Unlocking the Power of 1031 Exchanges

Matt Linville (00:00)
I’ve got 30 to 35 % more equity to put toward these deals,

And if I’m not afraid of debt and I love leveraging you, how much more property could I potentially buy saving 30 to 35 % in every single investment property that’s 1031 eligible that I could exchange? That’s what really gets me excited for people.

Quentin (01:56)
everyone. Welcome to the Investor Fuel podcast. I’m your host, Q Edmonds. I think you should know that by now, right? I’m so excited again to have you here for another episode. And listen, I have someone here who I’ve been chatting with, who you’re going to get a wealth of knowledge from. Trust me and believe me on that. And so I want to introduce to y’all my friend, my man, Matt Linville, who’s also known as that 1031 guy.

He’ll listen to him. He’s humble, but I’m going go ahead and say that 1031 guy and listen, he’s helping investors and brokers and agents and attorneys and CPAs navigate the 1031 exchange. And he’s doing that with clarity, confidence, and less stress. And so I’m so excited to have you here today, Mr. Matt. you feeling today,

Matt Linville (02:45)
Fantastic. Happy Monday to you, by the way.

Quentin (02:47)
Happy

Monday to you, man. Listen, I’m excited. Our listeners, they’re going to take a lot away from this, especially the ones when they hear that 1031. mean, I know for some of them, it perks their interest, right? And some may not know what that is. And so I’m going to let you do what you do best. So if you don’t mind, I just want to dive in. And first off, for people who are not familiar with you, they’re not familiar with your world and what you do, here is a short version of what it is that you’re main focused on these days.

And if you don’t mind also tell them what market you’re working out of as well.

Matt Linville (03:20)
Yeah. So, ⁓ first off, I’m in the great state of North Carolina. our company is based in Chapel Hill. I have an office there, but I never see it. So I’m, somewhere between Michigan, Nebraska, Tennessee, Texas, Florida, Carolinas up North, talking, teaching, working with, ⁓ taxpayers. And as you said, my main focus all about 1031 Litecon exchanges. we serve as the qualified intermediary. We’re that.

necessary third party that the IRS requires to be involved in the 1031. But listen, for over 20 years, that has been my professional life and it is my professional passion. for those who might be listening who don’t know about 1031s or just kind of learning, I’d say this, the 1031 Lightkind Exchange is one of the greatest gifts the IRS has given.

an owner of investment property. And again, whether that be residential investment or commercial investment, and basically what they’ve said is this, if you own a piece of real property that you have used for investment or ⁓ business use, when you sell that piece of property, as long as you take the proceeds and roll those into another property or properties that you’re going to hold again for business or investment use, the IRS will allow you to defer

the tax on the gain you’d normally pay. And you might ask, what’s that matter? What do you even mean in that? Well,

there’s four taxes. First, capital gains tax. So it’s either 15 or 20 % federal capital gains that you can defer through the 1031. Second is state tax. Now, not for our friends in Texas and Tennessee and Florida and a couple of others, but for those in California paying a really, really high state tax.

or for any other state that has state tax, that’s deferred through a 1031. Third, net investment income tax. Federal level 3.8%, they can defer. And lastly, is depreciation recapture. So as kind as the IRS is to allow us to depreciate a property either over 27 and a half or 39 years, whenever we sell it, they say, listen, here’s what we’d like. We’d like to have 25 % of that back.

So that can also be deferred through a 1031. Now, if you’ve owned a property for a couple of years, maybe that’s not the biggest deal, but if you’ve owned a property for a lengthy amount of time and you’ve really taken heavy depreciation on it, that 25 % deferral might be the biggest tax you can defer. So at the end of the day, the whole thing is for those who are listening to this and they’ve sat around the table and they’ve cried about a property, they bled over a property,

They’ve argued over a property, they had to go to court for a property and a tenant. This is the IRS saying, take all of that money that you poured into it and you earned out of that property, you keep it and you keep reinvesting it into other properties and we’re going to allow you to grow your portfolio through this deferral.

I’ve got 30 to 35 % more equity to put toward these deals,

And if I’m not afraid of debt and I love leveraging you, how much more property could I potentially buy saving 30 to 35 % in every single investment property that’s 1031 eligible that I could exchange? That’s what really gets me excited for people.

Quentin (07:25)
No, I love it, man. love it how you’re telling people how we can leverage this 1031. All right, and you give them percentages, 25%, 35%. I mean, like, come on, like, you got, if it’s here for you, you gotta leverage it. it’s gonna save you money, put more money in your pocket, and however you wanna look at it, like you said, you can keep turning these things, putting it into 1031 and watching it work for you. That’s amazing. That’s amazing. That’s amazing. And I’m, know,

Matt Linville (07:35)
Hello?

and

That’s right. Yes.

Quentin (07:52)
You mentioned it, know, in this climate, you know, there’s a lot going on, right? There’s a lot going on with the three-letter word that I don’t even want to mention, you know, like the I and the A’s and the S, you can think out what to put in the middle, right? So, you know, it’s a lot of things that’s forever changing. What is it that keeps you guys running smoothly? What is it that keeps things running smoothly for you?

Matt Linville (08:03)
Right, yeah.

So I think it’s the same thing for anybody in any business in any deal, it’s communication. Communication is key. Communication of the facts and of correct information is communication, especially when we’re involved with a 1031 Lightcom exchange, we’re talking to the taxpayer, we’re talking with their agent or broker. As you mentioned,

coming into the podcast, we’re working with their CPA, whoever their tax advisor might be, real estate attorney. We’re working with the closing entity, whether that be an attorney, a title company, or anybody else who’s actually closing the deal. We’re working with all of those people and our part is crucial because number one, we’re preparing the exchange agreement for our taxpayer that must be signed and dated before or at least at the closing table.

So that takes some coordination and some information gathering. We’re working with the closing entities so that the monies from closing goes from their escrow account directly to us as they’re qualified intermediary, not passing through the taxpayer’s hands. So that takes some coordination. And then for those of you who are familiar with the timeframes that we have, that 45 and 180 day timeframes, we’re working with the taxpayer, helping them on their ID.

remembering their deadlines for identification. And then when they’re ready to close on a replacement property or properties, we’re working with that closing entity, escrow payments, earnest money, due diligence, anything that needs to come out. you know, we get, we’re a part of that 400 email chain, you know, that’s going out to everybody. And we’re doing, you know, a few hundred of these a month. So it takes a lot of communication and coordination on our side.

to keep things flowing. And I gotta be honest with you, if you don’t answer your phone, if you don’t respond to emails, you’re breaking that communication line. And so we really pride ourselves on making sure we have somebody available at all times to answer that phone when we’re open and we’re responding to emails, even myself. don’t get exempt from that. So I always tell people, you can call me, text me, email me, if it’s on the weekend, a holiday, you know.

Timeframes don’t stop. So if you need to talk to somebody, you can text me and listen until Abigail looks at me very kindly and says, that’s enough. Okay. It’s 10 o’clock on Saturday night. Put it down. Okay. So that’s usually I tell people that’s my hours right there until she says it’s time to put it down. Okay. So yeah.

Quentin (11:15)
Yeah, I was wondering who the real boss was and you just let it slip out.

Matt Linville (11:18)
Yeah, I’ll

take that. Best boss and partner I’ve ever had in my entire life. ⁓

Quentin (11:25)
You took the words of

my heart because I was about to say partner. was about to say there’s always that partner that can bring you in. You know, like, you know. I get it, man. And I love it because… Yes, sir. Absolutely, man. Absolutely, man. I can go so far into that, but man, they protect us, man. But that’s a whole other podcast I can get into, you know. But yeah, absolutely, But you talked about, you know, communication and making sure that communication don’t break down.

Matt Linville (11:29)
Yeah, it is right.

That’s right. That’s right. He knows the words to say.

Right.

Quentin (11:52)
That’s, that’s pivotal. And you also talked about, so there’s a deal going on and y’all are balancing. I love how you said the entities, right? The closing, the closing entity, the title company, there’s a deal, you know, that’s going, that’s trying to go down. You’re trying to coordinate everything. So now, you know, I know as an operator, there’s time when things get real, right? So maybe tell us about a deal that maybe went sideways or a time maybe that you had to pivot fast. You mind sharing one of those stories?

Matt Linville (12:20)
I don’t mind at all. think one of the pieces that we try to get out in the phone calls that I try to avoid is when the taxpayer calls and says, Matt, I really want to do a 1031. That’s not the one I’m trying to avoid. I want that all day. Bring that person to me. And so my first question to them is, okay, well, when is your closing?

What I don’t mind hearing is in a couple of weeks. What I don’t mind hearing is it’s this afternoon. Okay. Can we get everything together for closing this afternoon? Absolutely. What I don’t want to hear was it was yesterday. That’s what I don’t want to hear. And so whenever I hear that, my follow-up question is, okay, do you mean you signed a contract yesterday or were you actually at the closing? So if they were at the closing and they closed and they did so without an exchange agreement from a qualified intermediary,

There’s no 1031, okay, it’s done. There’s no way of going back and post-dating or pre-dating a contract. We would never do that just like an agent would never pre-date or post-date, change the date on a contract. We never do that. So that’s one piece where unfortunately we’re having to help that taxpayer pivot because all of a sudden the 1031 is not available. When it comes to…

I guess closings are probably the biggest thing. Closings can sneak up or they can be delayed. So we want to make sure that we’re fully in communication with the taxpayer and we understand when the closing is happening, who is closing it. So those last minute details or changes when they need HUD signatures or when they need, like we’re talking about the earnest money deposits or something dumb that were there, we’re on time to get that done.

There’s a lot of things that can happen and nuances within the 1031 when we have folks who aren’t abiding by the same taxpayer rule. Lots of rules to know, but basically entity A sells, well entity A needs to be the one that buys the property. It needs to be the same taxpayer. So what happens when we get the sales contract on the property they’re selling and it’s X entity, and then they’re looking at buying the

the next property and we see the contract there, all of a sudden the entity is different. And so if we see that entity is different, that’s an immediate call to the taxpayer to walk them through what the same taxpayer rule is, what that entity is made up of, and does that need to change? And so all of those things kind of come in to say, do we necessarily need to pivot? Not necessarily, but can we help the taxpayer pivot into the right way or that

the old path of how things are supposed to be done to make sure they’re abiding by the 1031, of course, working with their tax or legal advisor along the way. So it’s really helping the taxpayer pivot when we see that something doesn’t seem to be right and making sure they’re getting good sound legal and tax advice from their advisors on that issue.

Quentin (15:33)
Yeah, yeah.

Absolutely. And see, stuff like that for me, that separates the investor title exchange who you so eloquently represent from people just that dabble to people that’s in input in long term. I think that’s one of the strengths of your company is the longevity, right? And so giving that type of information and say, don’t call me and you’re listening to people, don’t call.

after the deal was made, don’t call and say, hey, it was yesterday. No, you got to get ahead of the game. And so for me, this is why what you do in the company that you represent is so important because people need to hear stuff like this, right? They need this information. And so let me ask you this, what are you most focused on solving right now? Like what’s the real next goal that you see coming into play?

Matt Linville (16:15)
Right.

Um, I think it’s the, I think it’s the provision of information and, uh, you know, marketing is not all about company and brand as far as, know, I want you to think of me first thing when you’re doing a 10 31. That’s nice. Don’t get me wrong. That’s great. But we also want to make sure that the right information is out there. Uh, so if, if I am basing my investment strategy,

and I’m selling property A and here are the three properties I’m looking at rolling funds out into through a 1031 and all of a sudden I’m basing that plan off of incorrect information, then the potential of my strategy being successful diminishes quite a bit. Not gonna say it can’t be still successful, but if you have wrong information from the beginning,

And all of sudden the assumption is there’s gonna be a lot of other things that will be wrong as you go down that path. So it’s about the dissemination of correct information. What does it mean for the 45 and 180 days? And did you know that the 45 day identification period, that’s calendar days, not business days. So holidays, and rainy days and Mondays and the kids are sick and I just don’t feel like it or we’re on vacation for a week. I don’t even wanna think about real estate.

All of those days count on that 45 day identification. And if you missed the date and you’ve missed your exchange, you know, if you only identified one property when you had the potential of identifying multiple properties and for some reason after that 46 or 45th day, you can’t close on that only that one single property identified. Well, guess what? Your exchange is over with and now you’re paying tax that maybe you could avoid it if you knew the identification rules. So again,

You know, it’s not that people are out there disseminating false information on purpose, but I think with anything, we can go out to the internet and we can Google something and find something that may not exactly be correct. So we want to make sure that the information that’s provided is solid. It’s helpful and it’s written in a way that is easily taken in by taxpayers so that they can process it, talk with it about their talk about it to their CPAs and.

attorneys and eventually get with us and talk it through as well. So good information is most important.

Quentin (19:02)
Absolutely. Absolutely. I love that as a goal to make sure people are getting the correct information. And I think you teed it up that when you said one of the best opportunities for you guys is to leverage your network, right? To make sure that you’re handing off like the warm handoff, right? To make sure that people are getting the right information, to leverage your network, to broaden it, to get that information, to educate people out there. And so that’s beautiful. And I think, you know, there’s a lot of people

They’re listening and they are like early in their journey. They’re looking to maybe do a 1031. They’re looking to find a reputable company who they can go through. And of course we’re going to plug Investors Title Exchange once again, corporation, you know, once again. But I, you know, I think, cause I hear what we talked about networks and I think you have a strong network. I think you have a strong staffing, right? We talked about that. So I think.

It benefits people hearing this from you when it comes to building relationships and growing your network, which made the biggest difference for you.

Matt Linville (20:07)
Yeah. Consistency. Boring, old consistency. ⁓ You know, it’s, so I travel a lot and traveling, people think, well, people think a lot of things, but people think traveling is like the exotic thing. Matt travels everywhere. It must be so much fun. And listen, it is fun. The day that my job stops being fun, it’s going to be really hard. Okay. It will be, but so for the people who say, Matt,

Quentin (20:13)
more than.

Matt Linville (20:34)
You travel everywhere. It must be so great. I’ll send them a picture of the luggage carousel from the airport in Lansing, Michigan at 430 AM. Okay. That’s, that’s, that’s exotic. Or I’ll send you a picture out of the hotel window, looking over the hotel and Ocala at the HVAC units and go, here’s, you know, here’s business travel. but if you’re not there, people don’t, people can’t get to know you. If you’re not there, you can’t talk to people.

If you’re not consistent, then you can’t be top of mind. So consistency is the key in your message, in your outreach, in your physical presence. And again, let’s go back to even just picking up the phone. I would love to know the statistic of how much business is won by simply picking up the phone. You know, if you’re the person they call because they’re searching for an answer and you don’t pick up your phone, there’s somebody else.

who they’ll find. But if you answer your phone, or at the least, you call them back and say, listen, I’m in a meeting right now or text them, I will give you a call in 30 minutes if that’s okay. People just want communication and effective communication comes from consistency. That’s it. As boring and as that sounds, it’s all about consistency. There’s nothing glamorous about that.

Quentin (21:44)
Am I right?

Listen,

you can’t fake relationships. And I’m going say this. You have Abigail, I have Vanessa, right? And you and I can both agree that it’s consistent communication. It’s key, right? Consistent, and not faking it. You are showing people, I value you when I call you and say, hey, I can’t listen to If you just give me 30 minutes.

Matt Linville (21:50)
No.

There you go.

Yeah

Back around.

Quentin (22:11)
I would be right back to you because we believe in what we do. We know what we do, but we want people to understand that I value you. Not only that I’m gonna bring value to you, but I value you as a person. I value your time. And so you’re right. You can’t fake relationships. And so I love hearing that word consistency. It’s a beautiful word. It can be a daunting word sometimes, it’s just, you said it 1 % better.

If we can just break it down into doses, you can just be 1 % better with your consistency. You won’t veer off track. You’ll stay the course. And so now that was beautifully said. That was beautifully said. So listen, we’re about to wrap up. This has been fruitful. This has been knowledgeable. I appreciate you, Matt. Listen, but before we wrap, if someone wanted to reach out to you, connect with you, collaborate with you, say, hey, I need that 1031 guy.

Matt Linville (22:44)
exactly right. Yeah.

Quentin (23:01)
What’s the best way for them to reach? Yeah, exactly. There you go. There you go. ⁓ So, T.M. up, man. How can they reach out to you,

Matt Linville (23:01)
That’s the call I want. But yeah, that’s what I want, right?

Write this down, 984-484-8685. That’s my cell phone number. Call me, text me, Linville, L-I-N-V-I-L-L-E, at INVTITLE.COM. Call me, text me, email me. I will get right back with you. If anybody would like to have like a three page overview on 1031, it’s just something good to sit down with.

Listen, if you’re an agent listening and you want some information to send out to your clients or potential clients, shout at me. I will send this to you. It’s great to send around to your clients to generate conversation. Listen, even if you’re a residential broker or a residential agent and you’re focused on single family residency and primary residences, and you may think, in the world does a 1031 have to do with me?

you don’t know what your potential clients may own. And you may be helping them on a primary residence, but they might own a whole lot of other property. And if one of your questions to them isn’t, Hey, do you happen to own any investment property? There’s a whole line and scale of business out there that you might be leaving behind. So this is good information, even for those who might happen across this podcast and go, what’s this guy talking about? It doesn’t do me any good. You never know.

You don’t ask, you don’t know.

Quentin (24:26)
There he is everyone, Matt Lindell, that 1031 guy. Listen, sir, I appreciate your time, your story, your perspective. We need more people like you in this space that’s doing it the right way, man. So Mr. Matt, thank you again, sir. Appreciate you. And listen, for those tuning in, if you got value from this, please make sure that you’re subscribed.

Matt Linville (24:40)
Thank you. My great pleasure.

Quentin (24:50)
We want that alert to come up when a new episode come out, because we do not want you to mix these conversations like we had with Mr. we had with Mr. Matt Lindell. So thank you so much. Y’all have a great one. I’ll see you on the next podcast.