Dan Handford On Biggest Frustration with Capital Gains Tax

[Brett P Swarts]

Brett Swarts:

Welcome to the capital gains tax solutions podcast. This is an intro to our full podcast with Dan Handford. He is the founder of Multifamily investor nation and PassiveInvesting.com, Value add multifamily, mostly in North Carolina and South Carolina. And we're gonna have a full interview. But I have Dan here for just one question. And this is the question, Dan, what's the biggest frustration when it comes to capital gains tax referral for high net worth clients or partners or friends or family? For other assets, site types besides investment, real estate?

Dan Handford:

Well, like we said, on the podcast that we just did, it's one of those things where when you have a taxable event, whether you're selling a business, or you're selling some high-value stocks, whether it be cryptocurrency or something else, or you're selling real estate, and you have this big capital kind of tax gain event, then the biggest frustration is trying to figure out how can I keep as much that money in my pocket as possible for as long as possible. And so being able to have the ability to, you know, defer those taxes into a deferred sales trust, and things like that are really beneficial for you, as you're trying to walk those different steps and be able to figure out, how can you keep more money in your pocket as long as possible?

Brett Swarts:

Yeah, 100%, you know, the biggest thing we found is taking something that's let's say, illiquid and or not producing cash flow, right, such as like a cryptocurrency or such as a highly appreciated business that's maybe producing, you know, $500,000 of income, but you could sell it for maybe $15, you know, $15 million or $20 million, and someone else can come in and double that you capture all that value, or even a primary home when you get a deal in Palo Alto, but $8.3 million, these are a lot of times either non-cash flowing, producing properties or assets, or low return on equity assets. And so when you can capture that value, and take that either he called lazy money or dead money, right debt-equity, and then move it into value, add multifamily properties or other assets that are going to help you grow your wealth. That gives you more wealth, more freedom, more options, more diversification, by the way, more about that at www.capitalgainstaxsolutions.com. Any last thoughts on that, Dan?

Dan Handford:

Yeah, I was just gonna say I don't know any business that's only generating $500,000 in revenue, you're going to sell for $15 million. That's a pretty nice equity multiple, but I do understand the concept of trying to go to take that $500,000 and exit, maybe it's a 5-7x multiple, depending on the business, but definitely be able to kind of tap into that kind of debt-equity and put it into work for you. But to increase that cash flow.

Brett Swarts:

100% Yeah, that's probably not a good number for me on the 15 minutes for like a three and a half. You know, I'm trying to think I'm doing a deal right now. Actually, it's interesting. It's a just listen to property like today, it's a multifamily property, they have no basis, it's about a $2.6 million sale, they bought it for about $1.2. And, you know, they've run out of that depreciation and their cash one about $120,000 NOI per year. And so we did the simple math, we said, okay, 120, on about 2.6 gives you a return on equity, I think about 3%. And I'm saying if we capture that value, you know, put in the deferred sales trust, which is, which is the plan, and then go redeploy that we can probably increase your cash flow to about $50,000 to $60,000 per year, like immediately. And they're like, that makes sense. And we can get a new depreciation schedule if we do it active. So lots of ways to carve that out. The key is to get clarity on that, go to www.capitalgainstaxsolutions.com. Learn more about that. And for Dan, for those who want to get in touch with you learn more about multifamily investor nation and or investing. As an accredited investor, what's the best place for him to find you?

Dan Handford:

Sure, you can go to www.passiveinvesting.com and fill out the questionnaire there about joining our Passive Investor Club. And then one of our Investor Relations team will reach out to you to discuss your investment goals and see if you're the right fit for our group. And then if you want to join us on the Multifamily Investor Nation, you can go to www.multifamilyinvestornation.com, or go to www.mfinsummit.com to check out our event that we do twice a year. And if you want to just connect with me, you can go to linkwithdan.com that'll take you directly to my LinkedIn profile. You can connect with me there and follow some of the content that we're posting every regular, weekly, or monthly content.

Brett Swarts:

Beautiful. Thanks, Dan, and look for the full interview to drop section on YouTube right now. But it's gonna be on iTunes and we're talking about Dan's story. We're talking about deals talking about COVID-19 talking about collections, talking about the future of the real estate and investing. Also, you can create and preserve more wealth or help your clients do the same. Hey, appreciate you watching this short video. Thanks so much. Take care.

Learn more about Deferred Sales Trust
Visit: www.capitalgainstaxsolutions.com