might be selling a property for a million to that’s kind of the example I use, often 4,000,002. And let’s say that their gain on the sale of that property, because they’ve owned it for a very long time, might be $720,000. In that particular example, the taxpayer would be faced with a tax bill somewhere around 265 $66,000. That state and I’m talking when I say state, I’m talking referring to California, that state and federal taxes. So if the taxpayer had to earmark 200 and say 60, I’ll just use 65. For these. If they had an earmark $265,000 from the cash that they’re getting out of a transaction. That means that’s less money they have to put down on the replay. property. So let’s just say that they have 600 and $600,000 of cash. If they had the earmark to 65. For taxes, then that means they only have $335,000. If I can do the math in my head to put down on the next property. However, if you’re going to do an exchange, you can defer paying the tax both federal and state. So now I have the full $600,000 that I can put down on the next property. So that’s what we call the power of an exchange. I can do this until I pass away, I can exchange exchange exchange until I die, and then what happens then at that point, until the tax laws change, my heirs would inherit the property and they will get a full step up in basis on the property, which means they don’t have

Jason Hartman 16:51
to pay any tax because it’s now considered to be at the market value at time of death. Right?

Dino Champagne 16:56
That’s correct it they’re selling it closely. of the passing and the valuation of the property. But also what’s more important, is they’re not responsible for paying any of the tax. I’ve been deferring all the years ahead. So that taxes forgiven.

Jason Hartman 17:12
That’s just incredible income property is the most tax favored asset class in America by a long shot, isn’t it? Yes. Good stuff. Okay. Do you know back to what you were saying about the identification roll, if we’re

Dino Champagne 17:25
kind of done on that subject? Yeah, we just pretty much covered it. I mean, when you’re when you’re selling a high asset property and going into states where the values are going to be smaller or lower than you might be using the 200% rule, and you can use it very easily. As an example, I had a client that did an exchange out of California, they identified 20 properties, ended up buying about 15 of those properties, but they gave them some flexibility. We integrate one like that they sold a property, a highly appreciated property that they had inherited. It was in Orange County, California, and it sold For, I believe around two and a half million dollars. And I think when they came to our network, they bought 36 properties. So literally, their cash flow went through the roof. I mean, it was unbelievable. And they didn’t pay any tax, it was an exchange. So they, they got them all. I mean, just incredible, incredible opportunity. And that’s a fantastic example. And here’s something just to piggyback on that a little bit, is when somebody does something like that they bought 30 different properties, if they decided where they wanted to start incrementally cashing out for whatever reason, they when you sell the one property, you can just pay tax associated to that one property, not the other 29. So when you’re when you’re spreading your wealth around, if you will, you can at some point, incrementally cash out if need be, where if you just bought one property and you want you needed to cash out, you’d be paying all the tax. So there’s certain strategies to consider when you’re Selling investment property? What’s my exit strategy? What’s my game plan? Do I need cash flow? Maybe I need to cash something out at this point in time. So there’s a lot of strategies. And I know, Jason, that you sit down with the folks and you deal with all of that, and you help guide them through their investment strategy. So you’re a good team member for them?

Jason Hartman 19:19
Well, I hope so. And we certainly appreciate their business and we can really, really help them. It’s really amazing. I don’t think we finished the identification rules, did we the three,

Dino Champagne 19:28
the other rule would be the night yet the other rule would be the 95% rule, which is unlimited properties, unlimited dollar amounts, but you better be prepared to purchase all of your entire list. So you want to stay away from that rule, if at all possible to

Dino Champagne 19:44
my property, three property rule in the 200% rule. Okay, great.

Jason Hartman 19:48
So the problem can happen here, and I’m sure you’ve seen this at your company fairly often, where someone can’t close on all these properties, right? then something happens and that’s why you aren’t Identify more than you’re actually buying, right?

Dino Champagne 20:02
That’s correct. Yeah. You have a backup. Right? Exactly. Okay. All right, good. Exactly.

Jason Hartman 20:08
Whenever we trust some other person or institution with our money, we’re always at risk, aren’t we? Your world of exchange? accommodators is not very regulated, isn’t it? It really is it? I mean, I didn’t mean to say, isn’t it? There has probably been some scams over the years, haven’t there?

Dino Champagne 20:28
Well, regrettably, I should say regrettably. But our industry from a federal level is not regulated. There are certain states that do have regulations and the regulations vary from state to state. But regrettably, that’s what the regrettably part I want to come in. And there have been situations where a Qualified Intermediary is either lost the funds or ran away with the funds. So when you’re dealing with the Qualified Intermediary, sometimes I’ll get a question the first question on the phone call Bay, what’s your fee? The fee should be it’s a fair question. But it’s probably should be somewhere down the third or fourth questions that you might ask the Qualified Intermediary. The important thing about the Qualified Intermediary is what’s your security? Who backs you with the financial strength of of a larger company that backs you? How many of these have you done? Is this all you do? Are you an expert in this area in this area alone, because there are people that can anyone can be a 1031 qualified intermediaries, you put out the right paperwork, and you, you know, draft your own exchange documents. But that doesn’t mean that you’re keeping up with the tax law changes, it doesn’t mean that you have any financial backing. Jason, if you decided to set up your own q i, tomorrow, God forbid something happened to you what’s happening to the funds, what’s happening to the transactions you have going. So when you’re doing a 1031 you want to look to security funds, who backs them? How long have they been doing it? And what’s their expertise in the field itself? And are they keeping abreast of all the changes that may be coming down? I’ll court cases that you know that we can help the client to understand to have the conversations with whoever does their taxes.

Jason Hartman 22:09
Yeah. And it’s basically when someone sells their relinquished property, that money goes into your company’s account. You know, I remember years ago when I owned an escrow company, that was a tremendous responsibility that I really do not want to ever have again in my life. Because, because I, yeah, I had millions of dollars and you know, this account and, gosh, that just really makes you lose sleep at night. But, you know, if I was a crook, I mean, you know, people that escrow companies, they just run off with the money. Sometimes it’s happened. I mean, I know someone that had happened to and that money can just disappear. And that can happen with an exchange accommodator to Canada.

Dino Champagne 22:52
It can and has, but I just want to clarify something it doesn’t go into our operating account. Okay. As for asset preservation, right. But it takes us to

Jason Hartman 23:01
come. Yeah.

Dino Champagne 23:04
We’re definitely we are control of the funds but for the benefit of the taxpayers. So ultimately the is the taxpayers funds. But I just I just want to clarify it wasn’t going into operating funds. Okay. That’s

Jason Hartman 23:16
what I’m talking about the crooks, right. You know, that money. I mean, trust accounts have been commingled trust money has been stolen. It’s not something that’s unheard of. So be extremely careful with the exchange accommodator that you choose. Because this is a giant amount of money. Okay, you can have you sell one property and maybe there’s $500,000. In that account, maybe there’s two and a half million like and that story of our clients, you know, fortunately, nothing happened. You guys did their exchange and everything worked out great. But if there’s a crooked accommodator boy, let me tell you that could just ruin one’s life. I mean, it’s a giant

Dino Champagne 23:56
amount of money there, right? Yes, it is, and it’s however much money we’re holding. fund individual, it’s important for them so I may hold $100,000 for one person and 100 million for someone else. It’s all relative. Right? So

Jason Hartman 24:09
yeah, that is definitely, definitely well good to know. Okay, so, so be very careful. There’s a lot of fly by night companies out there so be careful of that with a new tax law, any big changes there

Dino Champagne 24:21
is a 1031 fortunately, we still have the 1031 for real property, the personal property and when I quote a qualify the term personal property or more capital occasionally, no more cattle no more horses, no more Ferrari’s or art, okay. So basically furnishings, fixtures, equipment, those types of things are no longer able to do a 1031. Sometimes when we say the 1031 for personal property is no longer available, people think about primary residence and that’s not the issue here. That’s a completely different tax code itself. So just basically real property. So if I’m working with somebody that’s doing an exchange For a hotel, for example, there’s going to be a combination of furnishings, fixtures and equipment along with the real property itself. And probably the business opportunity and goodwill. You know, at one point, you could do the exchange with the furnishings, fixtures and equipment, but you can no longer do that. So the allocation, you have to know what the value is of the real property, the bricks and sticks, if you will, that’s the portion that’s going to be doing the exchange. So in the tax new tax code, we still have the real property, the personal property was not a huge percentage of what we did in exchanges. Very few people do those, but in comparison to the real property side of things. So beyond that, you know, we’re pretty much we’re still good to go. Okay.

Jason Hartman 25:41
Let’s talk a little bit about opportunity zones for a moment. This is something that is way overhyped, if you ask me and basically what it does is it allows people to invest in these mostly blighted areas, not they’re not all that bad, but most of them are, then they can improve properties they are do very substantial improvements, spend a lot of money on upgrading these properties, and wait up to 10 years, sell the properties and be exempt from capital gains. Now, don’t quote me on this, I’m not a tax expert, which by the way is the disclaimer we should definitely make here. Neither Dino nor myself are tax advisors. Okay? So always seek out a competent professional in the field. We’re just giving you the concepts to go to them with but only opportunities own thing, they could just do a 1031 exchange, and probably have a much better result. I mean, to me the you know, that’s just for people who want to leave the game of real estate, which I don’t know why anyone would ever want to leave it But okay, what do you want to say about opportunities zones, and especially about these people out there promoting opportunities, own funds, you can’t exchange into them, right. So I don’t know. I just don’t know what the big deal is. I don’t think it’s a very great thing at all.

Dino Champagne 27:02
From a real estate perspective, if you’re selling real estate, the one thing you cannot do is you cannot exchange into an opportunity zone fund. It’s not doesn’t qualify as like kind property. The advantage and some of the information out there is very, I don’t want to say misleading, but the guidelines are still coming out on opportunity zones. So it’s important to make sure that if anybody is considering an opportunity zone fund that they definitely speak with their tax advisor to understand if they’re going to benefit from this or not, or if it’s something good for them to invest in. In the real estate perspective, you can’t exchange into it. Now, there’s some talk out there that is if you have a failed exchange, this is one way to not pay the tax. The one thing I want to say that there’s certain if you’re going to have a failed exchange and if you’re considering an opportunity zone, fun to put the game in which is a different What you have to do for an exchange, because in the exchange equation, you have to spend the game, let’s put the game plus the basis into the next property. With the opportunity zone. It’s only the game that gets invested into the fun. However, if somebody sells real estate or stocks or bonds, because as you mentioned earlier on the podcast, that stocks and such, there’s no deferral mechanism for that. So an opportunity zone fund might be something more in line for them because they would have to pay the tax anyway, which is completely different than a real estate investor who has the option for doing a 1031 tax deferred exchange. So if somebody has a failed exchange, and the exchange fails on day 46, which is one day test

Jason Hartman 28:47
for 45 days, right,

Dino Champagne 28:48
because now we can release the funds assuming they have no identified property, then they may if they chose to maybe put money into an opportunity zone fund. However, there’s Still going to end up having to pay the tax on that game. It’s just going to be 10 years later. And then any any growth in that opportunities, own fun, that’s not going to be taxed. But the game that was deferred or not taxed at the point will end up they’ll have to pay. So they’re going to need to save their money, or find out some way how they’re going to pay that tax when it comes do because it doesn’t go away. Right. And the other downside to the opportunity zone is if somebody invest in an opportunity zone, and they pass away, there’s no step up in basis. So opportunities own funds for folks that are certain age group probably is not a good investment for them in that regard. Because you have to hold it for 10 years. So if I’m 75 and I’ve got a 10 year hold on my 85 and I pass away at 84 my heirs are not going to get a step up and basis where in the real estate side of things they did

Jason Hartman 29:56
right you’d be much better off simply buying your properties with a 1031 exchange or not. And then when you want to cash out just if you want to get out of this properties, just do another 1031 or or pass away.

Dino Champagne 30:13
Well, that’s a permanent solution. It’s a good

Jason Hartman 30:15
one, it works really well. Listen, it’s gonna happen to everybody. You might as well just come to terms with it right where we all are, it’s going to happen all of us.

Dino Champagne 30:26
So without question

Jason Hartman 30:28
that opportunities own thing just forces you into these blighted areas, mostly, it’s got so many complex restrictions on it, I just don’t get it. I maybe I’m missing something. But I have gone around and round with this. I just don’t think it’s that great. I would easily be recommending it to investors if I thought it was and I reserve the right to change my mind, but so far, I haven’t.

Dino Champagne 30:53
Yeah, well, it’s definitely the new shiny toy on the shelf, that’s for sure a

Jason Hartman 30:59
few years ago. It was cryptocurrencies. And then you know, it was Airbnb. And so far, both of those have either flopped or are flopping. Okay. You know, I just don’t go for their shiny. I’m too old for that I used to. I used to be that way. And I just don’t chase shiny objects. And you know, I’ll tell you something Dino. This happened during the go zone. And I don’t know how many people listening or if you remember the go zone, right, that was hurricane affected areas in the Gulf Coast. And at the beginning, it was great, because the properties, they didn’t price in this artificial tax incentive. And at the beginning, we recommended and I bought a bunch of properties in the go zone. So did our clients. We recommended it because we like it. But the prices rose so quickly, because all of these promoters got out there promoting the tax benefits. And the deals just didn’t make any sense after a while. And so people were now overpaying for Tax Benefit, but that tax benefit was actually much better than this one. This one isn’t nearly as compelling as this, the go zone was, you know, and what I always say is, don’t let the tail wag the dog, don’t let the tax benefits determine what you should buy. Your deal needs to make economic sense before tax benefits, and then look at the tax benefit as the icing on

Dino Champagne 32:23
the cake at sound advice, and you didn’t address it, but I’ll bring it up is the one we’re talking about the opportunities on this is brand new. So if somebody is going to consider that you need to look at the I’m going to call it sponsor for lack of the proper term, probably, but whoever’s putting the fun together, that’s the spot you need to vet you need. Yeah, you need to vet the fund, you know, how long have they do? What’s their experience in real estate in development? Do they have the capability to deal with any public private issues that may come up in these opportunities zones, there are certain amount of time that you have to spend The money in order for this to be viable. So if somebody is putting their money there, they have to understand they’re not going to in most cases, they’re probably not going to get any cash flow for quite some time. So this is, you know, I don’t see this as a cash flow play, at least not immediately. So, you know, you want to vet the sponsor like you would do anything else. And there’s not a big track record and opportunities own. So make sure that whoever you may be considering doing this with had they done development before with with their background, and all of this was the financial backing. So just something a common sense. Yeah, absolutely. Right. Good, common sense. And you know, that goes back to commandment number three, thou shalt maintain control. That’s part of my 10 commandments. When you relinquish control to some kind of fund or pooled money investment, you might be investing with a crook. You might be investing with an idiot. Either way, you’re going to lose money. assuming they’re honest and competent. They take a giant management fee off the top for managing the deal. And the Those fees can be buried into those fun documents is absolutely astonishing to me. You know, there’s this little fee, that little fee, and those are the disclosed fees, the ones you don’t see that will call them the soft fees are, you know, well, you got to take everybody to dinner, and you’ve got to fly first class to go visit the properties and

Jason Hartman 34:23
or where you’ve got to have a corporate retreat so your team can think about it all and just

Dino Champagne 34:30
Yeah, well, I haven’t looked at a document. So I defer to your knowledge on that aspect of it.

Jason Hartman 34:36
It’s a general statement. I’m not talking about anyone promoter or sponsor. It’s just a job statement on funds in general and not even opportunities zones, just just a general comment, but do you know, this is always very enlightening. This is a wonderful tax advantage, the 1031 tax deferred exchange. You don’t need an opportunity zone. You just need a 1031 tax deferred exchange and in good quality properties. That’s what I would say. give out your website and tell people where they can find you.

Dino Champagne 35:04
Our website is a p i exchange.com. So A is an apple p isn’t paul i isn’t it and then the word exchange.com API exchange. com. Thank you so much for joining us today. My pleasure. Thank you for having me.

Jason Hartman 35:23
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