Turn Trash Into Tax Cash: How Deconstruction Creates Hidden Value in Real Estate

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Show Summary

In this episode of the Real Estate Pros podcast, host Q Edmonds interviews Kyle Fitzgerald, a seasoned expert in redevelopment and demolition. Kyle shares his journey from childhood experiences in construction to his current focus on deconstruction and tax strategies that benefit both developers and the community. He emphasizes the importance of resilience in real estate, discusses challenges he’s faced, and highlights his commitment to community investment and personal growth.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Kyle Fitzgerald’s Instagram
    • Kyle Fitzgerald’s Email: [email protected]
    • Kyle Fitzgerald’s Phone Number: (563) 542-6867

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Kyle FitzGerald (00:00)
  We’re still going to give you a clean, flat surface to build your new home, but we’re going to donate all these materials. We’re going to pull every nail. We’re going to take the fireplace mantles, the wood flooring.

  Every floor joist is gonna be donated and documented. And the appraiser that comes through and puts a value on the building says, this building’s worth,

  Every component in that building that can be reused.

  their pocketbook just doubled because no longer did they just pay us to do the work. They got a ⁓ huge tax incentive.

  Quentin (00:23)

  everyone. Welcome to the Real Estate Pros podcast. I am your host, Q Edmonds. Excited about my guests. I got a guest on here who’s going to, man, you in, let you into some valuable nuggets, especially when it comes to redevelopment and demolition, right? Did you guys know there’s a tax model that can actually help you out when you’re doing this development and maybe put you a little ahead?

  Then behind, listen, I’m not the expert here, but my man is, and he is about to give you some nuggets now. Listen, he is controlling the information that he gives you, so I don’t know how much free gaming he will give you, but I do know that what he’s gonna tell you is really gonna help out, and you’re gonna really, really like his lens. So I have to introduce you guys to Mr. Kyle Fitzgerald. Mr. Kyle, how you doing today,

  Kyle FitzGerald (02:55)
  I’m Great Q. Thanks for the intro and thanks for having me on. I appreciate it. It’s exciting.

  Quentin (03:00)
  No, absolutely

  man. Listen, I thank you for being here and listen, I want to dive right in because sir, you are a wealth of knowledge. I love what your business is doing. And so take us into your world. Tell us what your main focus is these days. Maybe tell us what markets you’re operating in. If you want to go into a little bit of how you got started, man, I just want you to take us into the world of Kyle. So please take our viewers into your world brother.

  Kyle FitzGerald (03:25)
  Awesome. Sounds good. ⁓ Where I got started, guess, young kid watching my dad in a small town. He’s from Oak Park, Illinois. So

  my parents grew up in kind of an interesting area with a lot of historic buildings. Frank Lloyd Wright had a lot of stuff there, but like really just people who appreciated some of this, you know, ⁓ gorgeous architecture. And they moved to a small town of 600 people in Lansing, Iowa, Northeast corner of Iowa, the most incredible driftless region.

  beautiful part of the country that it’s really misunderstood. Iowa, people think cornfields and flat land. It’s actually, this is like being in the Interondex. It’s gorgeous with this Mississippi River running through. ⁓ So they saw value in these incredible properties. My dad was a painter and a contractor and restored buildings. So early on I saw what work meant. He instilled a work ethic in me that was one that I couldn’t shake. ⁓

  So basically I started ripping apart buildings. You know, I was filling buckets with plaster and lath and you know, at a young age, wearing a dust mask and just going after it. so demolition has always been in my blood, but then putting it all back together to restoration, seeing the final product of these gorgeous restorations. And a lot of times in this case, historic restorations that were done delicately. But we lived in a small town. There wasn’t a Home Depot right down the street. The lumber yard was there, but it was, you know, not.

  fully stocked. So I saw the value in saving everything down to like, literally, I’m not gonna joke that straightening a nail, like pounding a nail straight after you pulled it out to repound it back in. So that sounds crazy to me right now, even to say that, but

  Quentin (04:58)
  Yeah.

  Kyle FitzGerald (05:55)
  got really keenly aware of where the value was in materials. And then from there, I went and worked for a developer in Iowa city when I was at school at Iowa and

  I was raiding the dumpsters. They were throwing out perfectly good stuff. And I was like, no, I’m putting that in my truck and taking it home. And I would have garage sales at my own home on the weekends in Iowa city. And I’d make four or $5,000. I’m not joking. Something got scratched or dented with a crown molding. There was 13 extra sticks that were 14 foot long. I’d haul them home and I’d sell them for, you know, 30 bucks a piece or whatever it was, which was half the cost that they were.

  But as a developer, when you’re cruising building 12 plexes and big luxury homes, you don’t have time or a place to store that crap. So I started in that area, that reconstruction and reuse. And that really led me into this whole idea of what’s an old growth piece of lumber worth. You somebody said, Hey, I’m going to tear down this barn. Do you want it? I’m like, absolutely. You know, so me and some boys showed up with, you know, crowbars and hammers and a sawzall back in a generator because we didn’t have cordless tools.

  Quentin (06:39)
  Thank

  Wow. ⁓

  Kyle FitzGerald (07:02)
  back then that we do now. And we’d cut that burn up and we made $25,000 in a weekend,

  taking barn boards, pulling the nails, putting the time in, restacking the material. And we get a call from a guy that says, I’ll buy all of that. And so right then it was like, pow, like people are missing the boat here. Like, what are you doing? You’re throwing money in the dumpster. But I totally get it. Cause if you’re a contractor or a developer, that’s just shit in your way.

  Quentin (07:17)
  Mm.

  you

  Kyle FitzGerald (07:32)
  That stuff, it’s not serving your goal. You’re going to make your turn on building the new building. So it doesn’t fit into their value prop. And then I’ll fast forward even further, like after college, coming back to Dubuque, Iowa, working in historic redevelopment and some big projects. I met a guy named Ken Ortiz in Chicago, Illinois. And we actually trained like 27 people on deconstruction, this concept of taking buildings down by hand.

  Quentin (07:39)
  Yeah.

  Kyle FitzGerald (07:58)
  crazy to most people, most contractors to this day, even excavators and friends of mine, they’re like, you guys are nuts. But when then you show them you’re holding $10,000 cash for taking all the old wood out of a building and selling it to a guy who’s down in Arizona and he’s selling this stuff for triple what I sold it to him for. They’re like, ⁓ maybe there is some sense to that. And now they just call me and they say, yeah, can you get this stuff out of here? I don’t work for free anymore. I charge for that service. ⁓

  know, fast forward, skipping through a lot of this stuff, we identified a tax, I wouldn’t call it a loophole, it’s a tax strategy for involving 501c3 nonprofits that specialize in taking good valuable building materials and kicking them back out into the, they sell them, so into the network. So we have partners that also do appraisals. So imagine, you know,

  Quentin (08:50)
  Yeah.

  Kyle FitzGerald (08:58)
  a high-end home on the North Shore of Chicago, lakefront property, that people just bought it for a million, and they don’t love it. And they went through it with their architects, their designers. Yeah, they could gut the kitchen and redesign it the way they wanted it, but they really just want a new cube to live in. So they’re gonna smash the house. They call their contractor, the contractor says, it’s gonna be 187,000 to smash the house.

  Quentin (09:08)
  Hmm.

  Kyle FitzGerald (09:26)
  Okay, cool. What do they get? They get a clean slate to build their new home. Fine. Well, they call us and we’re like, yeah, it’s going to be almost double that. Maybe sometimes competitive, but it’s going to be more than the demolition of just straight demolishing. But here’s the kicker.

  still going to give you a clean, flat surface to build your new home, but we’re going to donate all these materials. We’re going to pull every nail. We’re going to take the fireplace mantles, the wood flooring. We’re literally pulling up every wood floor, pulling the nails out of trim.

  taking every door, every sink, every sub-zero, wolf range, whatever, some of them have really great stuff.

  Every floor joist is gonna be donated and documented. And the appraiser that comes through and puts a value on the building says, this building’s worth, we’ll use an example, and I shouldn’t quote numbers, but in the case of a really high-end home that they just bought for a million, it doesn’t matter what it bought for, it doesn’t matter what your appraiser of real estate says.

  These people are appraising the of every board, every component in that building that can be reused. And we come in with a team and spend the labor to get it all taken to a nonprofit. So now a donation valued at a significant value is donated from the property owner to a 501C3. They fill out the proper paperwork. And now that homeowner

  Quentin (11:12)
  Mmm.

  Kyle FitzGerald (11:25)
  know, feels good that they did the right thing and kept these things from getting plunged into a landfill. And that always feels fuzzy, but their pocketbook just doubled because no longer did they just pay us to do the work. They got a ⁓ huge tax incentive.

  Quentin (11:31)
  Thank

  Kyle FitzGerald (11:40)
  They’re high earners, you know, and their tax basis just was deleted for the next, however long, depending on their situation. ⁓ you know, it’s such a great model. Nobody knows about this. Very few do. Those that do,

  Quentin (11:44)
  Mm.

  Kyle FitzGerald (11:54)
  They’re using it. We’ve got, we’ve grown contractors. We’ve, I’ve trained people on how to do proper deconstruction because there’s an art to it, you know, and to doing it right into capitalizing and maximizing. And sometimes, sometimes it’s not worth doing the full deconstruction. Sometimes it’s worth just the hybrid. We’re going to come in and we’re going to get the simple lowest hanging fruit to get you the highest value, keep things out of the landfill, but keep your costs down. It’s a, it’s a balance of figuring it out.

  Quentin (12:01)
  you

  Yeah.

  Mm-hmm.

  Kyle FitzGerald (12:25)
  So that’s, think one of the coolest things we do that’s, you my bread and butter, but I’m a huge fanatic for historic restoration. I see value in buildings that are just being smashed. We’ve even done, you know, contractors that are demolition contractors tearing down, ⁓ if you’ve ever driven on the interstate and you see these large tall walls that separate the interstate noise from the neighborhood directly behind it. ⁓ One time in the Chicagoland area, this wall was built out of ⁓

  Quentin (12:48)
  sir.

  Kyle FitzGerald (12:55)
  what they call ironwood or a Zobi. It’s a really high density, incredible lumber, ⁓ better than treated lumber, like a teak almost. And they were replacing it with a concrete wall. So the contractor’s like, got all this wood to get rid of, who’s gonna take it? We went and got him a multimillion dollar donation. So the contractor’s making hundreds of thousands, if not millions a year in profit. And he’s gonna have to pay Uncle Sam that.

  Quentin (12:58)
  and

  Kyle FitzGerald (13:23)
  but he took ownership of this material. We had a value given to that material that was unbelievable. And he was able to capture that value by donating it to us. I became the guy that came to contractor. There’s a lot of parts that need to be solved in that mess, but that’s what my specialty is, is taking very complex things and making them simple. ⁓ Even though maybe if you’ve listened to me for the last five minute rant, you’re like, is, it’s too much. I do that to people.

  But we solve problems in real estate through uncovering hidden value. I that’s really the simplicity of what we do is I identify the value, I find the best way to get it most efficiently, and I help people capture the value rather than dump it in the landfill.

  Quentin (13:51)
  What?

  Absolutely. Now, man, I’ve been told that I track very well. So, sir, no, everything you said was succinct. made sense. And it’s actually incredible. I’ll be honest with you. I’ve been doing podcasts, you know, a lot. This is first time I’m hearing about this. And so, man, you talk about these donations to the 501C3, the materials, your praise are coming in, making sure you get the exact amount that you’re supposed to get and you taking that and donating it and then you get the tux right off. I mean, that’s amazing, man. And so…

  I know we’ve been talking and you’ve been saying, you you got a lot that’s going on. You are doing a lot of different things. So what keeps you kind of structured? Like what’s been the key to keeping you running smoothly and that machine that you have running smoothly.

  Kyle FitzGerald (14:57)
  I think that’s the question my wife’s asking too.

  I don’t know. I think it’s tricky because I have a lot of interests. I love real estate. I’m doing personally, I’m doing some redevelopment projects myself and I’ve got those things. Those things actually drain you. You you get long-term equity, but I think what keeps me structured, I’m going to be absolutely honest with you. Like I have a very strict routine. do, I do coaching as well. I only have four people that I work with at a time.

  But I do personal coaching and resilience training for people. And if I’m looking at it in my book, this is an incredible, incredible guy, Joe Ticino, but he’s one of my mentors. exercise, working out, but every single morning people think I’m nuts. I get into an ice bath and I pray and I meditate and I center for my day. I’ve diagnosed as having ADHD, all that crap. It’s all BS.

  doing breath work, doing cold plunges and getting yourself fit in whatever way that means, getting spiritually fit, that’s my key to everything. I’m not always on point. I am probably one of the most disciplined and least disciplined people at the same time. But knowing myself, doing self personal growth, really understanding who I am and how I operate and trying to continue to like take micro steps towards being a little more disciplined is helpful because

  Quentin (16:52)
  Catch you.

  Kyle FitzGerald (17:04)
  anybody who’s listening to this, if you’re a real estate investor, you’ve been kicked in the teeth. And if you haven’t, wait, you’re gonna get kicked into the teeth. I can’t wait for you to get just knocked down because it happens. And if you can’t get back up from that, you’re done. You may as well just go dig your six foot hole and jump in because this is not for the faint of heart. So you’ve got to build a solid basis of resilience. And I truly believe that and

  I’ve been fortunate to have a lot of adversity in my life. And ever since I started, you know, doing cold plunges, ⁓ it’s been catching on. People are all raving about it and things like that. And it’s great. It’s great that it is, but it’s become almost like a fad. I stick with it. know, faith and exercise and just commitment to yourself. You have to do it. It sounds selfish, but it’s the most selfless thing you can do is know yourself and dig deep. know, my quote, I guess my slogan is,

  draw deep and rise strong, you know, and that’s what you gotta do. You gotta draw deep and you can rise strong. But you asked and I guess that’s my big answer for that. It’s powerful, so.

  Quentin (18:14)
  Nah, it’s definitely powerful. We are on the same page. I understand. You you and I was talking, told you right before you and I got on, I was talking to my life coach and we were talking about being present. And one of the things that you said, you said discipline and then least discipline. The thing is being aware, being aware of who you are, being aware of where your strengths are, where your weaknesses are. Cause when you are aware, then your mind changes around the way you operate and attack it. And so it makes all the sense in the world.

  know people that do the cold plunges and ice baths in the morning. So brother, I hear you loud and clear. Loud and clear, yeah, man. So let me ask you this. And I love to get this from your perspective. Operators, things go wrong all the time. Things get real, right? Maybe deals go sideways, or you have to pivot fast. And so within your world,

  Kyle FitzGerald (18:51)
  Good to hear.

  Yep.

  Quentin (19:10)
  Are there moments where you have to pivot fast, moment where you kind of got to think on your feet and restructure a deal or I’m not even sure if we call it a deal when you world, but have you had any moments like that? You picking up what I mean?

  Kyle FitzGerald (19:24)
  I don’t even want to talk about it because I’m in one right now. ⁓ I made a very, I don’t want to take full accountability for it. And that’s against the grain of what I like to teach is like, you have to take accountability. My part is big. I trusted someone who was selling me a property that my initial, and I thought I would, was seeing what I was seeing.

  Quentin (19:27)
  Ooh. Okay.

  Kyle FitzGerald (19:49)
  The diligence wasn’t done. didn’t do enough due diligence on a large commercial purchase and it came and kicked me in the teeth. ⁓ It was an older building. needed everything. City codes had changed. Everything went wrong if it could have gone wrong. And a lot of it was because the previous owner knew of these problems and they hid them ⁓ and presented it as, look, it’s got brand new PEX tubing. Everything’s been done. New water heaters, HVAC. This is a great building. It’s turnkey.

  Well, Turnkey became full gut rehab of a building. And anyone who understands this industry knows that if you were planning to just move people in and it turned into an entire gut rehab, new windows, new roofs, new everything, because once you start doing work, like you don’t just like, well, we’re not going to know. You have to do the full mechanicals, the full, you know, from the ground up. And in that case, it was a full gut rehab. That stuck me big, you know? And so.

  Quentin (20:47)
  Yeah.

  Kyle FitzGerald (20:49)
  I guess it was there. I fought with it for a while and I was angry at myself, didn’t forgive myself, was very ashamed of myself for making that kind of mistake. And the more I just accepted it and I even sued the person that sold it to me because ⁓ they didn’t operate in good faith there and they in fact hid things, but that’s an ongoing lawsuit. So we’ll see what happens with that. I’m not trying to kill them, but I want something back from what I’ve had to go through there.

  Quentin (21:14)
  Yeah.

  Kyle FitzGerald (21:19)
  I got saved by the opportunity that we have like some really great groups. have to hunt, have to go talk to your bank, you have to own your stuff. And the only way out of it is through it. And I’m still working through it, but we’re going to get through it. And those are, those are the kinds of things that especially in a changing environment, interest rates are higher now. It became really unforgiving and I’m thankful for it. I’m grateful for it. It’s taught me a lot, you know?

  Quentin (21:29)
  Yeah.

  Yeah, yeah,

  yeah. Man, see, talking to someone like you that has the perspective that you have and the way that you discipline yourself, you know what to take responsibility for, but then also making sure you give responsibility sometimes back to the person that it’s supposed to be on at the same time. So I’ll take responsibility for my part, but actually you’re going to take responsibility for your part too. Even if I got to sue your ASS, you know what I’m saying? Like, you’re going to take some of the responsibility back too, so.

  Man, I listen and I love just seeing your perspective, the way you walk through scenarios personally and in business. And with that being said, I want to ask you your perspective about this. What did you most focus on solving or scaling next? Like Kyle, what’s the next real goal for you, sir?

  Kyle FitzGerald (22:18)
  Thanks.

  You know, it’s interesting. I think that the scaling piece, just, love the community I live in Dubuque, Iowa. It’s a Midwest town. It’s right in the Mississippi river. There’s so much happening in this community. And it’s a community you can get your hands around. I can’t go to the grocery store without knowing four or five people, you know, and there’s five or six grocery stores in this town. They’re big, you know, but I just, love people. So I see people everywhere.

  I see that there are so many interesting projects going on in this town and they’re all kind of happening in their own little silos and we need to connect those people. We’ve got an incredible group of companies here that have really supported and stuck around and kept this area alive ⁓ financially and they could go invest in other communities. But I think seeing their commitment investment.

  allows small developers like myself. And I’ve got some friends who we’ve kind of adopted this thing called the central corridor. And it’s a group of buildings that are two to three story high buildings, all built facing each other, like 1880s era, incredible historic buildings. When people put their name on the top of the building, know, P Klein building and whatever else. And there was so much pride and sense of place in the way they built these ornate cornices, Victorian era stuff, you know.

  Quentin (23:44)
  Yeah.

  Kyle FitzGerald (23:48)
  And I think that that seeing that chunk of talent, has been seen so much disinvestment, seeing it slowly turn and it’s a longer play. I’m excited about investing in that and being invested in that. I’ve got probably a million plus invested in just a few buildings in that little corridor. But some of the most powerful work I’ve ever done is not work that has turned huge profits. It’s

  Quentin (24:09)
  Yeah.

  Kyle FitzGerald (24:16)
  giving back to a community and seeing it grow. I mean, I invested in my wife’s nonprofit. She had a dream to help people and she’s a music therapist and she started, you know, the fastest growing nonprofit organization that’s healing people from the inside out through music. It’s beautiful. And she’s got an incredible team. So like that sits in my heart as one of my greatest accomplishments by paving the way I went ahead and bought her a building, renovated it and real estate got me there. So.

  Quentin (24:19)
  Yeah.

  Mm.

  Kyle FitzGerald (24:44)
  anyone who’s listening to this that understands like real estate is a tool and it’s the most incredible investment mechanism I’ve ever had. I own some Apple stock. I own different Nvidia. I own stocks and I own some mutual funds and things, but those don’t, I don’t have any control over those. You know, I don’t work in company. Real estate, I can control. I can choose the tenants. I can choose if I’m going to renovate or redevelop or reconfigure the property. I have ways. ⁓

  Quentin (25:01)
  Yeah.

  Kyle FitzGerald (25:12)
  to maneuver it, so I have a sense of control with that. And that’s why I want to continue to build in real estate. I’m kind of reinvigorated to do that, but also coaching people who need the help. I mean, there’s some incredible people who have the dollars and the sense to do this. They just don’t have somebody willing to walk with them with their hand on the seat while they learn to pedal and balance. And so that’s where I like to play a role. That’s the most forgiving, fulfilling part for me is forgiving people.

  Quentin (25:37)
  Thanks, everyone.

  Kyle FitzGerald (25:42)
  strength through really just confidence, helping them build confidence in industry.

  Quentin (25:46)
  Yeah.

  Yeah. Well, listen, man, we, you hit on it about connections like you and I, we said it both, we’re both connectors. And so you are connected. And so I love hearing you talk about your relationship with people, connecting with people in your community. This central, I think the central corridor that you talked about, like really making sure that you reinvigorate just the places that you’re in. so.

  I love it, man. I love how you’re connecting with people. I love what you’re doing with your wife. I love that nonprofit that your wife has. mean, totally amazing, man. It’s just, I can honestly see your passion and your through line with connecting and helping and building things that’s sustainable and really helping people come through. So Kyle, man, this has been, yeah, man, this has been a 100 % pleasure, brother. It really has. And I want to ask you this before we wrap, man, if someone wanted to reach out with, reach out to you,

  Kyle FitzGerald (26:32)
  I it.

  Quentin (26:43)
  connect with you, or maybe even collaborate or learn more about what you’re doing, what’s the best way for them to reach out to you,

  Kyle FitzGerald (26:50)
  Good luck. We talked about my ADHD. No, I’m just kidding. To be quite honest, ⁓ when I had a large company with employees and all that stuff, I had a website and all this. I’ve shut a lot of that down. I want fewer ways to connect with me. My cell phone number is 563-542-6867. I do answer calls and texts, and I’m not afraid to share my personal number. ⁓ But, you know,

  I have an email address, kyle, K-Y-L-E, at wearereuse.com. So the website’s no longer active, but that’s my email. So wearereuse.com. And my name is Kyle, so Kyle at, I keep it simple. I’m on Instagram. I think it’s Coach Kyle Fitzgerald on Instagram. And then, ⁓

  know, Facebook, you can always find people and things like that. I post about a number of things because I’m a passionate writer as well. So I like to do things in that regard, but really, yeah, social media, you’ll find me. If you want me, find me. That’s how it works, you know.

  Quentin (27:54)
  Yeah,

  yeah. Now I love it, man. I’m say this in closing. One of my favorite, well, I can’t say one of my favorite books, but a book that has impacted me a lot is a book called Essentialism. And when you are essential about your life, you know what to say hell yes to, what to say hell no to. And so, I really admire your essentialism. You’ve scaled back on some stuff, scaled back on employees, scaled back even on the way you can be reached. And it shows me just how essential you are.

  and how you focus on the thing that matters. so, man, I really appreciate you being here today. I appreciate your story, your time, your passion. This has been great, man. So Kyle, thank you again, sir.

  Kyle FitzGerald (28:34)
  Hugh, thank you. This is wonderful for what you guys are doing here. And I think this is the epitome of connecting people, small glips of stories of what people do, you know. I think, yeah, I don’t want, I wish I could duplicate myself and build an army of consultants that are going to go and find, you know, all these reuse opportunities out there and connect me to these big timber frame projects. But I’m a dad, I’m a father, I’m a husband. I’m here for my kids and my girls. want, I want to…

  Quentin (28:54)
  Yeah.

  Yeah.

  Kyle FitzGerald (29:03)
  own my time and I do that, you know, so I can only have so much bandwidth and I take the most powerful projects to work on, you know.

  Quentin (29:09)
  Yeah,

  yeah, yes, sir. No, man, absolutely, sir. Listen, ⁓ this has been great, man. And so again, Kyle, man, I thank you. I thank you so much. And so everyone else you heard, Mr. Kyle Fitzgerald, I keep telling you, we’re going to continue to bring you all these amazing conversations. I’m listening. All I actually do is subscribe. Just hit the button. That way, you know the alert comes through and you know, ⁓ here go another valuable conversation. So go ahead and hit it. Mr. Kyle.

  Kyle FitzGerald (29:39)
  Keep

  it up.

  Quentin (29:39)
  Thank

  you again, sir. Yez, man, I appreciate you so much. And everyone else, we will see you on the next time. Y’all have a good one now.

  Kyle FitzGerald (29:47)
  Cheers.