Hey everyone kevin here, i'm selling my real estate well at least a chunk of it. Now, in this video we're gon na talk about why you should actually never sell your real estate, the only potential exception why it would possibly ever make sense to sell real estate and then my thoughts on the current market, especially whether or not it makes sense to Get in now to wait what's going on, but we got to start with the fact that this video is brought to you by ftx and, of course, my programs on building your wealth link down below but more on. Both of these later, especially since there is an expiring coupon code, price goes up in about four days for those, especially on real estate, investing okay. So, first, why should you never sell real estate? Well, the first thing to remember - and it's one of the most important things to remember about real estate - is something known as the stepped up tax basis see.

When you keep your real estate, you can actually make a deal with the government to pretty much, never pay taxes. Now, anytime, it comes to taxes. You should always talk to your cpa, but think about it. This way, let's say that you are 25 years old today and you buy a house at 25 for a hundred thousand dollars and every seven years you buy a house for a hundred thousand dollars more.

So that's 100k. 200K. 300K. 400K right.

You kind of get the idea here right so by the time, you're 67 years old you'll actually have 2.8 million dollars of real estate, assuming there was absolutely zero market appreciation realistically that this is a time frame here of 42 years. Your 2.8 million dollars of real estate could probably be worth somewhere between 7 to 10 million dollars, and, what's also really incredible, is if you got 30-year mortgages on all of these, these two would already be paid off. These two would be super close to be being you know, getting ready to be paid off uh, and then these over here you've already made substantial payments on, with the exception of the one that you just got right so like this is pretty freaking incredible like how Many people do, you know that are 67 years old, that have seven rental properties, probably very few, and that's because people buy a house, they live in it, they sell it and they don't keep them. So they remove one of the easiest ways to ever build freaking wealth and then they pay taxes.

In the meantime, this is nuts because see. Let's make you this example. Okay, let's say you had all of these properties - let's say by the time: you're 80 years old right so from 69 to 80. You've kept all these properties, you didn't buy any more real estate.

Now the real estate is worth 10 million dollars and, let's just say to make it easy, you fully depreciated all your properties and if you were to sell these properties right now, you'd have to pay taxes on them. Long-Term capital gains on real estate, plus, potentially your state taxes. Let's just say, you'd pay about 2.5 million dollars in taxes on your real estate. That's 25 right! Well, now, you're! You are left with 7.5 million dollars.

Now, let's say after you sell you get hit by a bus and you die well now you paid the government two and a half million dollars, but what if you had your children, sell these properties the day after you got hit by a bus? That is, you didn't sell them. You got hit by a bus and then your children sold all these properties. Well, thanks to the stepped-up tax basis, the government comes in and says, hey sorry for your loss. Let's just pretend you don't owe any of these taxes.

Your family can have the full 10 mil right. This is just an example of how you could delay ever paying taxes in real estate and that's a pretty cool benefit is the fact that, if you don't sell, you may never have to pay taxes on real estate. It's all about that stepped up tax basis, biden talked about getting rid of it, but biden and getting rid of much right now, certainly not getting much done, but hey, that's not to be political. Obviously, you know we've got a pretty split congress.

So the second reason you don't want to sell is because you could generally just refinance and take money out tax-free. Let's make a quick example. Let's say you bought a house for three hundred thousand dollars and you bought that house with ten percent down. So you have a loan of 270k, so the assets 300k, your loans, 270k right.

But now the house is worth 600 000 because you've got a good wedge deal on it. Well, you've got three hundred thirty thousand dollars of equity in this property. If you were to sell it, let's say you live in it. There is an exception that if this is not a rental property and you live, it live in it, you could get this loophole that if you've lived there for two years out of the last five, you can avoid up to 250 000 in gains as a single Person or 500k as a married person, so let's not assume taxes on this.

Let's just simply assume you have a six hundred thousand dollar house and you have a 270 000 existing loan. If you were to sell it, you'll have to pay selling costs and selling costs suck. If it's a rental property, not only do you have selling costs, but you're gon na have to pay taxes as well right. So, let's assume about six and a half percent of selling costs, that's going to be realtors, escrow title and probably another at least half percent honestly.

So seven percent total for uh fix-up costs just little repairs that come up during the sale. That's going to leave you with 558 five hundred fifty eight thousand dollars minus your loan of two hundred. Seventy thousand dollars. That's going to give you about 288k of cash on a home, and if this was a rental property, you'd have to pay taxes on that 288.

000 gain that you have probably plus depreciation recapture should so it could get even worse, so you'd, probably only take out you'd, be paying about 72 000 in taxes, so on a rental. You'd probably only take out about 216 000 on a rental. Well, this is where you look at and you go wait a minute. Why bother selling if you could just refinance and not have any tax implications, so the value of the home is now six hundred thousand dollars.

You're gon na have to pay a higher payment, though right because obviously there's there's always a pro and a con to doing everything right. But let's say you pay that higher payment. You refinance. You take out a 20 loan this time, no mortgage insurance right.

You owe 270 000 20 down on 600k is 120k, so you're gon na get a new loan for 480 000 you're going to pay off the old loan, which means you're going to take out hundred and ten thousand dollars via a loan. Look at that you take out if it's a rental property you take out almost the same exact amount with a loan as you would selling it and paying taxes. So you may as well take out the loan, assuming the property could meet certain criteria like being cash flow. Positive at that point, and you didn't have a better opportunity now.

This will actually be important in terms of why i'm selling certain properties and we'll talk about that in just a moment, but you can see here if you take out the loan, you still own the property, so you're still getting the appreciation potentially, unless of course, the Market fell substantially, which we don't really expect the market to fall substantially, you're still getting appreciation, a six hundred thousand dollar house and you have - which is six thousand dollars a year. If you just have one percent appreciation right, six thousand dollars of essentially free money. That's not even taxed until you go to sell and you get to use the money via refinance or you could even do something like a home equity line of credit, which is kind of like having a credit card on your home at substantially lower interest rates. Probably somewhere between three to six percent, depending on how much the federal reserve ends up hiking right.

So this is another reason you generally don't want to sell real estate, the first reason being the stepped up tax basis. The second reason being you could just refinance or take out a heloc to to uh. You know essentially take money out and oftentimes get out just as much money, and the third reason you shouldn't just sell outright is because, if you're gon na sell for some reason you should do a 1031 exchange. So that way you could kick your tax basis down.

The road to another property, but that's a little bit more detailed and it involves you already having another property to go into or quickly identifying another property problem here. Is you only have about 45 days to identify that other property? Let the irs know and then 180 days to close on it. So you have to have your timing in line here to pull off the 1031 exchange, which is possible, but it's a little tougher in in this kind of market. So so why? Why would i not do one of these things i mean i i've just walked away from my stepped-up tax basis.

I've uh, you know. Basically, i'm going to be paying paying taxes, i'm not doing a 1031.. Why don't i just refinance to take the money out all right, so a few problems, the properties that i have are in california, and the prices have gone so high that i can't fully refinance these properties. If i were to refinance the properties that i have, i would only be able to take out about 60 to 65 in total, so i actually wouldn't be able to use as much cash.

I wouldn't be able to go all the way to a 75 or 80 percent loan problem number one, even if i could, the values have gotten so expensive and rents have not caught up that they would be substantial, negative cash flows and even though some like nominal Negative cash flow and like a new property, is okay. You don't want a portfolio of negative cash flow because then you're going to go bankrupt. That's a terrible idea right! You don't want to do that, but the third and most important reason that's motivating me to sell some of these properties. Take the profits pay a little bit of the taxes is because i'm going to take the money that's left over and throw it into a brand new opportunity.

This is going to be a real estate opportunity, combined with venture capital and stocks. It's gon na be pretty freaking amazing and, in my opinion, the upside in that opportunity outweighs the negatives of paying taxes. So this is why, when i say, hey, i'm selling real estate, but you probably shouldn't sell real estate. Unless you have a really good unique opportunity.

Is unless you're in my shoes - and it's like, if you refinance you'd, have big negative cash flow on them, which i don't want and at the same time i have another opportunity to move into. That makes sense for me, because the new opportunity is also going to get me into real estate. It's also an opportunity that, maybe in the future you might be able to participate in, you could go to metkevin.com series a and sign up to be on the list of that course. Members.

If anybody joins the courses, you're going to be the first to have access to this. So if you wanted to use the coupon code, link down below and join the courses, you'll have first priority. If you don't want to spend any money, you want to be on the second priority, just go to kevin.com series a now. I want to be clear about what this is and is not uh or just talk a little bit more about the market kind of broadly and talk about what i think is going to happen in the market short term, because i do think there are going to Be some big headwinds and i want to clarify those.

So let's talk about these first, i absolutely hate syndicates with a passion. I've spent years as studying real estate syndicates and, quite frankly, i've come come to the conclusion that real estate syndicates are a rip-off. They charge. You 25 to 35 percent of profits, known as a waterfall for, in my opinion, doing very little if someone's in the stock market they'd be laughed out of town, simply for picking a property stock buying it and then sitting around and doing nothing.

In some cases there are value, add opportunities, but a lot of the syndicates. They buy properties and then they don't actually add any value. They just sit there and speculate on appreciation which in general, i do believe that real estate prices go up over time. So it's kind of like getting compensated for just getting people into deals and then doing it.

It's insane it's absolutely insane, but one of the most ridiculous accounting tricks that happens in these syndicates is what's called the waving of management fees to make. You feel like you're. Getting higher cash flows so what they'll do is they'll, buy a building, a 100 unit, apartment building or whatever they'll say hey, we charge a 1 management fee, but in the meantime, we're going to pay you dividends of five or six percent cash flow and what they'll Do is they'll waive the management fees until they sell the property in the future. So then they sell the property in the future.

Take the 30 waterfall on the profits then give you a bill for the 10 years of management fees. You didn't pay take that out of your profits and the profits you get left with are substantially less than what you expected, because you've been kind of getting this inflated feeling of cash flow. It's honestly terrible! So, the more and more i look at syndicates, the more i hate syndicates, so the new thing, not a syndicate and for those people wondering like what could it be? It's not a syndicate, not a reit either i'm really not a fan of advocating anything. That's high fee, i quite frankly, hate fees in general, i'm oops, i'm very anti-fee with with everything uh, because i think that people should provide more value than than really they get in compensation.

I'm a big fan of that, at least it's like provide more value. You'll always get taken care of, but but don't rip people off with like really high fees right anyway, so so just a little bit more on what that series. A thing is which i can't really talk about much right now, but uh. It's it's not those things.

It's gon na be a lot about buying wedge deals, uh below market value, whether it's single family, multi-family and doing so in a feast well in a non-fee structure, which is awesome, it's gon na be great, so stay tuned for that. Okay. So now, let's talk about my thoughts on the market and whether or not you should get in on this market. But i got ta shout out our sponsor for today's video ftx first, because ftx is freaking awesome and if you're watching this video there's a good chance.

You're trying to diversify and if you want to diversify with cryptocurrency as well, diversify a bit from the stock market. One of the best things, in my opinion you could do is make sure you have a proper technical indicator set up via ftx use. The link down below you could set up so many different trading view indicators here and then immediately. Trade based on your indicators see i'm a big fan of using trading view.

I use trading view almost every single day and the beauty is it's built in on ftx. So check out ftx via the link in the description down below use code meet kev when you go to sign up and you'll, get rewarded on your first crypto transaction, so check out ftx by that link down below and let's keep going with my thoughts on the Real estate market going forward so real estate market going forward. Okay, look we're going to have some temporary headwinds uh i've been saying since uh. The 10-year treasury was around 1.7 1.8 percent that i believe the 10-year treasury is going to go to 3.

It's now at 2.3 percent we're on our way. We are going back to what we saw in 2018. I hate to say here's 2018. and remember what happened in the spring of 2018 when the shock first hit.

It took a while. We saw this first shock over here going through uh march. It took until about may where we saw real estate prices, actually dip about 12 percent in the matter of a couple months, because it got so freaking expensive to buy real estate. I do think we're on that trajectory again now real estate in 2018 ended up net positive.

We had a good year in 2018. It was just a roller coaster. I think we're going to go through that roller coaster. Again, i believe it's likely that we have pen so much pent-up demand that real estate prices are still on a trajectory of if rates stayed low, going up, probably 10 or 15 percent this year.

So think about that way. If we have such little inventory that real estate prices are expected to go up - let's say 15, but then uh this year. But then we just see interest rates go from 2.8 on mortgages, which is the equivalent of probably a 2.8 was the equivalent of somewhere around a point. Eight percent ten-year right.

If this is the ten - and this is the mortgage over here. Well, then, when we go to a three percent, ten-year treasury yield we'll probably be at mortgages of somewhere around five to five point two five. This difference right here works out to about two and a half percent, which, unfortunately, is a negative. 25 percent drag on the real estate market and so there's a likelihood that at least temporarily we're going to see a little bit of maybe a negative five to ten percent headwind against real estate prices.

So what are my thoughts about getting into the real estate market? Right now, well, if you can get a good deal, whether it's off market or you can find a good property and it works for you personally, i always think time in the market beats trying to time the market, especially in real estate, unless, for some reason you Do this for a living, and you think you have a special edge in timing, the market, it's generally not worth trying to time the market, so, in my opinion, buckle up and ride it like 2018. If you find a good deal, get in a good deal being something below market value right, either below market value, rents on multifamily or a cosmetic fixer upper on multifamily right, very, very important. Now, if you are thinking about well, i'm willing to be patient a little bit with real estate. I do think that, towards the end of 2022, the beginning of 2023 right around the time that my real estate opportunity will will be ready to be entering the market substantially.

I actually think that there is a chance i'll be entering the real estate market at a much more opportune time with this new opportunity. So i am playing a little bit of a timing game, but that timing happens to work out because it's going to take us. Some time to set up what we're doing anyway, uh so i feel, like things, are aligning well, but no guarantees knock on wood right. I'm doing what i tell you not to do, and that's exactly why i can't give you financial advice, because i don't know about your personal situation.

The point of these videos is just to give you ideas now. One of the things i hate about real estate again are those big three things that i told you about: the stepped up tax basis, the problems of selling and selling costs and all that mess right, real estate's, tough to sell. So i really discourage selling real estate, but i plan not to do that with the new opportunity. So i'm very excited about that, and this lets me move over into this.

So that is why i am selling, if it weren't for this opportunity, i probably would not sell real estate, but i would be looking harder at refinancing certain properties, uh that makes sense to refinance cash flow wise and maybe considering a 1031 exchange into some multifamily straight Overs, like straight lateral over so that way i can, i can get a nice cost. Sag benefit, i can uh, you know, have cash flow with a uh with a larger loan, and that way, i'm taking advantage of some of the higher prices that we have now in the single family market. So my thoughts on potential headwinds getting in the market, where i'm going, what i'm doing. Hopefully this is helpful and very transparent to you.

If you want to learn more, but everything i know about real estate make sure to check out the different programs. I have on real estate, including the zero to millionaire real estate program, the uh do it yourself: property management and rental renovations program and, of course, the real estate agent sales program. I'll link down below you can bundle these together as well. Get a bonus discount.

There's a coupon code, expiring price just goes up over time, so if you're ever thinking about getting in the best time to get in is now because the price does go up over time, it's never been lower. Since i've created these programs uh over the last four years, the prices have never gone down and i'm always adding new content to them. So check them out, link down below thanks so much and of course, shout out to our sponsor ftx thanks bye.