1031 Exchange Explained: How Landlords Can Defer Taxes and Protect Their Real Estate Legacy

Steve Haskell (00:00)
Dude, I absolutely know what you mean. And here’s the answer. Complete transparency and leading with the I had a mentor of mine, I forget what she called, she said, like, call the babies ugly, right? If not every deal is perfect. And so upfront, we say our value isn’t pitching you the best deal. Our value is showing you where

where we believe any deal can lose you money. That’s how we lead. And so if you lead and say, so we’re going to show you the ugly first. That’s how we try to build trust, build rapport.

Cody Crabb (02:05)
Hello and welcome back to the Real Estate Pros podcast. I’m Cody Crabb with Investor Fuel. Today I’m joined by Steve Haskell, co-founder of Anchor1031. Steve helps landlords sell rental, multifamily and commercial properties through 1031 exchange into passive institutional quality real estate portfolios. So instead of staying stuck in active management forever, his clients can transition into diversified passive income without triggering a massive tax event. Steve, thanks so much for.

for joining us today, I really appreciate it.

Steve Haskell (02:35)
Yeah, absolutely, Cody. Thanks for having me. I’m excited to be here.

Cody Crabb (02:38)
⁓ So for starters, I’d love to hear a little bit about you, where you come from, why ⁓ you got into this business, just the works. Tell us about you.

Steve Haskell (02:47)
Yeah, sure. So ⁓ after college, I joined the military. was an officer in the Air Force, spent a lot of time in the joint special operation community, ⁓ better part of a decade there. And then coming out, I ⁓ joined a little investment firm with a good buddy of mine, just a couple of guys ⁓ doing the similar type process, similar type investments. And then we built it up when I left. We had about 50 ⁓ people on our team.

grossed up to making around place in about 600 million, I think was our highest when I departed annually. And then went and took over the ⁓ director of senior vice president of capital raising for another crowdfunding platform. And raised a bunch of money with them was in charge of a team there before they sold. And they sold off to a bigger ⁓ organization. And then at that point, ⁓

some of the sales team there and the IR reps, decided to spin off on our own and do things the way that we wanted to do it. So then we started Anchor1031. And at Anchor, we wanted to do a couple things different than what we were used to seeing in the industry. So the first thing is a focus on risk and education. When I was in the military and I was doing strategic planning, but also tactical planning.

for special operators, they’re SEALs, Rangers, Special Forces, ⁓ we didn’t talk about the upside. We all knew about the upside. We hyper-focused on what could go wrong and where all the points of risk were. And that’s really what we hunted for. That’s it. So it was a big culture shock for me when I came out into the investment field industry and everybody was just selling.

Hey, can I get, I want to get 6 % on this. I’m not looking at anything but 7 % and it blew me away. was like, this is people’s hard earned money, especially for 1031 exchange where people have had piece of real estate for 10, 20, 30, sometimes multiple generations. And then they’re selling it and then they don’t want to pay the taxes on it because they’re huge, sometimes 40%. So they’re looking for a 1031 exchange solution. And so we have them.

Cody Crabb (04:32)
Mm.

Steve Haskell (05:00)
And all of everyone in the industry is just like, hey, this is, you know, this is highly risk averse. This is, ⁓ you know, they’ve never lost money, all this, these different sales puffery. And I said, wait a minute, like, let’s focus on the things that can go wrong. And that’s kind of how I made my reputation and career.

it’s very difficult when you’re talking to someone that you met for the first time online, right? They say, what you got? And I say, well,

before I start pitching you deals, why don’t we go over some education and we can go over your criteria and what to look for? Then their next call they said, how about I get you 7 %? You know, that’s been a big obstacle to overcome. But I think the market’s starting to change because these investors are the same investors that got burned in 2008. And they’re the same investors that saw the market.

Cody Crabb (06:23)
Yeah.

Steve Haskell (06:37)
pulled back when the interest rates tripled and they realized that real estate doesn’t always go up. So they need to focus on the risk and that’s what we do. And so another aspect that I thought was strange about this industry was a lack of use of technology. And I think maybe part of that’s regulation, but you have this huge boom of AI that’s come down that we’ve completely embraced. So we’re using different AI agents to

⁓ take our due diligence teams products that they produce and analyze those on over a hundred different deals so that we can quickly process and learn and identify risk in all of these different ⁓ products and due diligence products and be able to communicate them quickly to our investors so they can build their criteria and know what they’re looking for. And also we have tools that put the power into our clients hands.

Like we have tax calculators, have portfolio builders, they were all able to put together with AI so they can build their own portfolios based on their own risk tolerance and investment criteria. That this stuff either was super expensive or not able to be done in the past. So it’s real exciting.

Cody Crabb (07:47)
Yeah, I’d be curious to know with the AI, with AI kind of everywhere, ⁓ know, people are really tempted just to use it in order to use it. You know, like it’s out there. Everyone says I need to hop on it. You know, in real estate, I would be curious, what do you see as ⁓ some good uses of AI? Because the more people I talk to, I feel like everyone kind of thinks differently on this. Some people are like just automate the boring stuff. Some people like automate the stuff that you

that you don’t have time for, automate the stuff that doesn’t make you money. So I’d be curious to know what your thoughts on that would be.

Steve Haskell (08:20)
So one, we’re trying to automate everything we possibly can. So that’s the first thing. And by doing that, and the team’s been pretty successful at it. So by doing that, we could spend more time one-on-one with our investors. So we’re able to ⁓ automate the backgrounds, how we’re organizing docs, how we’re reviewing deals, how we’re doing our website, how we’re doing our marketing.

Pretty much all that’s being automated. So we don’t need to necessarily hire third party vendors or hire marketing people, hire admin people to do all these things. And then we can also lower our fees now. As an early company, we can lower our fees in order to make more value to our investors. So we can pretty much be any of our competition for the most part, as far as value there.

Cody Crabb (08:57)
Mmm.

Steve Haskell (09:10)
Because we’re a skinny organization and we came in right at the right time a lot of our competitors They they have marketing people they have admin people they have large systems they bought buildings that offices that they have to pay rent on and They’re kind of stuck in this situation where we came out lean right when AI was exploding and took advantage of it So we are we’re super skinny with high margins and we can pass that value on to our investors

Cody Crabb (09:37)
So it kind of sounds like you’re, mean, correct me if I’m wrong, it kind of sounds like you’re using it as an intern. like just to kind of frame it for people that are trying to kind of get a better idea of what to use AI for. It sounds like, you know, use the AI to do the stuff that like the first pass stuff and then let’s free up any time that I use should be like the highest best use of my time at any time I possibly can do it. So I, yeah, I think that’s, I always kind of think that’s probably the way to do it is just.

Try to automate everything if you can, but if you…

Steve Haskell (10:06)
You know,

I think you’re right, but with a caveat. the caveat is, it is like an intern that is extremely smart that you can only have to tell them a couple of times and they learn. So you continue to prompt and you continue to educate and you educate your LLMs by DM files. You have to select what banks of knowledge you wanna give them and feed them.

But then you have to teach them how to learn and then you have to teach them how to correct themselves and then how to identify things that have gone wrong. And so they get better and better over time. And that’s kind what we do with our due diligence files. Right. So when we tab the education that our due diligence people put together, our teams, then we can. But we have 100 deals we have access to. So we quickly filter it. We’ve been educating it and training on how to prioritize the information so that we can ask it the right information and can give us answers.

And we go back and check them. And then if it’s wrong, we can retrain it over time. But what’s different is the creative. Like we’re able to generate creative that’s much beyond what a typically an intern can do. Right. Whether it’s pamphlets, brochures, educational material. I mean, the fact that we can put together a really high quality educational brochure in a day without having to use copywriters and creatives and upwork and whatever.

Cody Crabb (11:09)
Mm. Yeah.

stock photos. I yeah, it’s crazy. Yeah, there’s a million things like that. So I think, yeah, I think you’re absolutely right there. ⁓ One question I’d have for you specifically, ⁓ because you deal with 1031 ⁓ exchanges so much, ⁓ what’s something that you kind of deal with that maybe somebody that doesn’t have to deal with 1031s, ⁓ what do you see that maybe some of our other investors might not see?

Steve Haskell (11:25)
Like that part’s pretty amazing. Yeah.

So there’s a lot of nuances with 1031 exchanges that you need to be aware of. So there’s all kinds of, there’s IRS rules, like how you can identify properties, how you record that. There’s from the time that you close on a property, how long do you have to identify? How long do you have to close on the replacement properties? Right? How the financing’s built in, all these different aspects. then, so there’s the 1031 itself.

that takes a lot of education to make sure that you comply with IRS rulings. But then there’s different products that you can buy. The Delaware Statutory Trust is what we primarily use. It’s a structure and entity that holds title to real estate. So our clients can buy a fractional piece of a Walmart or a fractional piece of a multifamily building or a fractional piece of a self storage unit or raw land or a Marina or, you know, industrial park.

Cody Crabb (12:58)
Mm.

Steve Haskell (13:21)
Right? So then we could put together a portfolio. We can take $500,000 and $100,000 will place into each one of those properties. So they’re diversified by asset type, asset class, and geography. Right? So, and then they get different cash flows, different risk profiles. So they have a nice little kind of like a, a little bit kind of like a REIT, right? That’s putting passive income into their, into their pocket.

Now the same risks apply as any real estate and that’s why you need to have a good education and understand where to look to find that risk. And then there’s risk, you know, in the structure of the DST that a property on your own might not have. ⁓ And then different asset types have different risks and different risk profiles at different stages in the real estate cycle. So these are all things that we educate our clients on that they need to be aware of when they do a 1031 exchange. Or maybe…

Cody Crabb (14:15)
So,

yeah, go ahead.

Steve Haskell (14:16)
They want a different structure, like a tick, tenets in common. That’s a whole different education process that we take our clients through.

Cody Crabb (14:22)
So what’s your process of finding the ideal situation for somebody and what would be best for them and what their goals are?

Steve Haskell (14:30)
Yeah, good question. So we like to start talking to our clients months ahead of time because we want to spend time with them, understand what their history is, understand what ⁓ their investment experience is, understand what their goals are. If they’re trying to replace their W-2 income, they want overall return and growth or just asset preservation because they want to give something to the kids, right? And they’re just fine, they don’t need it.

⁓ Everyone’s got a different ⁓ risk profile, different buying criteria that we have to understand. And some people don’t know because they don’t know what’s out there. They just inherited this property 20 years ago and it’s been fine and they need to get rid of it. And different people have different goals of what they want to do with that money. So we have to understand what that is by spending time with them. And then sometimes it doesn’t come out until you educate them on all their options.

then the criteria starts coming out and that takes time.

Cody Crabb (15:27)
Yeah, and I imagine they’d have to there’s a level of trust you have to achieve to to get the real kind of the why behind what they’re saying. And if this is your goal, then it seems like your goal is actually this like that kind of stuff doesn’t really come out. unless you’ve really got that trust, which I feel like this is like you’re you’re you’re providing a service for people that are like they really need it. They’re like, I need to do this. So I feel like people.

Steve Haskell (15:51)
right

Cody Crabb (15:55)
I feel like that would be a tough spot to be in. You kind of have to right away start to build trust because they’re trusting you with a lot of ⁓ big decisions.

Steve Haskell (16:03)
Yeah, it’s true. mean, back when we were ⁓ doing mission planning, military is like, you know, it’s lives that you’re looking out for, right? And now it’s people’s legacies and inheritances. It’s ⁓ different, but it’s still really important. And that’s why we take it super serious. And that’s why we focus on the risk and not just pitching deals.

Cody Crabb (16:23)
So ⁓ how do you kind of handle that balance between, you know, the whole, I had guest one time that called it commission breath. like, they can smell it on you. So like, how do you avoid the best case for the customer scenario that’s, I understand like that’s what most people want is to give the customer what they need, but kind of how do you balance that pull of, you know, we’ll make more money this way or do you know what I mean?

Steve Haskell (16:45)
Yeah.

Dude, I absolutely know what you mean. And here’s the answer. Complete transparency and leading with the risk. I had a mentor of mine, I forget what she called, she said, like, call the babies ugly, right? If not every deal is perfect. And so upfront, we say our value isn’t pitching you the best deal. Our value is showing you where

where we believe any deal can lose you money. That’s how we lead. And so if you lead and say, so we’re going to show you the ugly first. That’s how we try to build trust, build rapport.

And then like if they go talk to somebody else, you know, and they bring a portfolio we put together to somebody else, they can shoot holes in it because we already did.

Cody Crabb (18:14)
So let’s say ⁓ we probably have a lot of future customers for you on this show. ⁓ I would be curious to know who, ⁓ you know, what can people start to do early on to build a little bit of a like foundation so that they can kind of prepare for something like this in the future?

Steve Haskell (18:33)
Well, right now, mean, there’s so much information online that they can go and review. But you got to make sure that you review a lot because there’s some incorrect information out there because 1031 exchange is really lucrative right now. Capital raising in general is difficult, but people are still exchanging. So a lot of folks are trying to jump on the gravy train and get into the 1031 exchange market because they’re not doing well at what they’re doing.

So, and then when they do that, they’re new, they don’t completely understand the process, financial advisors jumping into it. ⁓ They don’t understand DST, so they try to get the sponsors on the phone to explain it, but then they just end up selling, right? They’re not really educating. And so there’s some bad information out there. So talk to a lot of people, get different perspectives, and of course go on our website, anchor1031.com. We have tons of educational material there.

Cody Crabb (19:01)
Mm.

Mm. Yeah.

Steve Haskell (19:30)
We have ⁓ a portfolio builder that they can go play with their own information. They don’t even need to talk to us if they’re not ready for it. Tax calculators out there so they can get a general idea. They should always talk to their own CPA, their own tax advisor, but we can get them models and give them the questions to ask. So all safety, you don’t have to worry about a salesperson chasing them down.

Cody Crabb (19:54)
Yeah, I’m definitely like an introvert in that way where if it’s like like if I click on a software or something It’s like ⁓ let’s see how much this plan costs and it’s like call us to make an appointment I’m like, I’m not no, sorry, it’s not gonna happen So I always appreciate when someone’s willing to be like here’s some stuff that you don’t need to talk to someone for ⁓ So yeah, I think a lot of people will really like that just even just out of curiosity to say like what might my plans be in the future? You know if you kind of start playing with some some different options, I think

Steve Haskell (20:05)
See ya. Sure.

Cody Crabb (20:23)
Knowing what’s on the table, think, is really important.

Steve Haskell (20:26)
Yeah, I think ⁓ and it’s we’d love to talk to people away in advance, oftentimes a year in advance. And that’s great because there’s no pressure, right? We can’t, we can’t pressure you to go with us if you don’t have a sale coming for a year, but we’re happy to give our time. We’re happy to start educating you. We’re happy to give you information and the right questions to ask so you can start your due diligence journey. And we’re hoping that we provide you with ⁓

an enjoyable experience so that eventually you’ll want to come back to us.

Cody Crabb (20:55)
Awesome. So once again, can you give that website out one more time for people that want to check you out?

Steve Haskell (21:00)
Yeah, absolutely. www.anchor1031.com. It’s like an anchor, like a sailboat anchor.

Cody Crabb (21:06)
Awesome. Well, thank you so much. think people are gonna get a lot out of this. think there’s something to be said for ⁓ kind of just always be learning. And if there’s a new thing that you don’t know a whole lot about, it might be the perfect solution to something that you’ve been facing. try to learn about it. That’s one of the reasons I love having guests from all ⁓ kinds of avenues, because we get tons of diverse information on here. So.

Steve, thank you so much for joining us today. And audience, thank you so much too. If you like what you heard today, go ahead and give us a like, subscribe, follow all the things, and don’t forget to listen to the next episode so you don’t miss more awesome conversations like this. Steve, it’s been a pleasure. Thank you. Thanks so much for your time today.

Steve Haskell (21:47)
All right, thank you, Cody.

Take care.