Dave Foster is a degreed accountant and consultant who currently lived and works out of St. Petersburg, Florida. With decades of experience, he has demystified the 1031 exchange for James Prendamano and the Casandra Properties audience. In other words, this episode provides incredible value to our listeners and should not be missed!
The 1031 Exchange Exists for Investment Real Estate
Dave Foster proclaims that the 1031 exchange exists for investment real estate, and there is even a way to combine the section 121 homestead act and the 1031 exchange. This is exactly the technique Foster used 25 years ago when he moved his family from Denver to Florida over the course of a decade. Thereafter, they lived on a sailboat. “It’s all perfectly legal using different parts of the code,” Dave Foster reaffirms.
Early Life in Kansas
Dave Foster talks about his childhood in the Midwest and how it instilled a tremendous work ethic in him. He also said it taught him a lot about self-reliance. Growing up in Kansas, getting up at the crack of dawn, shooting guns, and riding horses gave Dave a solid foundation of self reliance, and that is evident in the future real estate success he would have.
CEO James Prendamano then relates a story about the first time he went turkey hunting; a friend and colleague had convinced him to go. Having grown up in Staten Island, NY, James’ lifestyle was worlds away from the one Dave Foster had been raised in. James talks about how he first begrudgingly went on the trip, but how it ultimately changed his view of the world forever. He said he watched the sun come up on the morning of the hunt, and it was a life-changing event for him. Now and then James Prendamano retreats with his family to his 200-acre farm in the country, where he grows vegetables, raises chickens, and milks cows. It was important that he teach his family about his newfound love of nature and the pure synchronicity of it.
Dave’s First Experience with the 1031 Exchange
Necessity is the mother of invention. On a related note, Dave Foster says his first experience with the 1031 exchange was a happy accident that he had discovered one year while he was irate with the IRS. What happened was that Foster had been hit with exorbitant taxes because the tax laws had just changed. Dave Foster vowed not to let Uncle Sam do that to him unfairly ever again. That’s when he discovered the ins and outs of the 1031 Exchange, and the rest is history. “Here’s the thing,” says Dave Foster, “the IRS has to let you do them (the 1031 exchange), they just don’t have to make it easy.”
What is a Qualified Intermediary, a QI?
Dave Foster is a Qualified Intermediary. In order to complete a 1031 Exchange you need an unrelated third party called a Qualified Intermediary. Here’s the thing -- A QI must be involved with the deal before the close of a sale. After the closing, it’s too late to find a Qualified Intermediary and do a 1031 exchange. And along with professional realtors, much like the ones at Casandra Properties Staten Island, QI’s also take their fiduciary responsibilities extremely seriously.
The 1031 Exchange Under the Biden Administration
Dave Foster says, “Believe it or not, I’ve been doing these exchanges for more than 25 years during five different administrations. The only President who eliminated the 1031 Exchange was the last person you’d expect: Donald Trump. “I can’t bring myself to worry about it,” says Foster. “It is a massive income generator.” As far as President Biden, I think he has more to worry about then 1031 Exchange at the moment. Dave Foster goes on to say, “Having said that, a famous 19th century American lawyer Gideon J Tucker once said that ‘No man's life, liberty or property are safe while Congress is in session.
Get Educated about the 1031 Exchange
Dave Foster has written over 80 articles on his blog, which you can find on his website. You can also watch all his videos (about 30 of them), which are only 2-3 minutes long. They’re all available on his YouTube channel. The wealth of information he shares with investors is invaluable. Be sure to check him out.