Unlock Your Passive Lifestyle

Episode Summary

What happens when your real estate portfolio becomes a full-time job? How can you retire from property management without immediately paying a massive capital gains tax bill?

In this episode of Unlock Your Passive Lifestyle, Tommy Thompson and Justin Kiehne of Fortitude Investment Group explore how investors can transition from active real estate ownership into passive investments using 1031 exchanges, Delaware Statutory Trusts (DSTs), and 721 UPREIT strategies.

They explain how DSTs provide access to institutional real estate, diversified portfolios, potential monthly income, and tax-deferred exit strategies. Through real client examples, they reveal how investors can navigate 45-day identification deadlines, replace debt, manage taxable boot, and plan for retirement.

They also compare traditional DSTs with REIT conversion strategies, highlighting liquidity considerations, estate planning, and long-term financial flexibility.

• DSTs enable passive real estate ownership through fractional interests in institutional properties.
• 1031 exchanges defer capital gains taxes when qualifying requirements are met.
• DSTs can serve as backup properties when traditional replacement deals fall through before the 45-day deadline.
• DST investments can address taxable boot and help satisfy exchange debt replacement requirements.
• Diversification reduces concentration risk across multifamily, industrial, medical, and self-storage properties.
• DSTs may provide monthly distributions, with discussed cash flow ranges of approximately 4% to over 7%, depending on the investment.
• Traditional DSTs are generally illiquid, with exits typically occurring when the underlying property sells.
• 721 UPREIT strategies can transition DST interests into REIT ownership, potentially offering future liquidity.
• DSTs differ from REITs because qualifying DST interests can receive 1031 exchange proceeds directly.
• Accredited investor status and suitability matter when evaluating DST opportunities.
• Early planning with CPAs and advisors helps investors evaluate tax exposure, retirement goals, and investment risks.

00:00 Real Estate Retirement and Exit Planning

00:39 Understanding 1031 Exchanges and DSTs

01:34 Why Inherited Properties Become a Burden

03:09 How DSTs Create Passive Investment Opportunities

05:09 DSTs vs. Net Lease Investments

07:23 Building a Diversified DST Portfolio

10:28 Institutional Real Estate and Fractional Ownership

13:11 DSTs as 1031 Exchange Backup Properties

14:54 Case Study: Avoiding a Risky Replacement Property

17:25 Using DSTs to Address Taxable Boot

20:52 Replacing Debt Through DST Investments

25:52 DST vs. REIT: Key Differences

27:27 Traditional DST Exit Strategies

28:32 Understanding DST Illiquidity

29:36 Growth vs. Income Investment Strategies

33:44 How 721 UPREIT Conversions Work

35:56 Case Study: An $8 Million Retirement Exit

38:34 Tax Planning and Future Liquidity

40:10 Accredited Investor Requirements

43:04 Planning Your DST Investment Strategy

44:38 How Quickly Can a DST Investment Close?

46:20 DST Reservations and Backup Planning

46:40 Case Study: $11 Million Farmland Exchange

48:17 Building Your Passive Retirement Plan

Tommy Thompson & Justin Kiehne

Fortitude Investment Group

Tommy and Justin help real estate investors explore tax-deferred exchanges, Delaware Statutory Trusts, passive real estate portfolios, and retirement exit strategies. Their approach focuses on investor education, diversification, and personalized financial planning.

Primary: 1031 exchange • Delaware Statutory Trust • DST investments • passive real estate income • 721 UPREIT • real estate retirement

Secondary & Long-Tail: DST vs REIT • 1031 exchange backup properties • debt replacement • taxable boot • accredited investors • real estate exit strategies • tax-deferred investing • institutional real estate • estate planning

Tags: 1031 Exchange, DST, Delaware Statutory Trust, 721 UPREIT, REIT, Passive Income, Real Estate Investing, Capital Gains Tax, Retirement Planning, Fortitude Investment Group

This episode is for educational purposes only and does not constitute financial, tax, legal, or investment advice. DST investments involve risks, including illiquidity and potential loss of principal. Consult qualified financial, tax, and legal professionals before making investment decisions.

Episode Summary

Commercial real estate attorneys John Metzger and Morgan Harris of McDonald Hopkins join Tommy Thompson and Justin Kiehne to explore the evolving South Florida real estate market through the perspective of a father-daughter legal team. John shares lessons from more than 40 years in commercial real estate law, while Morgan discusses building her own transactional practice with McDonald Hopkins in West Palm Beach, FL.

The conversation covers complex development deals, property assemblages, financing, due diligence, and the continued transformation of South Florida. John and Morgan also discuss West Palm Beach's growing reputation as part of “Wall Street South,” the influx of private capital, family offices, financial firms, and sophisticated investors, and how that growth is influencing real estate activity across the region.

They also explore common mistakes investors make before closing, how AI is changing legal work, why technology should remain a tool rather than a replacement for professional judgment, and how experienced advisors can help investors navigate increasingly complex transactions.

• Early legal planning is critical for complex acquisitions, assemblages, and development projects.
• Successful deals require coordination among owners, attorneys, lenders, and other professionals.
• Strong offers involve more than price, including due diligence, contingencies, financing, and execution ability.
• South Florida continues to attract major private and institutional capital, strengthening West Palm Beach’s “Wall Street South” reputation.
• Experienced local teams add value through market knowledge and strong professional relationships.
• Transaction planning should begin before the LOI or contract.
• AI can improve legal efficiency, but professional judgment and review remain essential.
• Investor experience helps attorneys provide practical, business-focused advice.
• DSTs can provide a passive investment alternative for owners leaving active property management.

00:00 Introduction to John Metzger and Morgan Harris

01:22 John's 40+ years in commercial real estate law

06:21 Morgan's path from art history to real estate law

11:15 Practicing real estate law in West Palm Beach

14:35 Why property assemblages are so difficult

16:58 When to bring attorneys into a development deal

19:01 Lending, distressed assets, and changing markets

22:02 South Florida, Wall Street South, and a changing real estate market

25:11 Why local relationships matter in development

28:16 AI, property owners, and changing transactions

34:21 The value of a multidisciplinary legal team

37:26 Common mistakes before signing an LOI or contract

39:15 Building a stronger real estate offer

44:13 How AI is changing the legal profession

51:49 How investor experience shapes legal advice

58:16 Ideal clients and complex real estate projects

John Metzger

Board-Certified Real Estate Attorney, McDonald Hopkins

John has practiced commercial real estate law in South Florida for more than 40 years. His experience spans development, lending, distressed assets, expert witness engagements, and complex transactions. He also helped establish McDonald Hopkins' West Palm Beach office.

Morgan Harris

Real Estate Attorney, McDonald Hopkins

Morgan focuses on transactional real estate matters, including acquisitions, development projects, private lending, and complex deal structures. Her background includes litigation, an LL.M. in Real Property Development from the University of Miami, and experience practicing in Miami and West Palm Beach. She practices with McDonald Hopkins in West Palm Beach.

Primary

commercial real estate • real estate law • South Florida real estate • West Palm Beach real estate • Wall Street South • real estate development • property assemblage • real estate investing • AI in law • commercial property • McDonald Hopkins

Secondary & Long-Tail

Wall Street South real estate • Palm Beach financial industry • South Florida private capital • family offices South Florida • West Palm Beach development • development deals • real estate due diligence • commercial lending • real estate financing • property acquisition • real estate contracts • DST investing • passive real estate investing • McDonald Hopkins real estate

Tags

commercial real estate, real estate law, South Florida, West Palm Beach, Wall Street South, Palm Beach, family offices, private capital, real estate investing, property development, commercial lending, AI, real estate attorney, DST investing, McDonald Hopkins

This episode is intended for educational purposes only and should not be considered financial, tax, legal, or investment advice. Always consult with your CPA, financial advisor, or qualified investment professional before making investment decisions.

Licensed Financial Representative Katie Rienas joins Tommy Thompson and Justin Kiehne to share how growing up in a commercial real estate family shaped her approach to investing, relationships, and wealth building. Drawing from firsthand experience managing a luxury motorcoach resort and working with high-net-worth investors, Katie explains why many successful property owners eventually seek passive investment strategies.

The conversation explores 1031 exchanges, Delaware Statutory Trusts (DSTs), alternative investments, oil and gas tax strategies, Roth conversions, and the importance of building long-term relationships in commercial real estate. Whether you're an active real estate owner or simply looking to diversify your portfolio, this episode offers practical insights into creating passive income while preserving long-term wealth.

• Relationships are the foundation of long-term success in commercial real estate and wealth management.
• Growing up around commercial finance created an early understanding of investing, trust, and entrepreneurship.
• Sports develop leadership, discipline, teamwork, and delayed gratification, all of which translate directly into business success.
• Managing investment property is far more demanding than most people realize, making passive investing attractive for many owners.
• 1031 exchanges allow investors to defer capital gains taxes while transitioning into professionally managed passive real estate.
• Alternative investments provide diversification outside the stock market while maintaining real estate exposure.
• Passive investments can reduce the stress of property management while continuing to generate income.
• Oil and gas investments may provide significant tax deductions for qualified high-income earners.
• Roth conversion strategies can help reduce future tax burdens and improve estate planning outcomes.
• Understanding an investor's goals, income needs, tax situation, and liquidity is essential before recommending any investment strategy.

00:00 Introduction to Katie Rienas and alternative investing

01:15 Growing up in a commercial real estate family

04:00 Entrepreneurship, flexibility, and choosing the industry

06:05 How sports shaped leadership and work ethic

09:45 Behind the scenes of managing a luxury RV resort

12:00 COVID's impact on the motorcoach industry

15:45 Transitioning from active property ownership to passive investing

17:15 Helping investors unlock wealth with 1031 exchanges

24:20 Understanding alternative investments and accredited investors

29:15 Matching investment strategies to investor goals

32:20 Expanding into the Louisiana real estate market

40:00 Oil & gas investing and tax planning strategies

44:30 Roth conversions and reducing retirement taxes

47:00 Why proactive tax planning matters

52:45 Family, purpose, and building a lasting legacy

Licensed Financial Representative

Katie Rienas specializes in alternative investments, 1031 exchange strategies, Delaware Statutory Trusts (DSTs), and wealth preservation planning for accredited investors. Raised in a commercial real estate family, she combines firsthand experience managing a luxury motorcoach resort with years of helping clients diversify their portfolios through passive real estate, oil and gas investments, and tax-efficient strategies.

alternative investments • passive investing • 1031 exchange • Delaware Statutory Trust • DST • commercial real estate • wealth management • passive income • accredited investors • oil and gas investing

commercial real estate investing • luxury RV resort • passive real estate investing • real estate tax strategies • Roth conversions • oil and gas tax deductions • diversified investment portfolio • estate planning • high-net-worth investing • tax-efficient investing • real estate wealth building • Delaware Statutory Trust investing

alternative investments, passive income, commercial real estate, 1031 exchange, DST investing, accredited investors, wealth management, oil and gas investing, tax planning, estate planning, real estate investing, financial planning

Disclaimer

This episode is intended for educational purposes only and should not be considered financial, tax, legal, or investment advice. Always consult with your CPA, financial advisor, or qualified investment professional before making investment decisions.

Cost segregation expert Richmond Stacker (CEO, USA Cost Segregation) joins Tommy Thompson and Justin Kiehne to unpack the tax code’s most powerful real estate tool. This episode covers the cost segregation fundamentals, why the short-term rental “loophole” is a trap, the recapture arbitrage most investors miss, and how the One Big Beautiful Bill made 100% bonus depreciation permanent starting January 19, 2025.

• Cost seg = an engineering study that reclassifies building assets into 5-, 7-, and 15-year property, front-loading 30–40% of your basis into year-one deductions.

• 100% bonus depreciation is BACK — and permanent — for property placed in service on or after January 19, 2025 under the OBBBA.

• QIP expensing (HVAC, roof, flooring) sunsets Dec 31, 2029. That piece isn’t permanent — the clock is ticking.

• Not for everyone. Skip cost seg on properties under ~$500K, on properties you’re about to sell, or when you already have losses.

• The short-term rental “loophole” is a trap. 100-hour material participation, no property manager, no 7+ day stays — most investors don’t actually qualify.

• Recapture is real, but so is the arbitrage. Offset income at 37%, recapture at 25%, and use a 1031 exchange to eliminate it entirely.

• Bought property in 2022–2024 without doing cost seg? Not too late. A Form 3115 catch-up can convert taxes owed into a refund.

• The math checks out. One client paid ~$7K more for a proper study and captured an additional $400K in tax savings.

Chapters

00:00 Intro — why cost seg is the most powerful tool you’re not using

02:00 How to explain cost seg at a cocktail party

04:00 Straight-line vs. accelerated — the $1M property math

09:00 Who’s a good candidate (and who isn’t)

19:00 The short-term rental trap

28:30 Recapture, arbitrage, and the 1031 escape hatch

33:00 Richmond’s origin story

34:00 Why cost seg is tax code, not a loophole

38:00 100% bonus depreciation and the One Big Beautiful Bill

44:00 The January 19, 2025 line in the sand

47:00 Form 3115 catch-up for 2022–2024 properties

52:30 ROI: $7K spend, $400K in tax savings

54:00 What’s next for the industry

Richmond Stacker

Founder & CEO | USA Cost Segregation

Richmond is Founder & CEO of USA Cost Segregation, a national engineering-led cost seg firm. A former mortgage broker who taught himself the tax code, he built his first proprietary cost seg software in 2019 and runs a team known for fast turnarounds and candid advisory — including telling clients when NOT to do a study.

Contact: [email protected] | usacostsegregation.com

cost segregation • 100% bonus depreciation • One Big Beautiful Bill • OBBBA • real estate tax strategy • bonus depreciation permanent

Section 168(k) • depreciation recapture • 1031 exchange • real estate professional status • Form 3115 • short-term rental loophole • QIP expensing • accelerated depreciation • USA Cost Segregation • Richmond Stacker • cost seg for 2022–2024 acquisitions

real estate, passive income, tax strategy, cost segregation, bonus depreciation, real estate investing, commercial real estate, tax planning

Educational purposes only — not tax, legal, or investment advice. Consult your CPA and a qualified cost segregation firm before initiating a study.

Episode Summary

Tax attorney and CPA Austin Carlson of Gray Reed breaks down partnership 1031 strategies (drop-and-swap, PIN notes, TICs) and the new Opportunity Zones 2.0 program made permanent under the One Big Beautiful Bill Act. If you own real estate with partners or are planning a business exit, this episode lays out the structures wealthy investors are using to defer — and often eliminate — capital gains tax.

• Solo 1031s are simple. Partnership 1031s require careful planning. When partners have different goals, involving a tax attorney early can help avoid costly mistakes.

• A “Drop and Swap” separates partner interests before a sale. Some partners can cash out while others complete their own 1031 exchanges. The IRS closely examines timing and intent.

• A Partnership Installment Note (PIN) can help when timing is tight. It allows an exiting partner to receive most proceeds upfront while keeping the partnership intact.

• QOZ 2.0 expands tax benefits beyond real estate. Beginning January 1, 2027, gains from real estate, businesses, crypto, and art may qualify for Opportunity Zone benefits.

• QOZs preserve basis, while 1031s require full reinvestment. Investors only need to reinvest the gain in a QOZ, which can provide greater liquidity.

• A Qualified Opportunity Fund (QOF) can be a backup plan. If a 1031 exchange falls through, a QOF may provide an alternative way to defer gains.

Chapters

00:00 Intro: Partnership Structuring, OZ 1.0 vs. OZ 2.0

00:47 Meet Austin Carlson (JD, CPA)

02:00 Tax Attorney vs. Accountant

04:35 When to Involve a Tax Attorney in a 1031

07:55 "Drop and Swap" Strategies Explained

10:30 Partnership Exit Scenarios and Loan Challenges

14:00 Partnership Installment Note (PIN Note)

17:55 IRS Intent Rules and Partnership Considerations

20:00 When a Tax Attorney Is Worth the Cost

23:00 Case Study: $50M Texas Ranch Exchange

26:30 Opportunity Zones for Art, Business, and Real Estate Gains

28:20 QOZ Origins and Evolution

31:00 1031 Exchanges vs. Opportunity Zones

35:30 Core QOZ Benefits: Defer, Reduce, Eliminate

38:00 QOZ 2.0 and Permanent Tax Incentives

40:30 Deferral, Basis Step-Up, and Tax-Free Growth Explained

43:00 $1M Gain Example Breakdown

44:30 New QOZ Maps and Substantial Improvement Rules

47:30 QOZ vs. 1031: Which Strategy Wins?

52:00 Timing Rules, K-1 Extensions, and 180-Day Deadlines

54:30 Using a QOZ as a Backup for a Failed 1031

56:00 Creating Your Own Opportunity Zone Fund

58:00 Existing Property Owners in Opportunity Zones

1:00:00 Wrap-Up and Future Discussion

Austin Carlson, JD, CPA

Partner | Gray Reed & McGraw LLP | Houston, Texas

Austin is a tax attorney and CPA at Gray Reed, focused on complex real estate structuring, partnership planning, 1031 exchanges, Opportunity Zone funds, and M&A. Named Houston CPA Society’s “Young CPA of the Year” and a Texas Super Lawyers Up-and-Coming 100 honoree, he serves on the Texas Society of CPAs Federal Tax Policy committee and works nationally with sponsors, family offices, and business owners on transactions from a few million to nine figures.

Connect with Austin: grayreed.com/our-people/austin-c-carlson

Opportunity Zones 2.0 • One Big Beautiful Bill • Drop and Swap 1031 • 1031 exchange partnership • Qualified Opportunity Fund • OZ 2.0 • capital gains deferral • OBBBA opportunity zones

Section 1031 • TIC exchange • PIN note • partnership installment note • swap til you drop • QOF • OZ vs 1031 • sell business defer capital gains • baby boomer business exit • new opportunity zone map 2026 • build your own opportunity zone fund

real estate, passive income, tax strategy, 1031 exchange, opportunity zones, partnership tax, real estate law, M&A, business exit, capital gains

Disclaimer

This is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance.

Because investor situations and objectives vary this information is not intended to indicate that an investment is appropriate for or is being recommended to any individual investor.

There are material risks associated with investing in private placements, Delaware Statutory Trusts ("DSTs") and real estate securities including the potential loss of the entire investment principal, illiquidity, tenant vacancies impacting income and revenue, general and real estate market conditions, lack of operating history, interest rate risks, competition, including the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and investors should read the PPM carefully before investing paying special attention to the risk section.

Risks associated with 1031 exchange- A 1031 exchange has an identification period of 45 days from the sale of the relinquished property to identify a potential replacement property or properties depending on the value of the previous property. To defer all capital gains tax, you must reinvest the entire net proceeds from the sale of the relinquished property into the replacement property and acquire debt on the new property that is equal to or greater than the debt on the property that was just sold and relinquished.

DST 1031 properties are only available to accredited investors which are typically defined as having a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two year.

The rules and regulations of the Qualified Opportunity Zone (QOZ) Program are complex, and compliance with the QOZ Program comes with significant challenges such as appreciation unpredictability, certain neighborhoods may be less accommodating to development, illiquidity for up to ten or more years, availability and cost of construction and development financing uncertainty, development and redevelopment real estate risks, as well as a number of Jobs Act interpretation uncertainty which may impact future risks, if any.

Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Fortitude Investment Group, LLC is independent of CIS.

In this episode of Unlock Your Passive Lifestyle, Tommy Thompson and Justin Kiehne dive into one of the most powerful - and most misunderstood - tools in real estate investing: the 1031 exchange. Whether you own a single rental condo or a multi-million-dollar commercial portfolio, this conversation covers what you need to know before you sell.

What You’ll Learn

• The basics of Section 1031 — a 100-year-old section of the tax code that lets you defer capital gains when exchanging investment real estate for like-kind investment real estate
• The real cost of NOT doing an exchange — 20% federal capital gains + state taxes (up to 13% in California) can mean a 30%+ haircut on your equity
• The critical timelines — day 0 (closing), day 45 (identification deadline), day 180 (purchase deadline), and why weekends and holidays count
• The three identification rules — with a deep dive into the three-property rule and why you should always use all three slots as “parachutes”
• The three rules for a fully tax-deferred exchange — equal or greater purchase price, reinvest all equity, and replace all debt
• Net lease vs. DSTs — the pros and cons of owning a single Home Depot or Walgreens versus buying a fractional interest in a diversified portfolio

Key Timestamps

• 00:00 — The misunderstood 1031 exchange
• 02:03 — The real math on a $1M sale: $300K–$400K in taxes to Uncle Sam
• 05:24 — Prep work and the qualified intermediary
• 07:50 — The 45/180 day clock and why end-of-year sales are dangerous
• 09:37 — The three identification rules (and the “parachute” strategy)
• 11:00 — Justin’s $10M Marina horror story
• 15:29 — The three rules for a fully tax-deferred exchange
• 18:15 — Like-kind, explained: it’s broader than you think
• 19:05 — Farm land → mobile home parks (a real client story)
• 21:02 — Net Lease 101
• 25:40 — DSTs: institutional real estate in $100K slices
• 29:02 — For the business-owner: sell the business and 1031 the real estate
• 32:27 — Passive lifestyle & real estate retirement

Who This Episode Is For

• Real estate investors considering a sale
• Business owners prepping for retirement
• Baby Boomers planning their real estate exit
• Growth investors using 1031s to build wealth faster
• Brokers, CPAs, and attorneys looking for client strategies

This is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance.

Because investor situations and objectives vary this information is not intended to indicate that an investment is appropriate for or is being recommended to any individual investor.

There are material risks associated with investing in private placements, Delaware Statutory Trusts ("DSTs") and real estate securities including the potential loss of the entire investment principal, illiquidity, tenant vacancies impacting income and revenue, general and real estate market conditions, lack of operating history, interest rate risks, competition, including the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and investors should read the PPM carefully before investing paying special attention to the risk section.

Risks associated with 1031 exchange- A 1031 exchange has an identification period of 45 days from the sale of the relinquished property to identify a potential replacement property or properties depending on the value of the previous property. To defer all capital gains tax, you must reinvest the entire net proceeds from the sale of the relinquished property into the replacement property and acquire debt on the new property that is equal to or greater than the debt on the property that was just sold and relinquished.

DST 1031 properties are only available to accredited investors which are typically defined as having a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two year.

The rules and regulations of the Qualified Opportunity Zone (QOZ) Program are complex, and compliance with the QOZ Program comes with significant challenges such as appreciation unpredictability, certain neighborhoods may be less accommodating to development, illiquidity for up to ten or more years, availability and cost of construction and development financing uncertainty, development and redevelopment real estate risks, as well as a number of Jobs Act interpretation uncertainty which may impact future risks, if any.

Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Fortitude Investment Group, LLC is independent of CIS.