Roundtable: Technology, Marketing, Brokerage, Government Policy, Capital, Construction & Cyber Security in Real Estate with Andreas Senie


May 24, 2022 Andreas Senie, Dan Wagner Season 4 Episode 2 Roundtable: Technology, Marketing, Brokerage, Government Policy, Capital, Construction & Cyber Security in Real Estate with Andreas Senie
Show Notes Transcript

Join Andreas Senie and special guest Dan Wagner for this Industry Sector Expert Interview as they discuss the history of Inland Family of Companies, 1031 Exchanges/Delaware Statutory Trusts aka the 401K of Commercial Real Estate, Institutional Real Estate, and upcoming changes to Government Policies affecting the Real Estate Industry. 

Sector Interviews are bonus episodes of Real Estate Roundtable - Your comprehensive all-in-one view of what's happening across the real estate industry -- straight from some of the industry's earliest technology adopters and foremost experts.

This  Sector Interview included:

Andreas Senie, Host, Founder CRECollaborative, Non Profit & For Profit Business Technology Transformation Champion, CRETech Thought Leader, Founder & Brokerage

Dan Wagner, Senior Vice President of Government Relations
The Inland Real Estate Group of Companies, Inc.,

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Your all  in one comprehensive view of what is happening across the real estate industry -- straight from some of the industry's earliest technology adopters and foremost experts. 

Join us live at 6 PM EST on the 1st Thursday of each month, across all major social media channels and wherever you get your podcasts. Learn more at

#commercialrealestate #1031exchanges #crecollaborator 

The Roundtable Sector Interview with Dan Wagner_05-24-22

[00:00:00] Andreas Senie: Welcome back to the Real Estate Roundtable for another sector interview. Sector interviews, are bonus episodes for the Real Estate Round Table. Your comprehensive all in one view, what's happening across the real estate industry, straight from some of the industries, earliest technology adopters and foremost Epps, foremost experts.

I'm Andreas Senie. Founder,  Brokerage owner and technology growth strategists for both the non-profit and for-profit sectors.

Joining me for this show is special guest, Senior Vice President Government Relations at the Inland Real Estate Group of Companies, Dan Wagner to discuss 10 31 exchanges, institutional real estate and upcoming government policy changes affecting your day-to-day business.

And the same format as our regular shows. This will be in three parts, an introduction, a bit of history who Dan is, where he's been, why he should be advising us the second diving deep into the 10 31 exchange, all the benefits it brings what you can do and what you should focus on. And. Where'd you get involved or where to getting more information, Dan welcome.

I could not be more excited to have you here for the show, with all the expertise and knowledge you bring and the Lincoln behind you included. 

[00:01:33] Dan Wagner: I'm coming at, you live from inland world headquarters here in Oak Brook, Illinois. So it's good to be here today. Thank you. 

[00:01:39] Andreas Senie: I love it. I love it. And correct me if I'm wrong, Dan, over 18 years at Inland? 

[00:01:42] Dan Wagner: years of.

Yes, 18 years. Absolutely. It's the best place I've ever worked. And it's the only, this is where I'm going to finish my career. I, I, this is, uh, a family, uh, of inland and it's coming here every day is the best thing for me. I love it. 

[00:01:59] Andreas Senie: Um, after your hair. So, uh, for our listeners tuning in the first, for the first time with you who don't know you that well, you've been at inland for 18 years.

You sit on the board of the civic Federation, part of the wellness house wellness house, not to mention you're a national association of realtors card carrying member for God knows how long, since 2004, 2007, for me and past president different associations there. What, how did you end up in government relations?

What does that even mean for us? 

[00:02:35] Dan Wagner: That's a really good question. I am, I guess you could call me the ultimate advocate. Um, the, the whole position that was created by Mr. Goodwin, Mr. Goodwin is the chairman and CEO of the inland real estate group. And, um, I guess I'll kind of give you a little bit background on inland and B.

If that helps you explain things. So. Absolutely. Okay. Um, so the thing, one of the things I love is working here for, uh, they had good one in the founders of inland. Um, there are four Chicago public school teachers and they come from absolutely nothing. So Dan Goodwin is the chairman and CEO. He was. His dad worked at a tool and dye company in Chicago, uh, uh, Bob, uh, bombs dad, he's the chief legal counsel.

His dad was a scrambled around selling auto parts to, uh, different gas stations out of his car. Um, he also was a Cantor for a synagogue. The, uh, Bob, our joke ascends is his dad was about. Uh, and then, uh, five parks. His dad was a janitor. So these guys come from nothing and they ended up, uh, becoming Chicago public school teachers.

They went to, they went to college together and they, uh, they, they got their degrees and started teaching. And in the summers they realized, wait a second, we're making $5,500 a year. We gotta do something more for our family. So they got into real estate and they got other Chicago public school teachers together.

And to give them money and they invested this money and did really well so well that they left here. And they ended up getting 42,000 apartments in Chicago. They're the largest landlord of Chicago. And they did that through limited partnerships. Well, one of the reasons why my position exists is through this limited partnership stuff with tax reform.

So it's really interesting to see that, uh, in the eighties, when the tax reform w put, it was put into place, pass through entities, like limited partnerships were really hurt and. They had a variety of their investors who were their fellow principals and teachers and family and friends. Some of them were under water, uh, and their investments.

Well, these four teachers that came from nothing, they said, they're not going to let anybody go under water. So they put all their money back into the company and they went to Walmart and they said, Hey, Walmart, I know you've never done this before, but. Do sale leasebacks with you and Walmart thought, boy, these four teachers that are interesting story, they said, okay, we'll do it.

So they became the largest landlord of Walmart. At the same time, they went to treasury and they worked with some lawyers and they were able to say, Hey treasury, we got this cool idea. We let it. 10 31 exchange people out of these underwater investments into a fractional share interest with these Walmarts and treasuries like, well, nobody's really done that before.

Yeah. Go ahead and do it. So that was the birth of inland and ten thirty one and really jump into the stratosphere because it's kind of like, it's a wonderful life moment that nobody ever heard of that before. So my position getting back to why I exist. So these four teachers are aggregated. Goodwin said.

He does. He never wants government to happen to inland again, because they did not realize this was what, what was going on in Washington. And he also is a realtor and he said the most, one of the most powerful organizations in block two was the national association of realtors. And so we created my position and I'm like the second person in it because he, he wanted to basically have a Canary in the coal mine.

He wanted somebody to be able to let them know what's going on. That will impact the industry, um, their clients and their company. So, um, so that's why my position exists and I call myself a Tom Sawyer of inland. So my job is to get all of our associations to pay the difference for us. So, um, for, for some millennials, they might not get the reference of time store here, but I'm 54, I'll be 55 pretty soon.

So that, so I gotta I'm dating myself possibly, but, uh, but obviously. The associations to work on behalf of the commercial real estate industry is a big deal. And a lot of times, uh, because inland is such a leader in the marketplace, I get to be a part of lots of organizations. So I act as a brain synapse kind of connecting different groups together.

So this 10 31 like kind exchange, um, uh, advocacy efforts for the last couple of years. It's really been, um, it's been really fun to be able to kind of bring folks together and work with everybody. And you go from the national association of realtors to the international council of shopping centers, Institute for portfolio alternatives, to the mortgage bankers association, the Craftsy.

I mean, it's just across the board, everybody's coming together and we're uniting to, uh, to help defend this really important part of our team. And inland has been, I mean, it's part of our history and culture, so that's why I exist. 

[00:07:15] Andreas Senie: Well, I'm sure it's much more than that, but that was a great synopsis of what you do on the day to day.

And for those that don't necessarily get it. And I'm speaking of my brokerage clients, once upon a time before we were working together, they came in, they were selling properties. They didn't realize all the ads. That they could all the advantages of a 10 31 pulls in economic jobs, creation, labor, as well as tax benefits.

What does it mean to the farmers on main street? What does it mean to the local municipalities? Why is the 10 31 such a big deal? When we're talking about economic. 

[00:07:50] Dan Wagner: Well, that's a great question. It's been, um, it's been really a great learning experience for me because obviously I, you know, before I got into the real estate world, I was, I was in the political world, a chief of staff to our county board chairman here in DuPage county, which is the county outside of cook.

And what I, you know, got my real estate license. And, uh, and then I got my securities license. It's for 10 31. And an inland is, uh, is really the market leader. The 10 31 space. Um, inland Duda was worked with a variety of, of lawyers and worked with the industry and created the Delaware statutory trust, 10 31, like kind of exchange.

And. That has been such a powerful tool for people who to invest in. And the 10 31, again, as I go back, it's just such a part of our culture, who we are. It makes it made sense that, um, that our founders were the ones that, you know, Mr. Goodwin was the one that'd be able to create this. And, um, and we're very proud of being the market leader in this.

Um, the 10 31 goes back to over a hundred years ago, uh, was put into place the. And really for folks to understand it, it's kind of like the 401k. And, you know, with your 401k, you put your pre-tax dollars in, you know, you make your money and you put it in it, doesn't get taxed and you invest and it grows and grows.

And then eventually when you retire, you take it out and that's when you start paying the tax. Well for, for real estate, for commercial real estate, only you're able to go from your, you know, like say you buy one apartment and you're, you're working on that and do a great job, and then you're able to sell it.

10 31 exchange kind of like a 401k into, uh, you know, a, a four flat and then you keep going up and every time you grow your portfolio, you're deferring the tax because you're using the tax money that you'd be paying uncle Sam to grow your portfolio. And then that helps you grow. And then eventually when you cash out, that's when you pay the tax.

So it's, it really is probably the best explanation of what a 10 31 is, is understanding that through like a 401k for real estate. And once people realize that, then they're. Makes a lot of sense. I know, um, a lot of members of Congress ha there's, their staff members are very young and so it's hard. It was harder for them to understand it.

They're like, boy, this sounds like a tax loophole. And when you explain it like, oh, this is the 401k real estate, but like, oh, well that makes sense. You know, I mean, can you imagine if we didn't have the 401k? I mean, that's, that's what you're talking about. It's like, if you get rid of the 10 31, it's like getting rid of the 401k and nobody would ever think about doing that.

That's how people are able to retire. So that's probably the best example of the 10 of the 10 31, but, uh, we've gone through a lot of readmissions and understanding of what the 10 31 means to the economy. I could go into all that if you want me to. 

[00:10:41] Andreas Senie: Well, I, at a high level, I mean, reducing impediments to transfer.

It just seems like a no brainer. And the more I read on it and the more I've educated clients on this simple exchange versus the security side, because security securities, you have to go through a broker dealer. They just don't know how valuable a tool it is and 

[00:11:02] Dan Wagner: sure, go ahead. Yeah, I'll be happy to, so one of the things we had, uh, you know, a few years ago when the, when the Republicans were in charge of the house and Senate and the president was president Trump, Um, they wanted to do tax reform and they went, their goal was to bring the corporate tax rate down as low as possible.

And one of the things they were looking at doing was to eliminate the 10 31 exchange and use those tax dollars. That's perceived. That would be a windfall, which is actually not, they proceeded through a windfall. And so that woke up the entire real estate round table, the commercial real estate universe.

We're kind of like shocked, like, oh my God. This is, you know, it's kind of like when your mom tells you, you go outside and play, cause it's good for you to be outside and get fresh air. Well, quantify that, right. I mean, you know that the 10 31 is good for the economy and we know how important is commercial real estate, but really that, at that moment in time, we really.

Yeah, I had our feet put to the fire to say, quantify the benefits of the 10 31, like any shade. And so that's where the industry came together like that anytime before. And we were able to work at do a great job to explain that through a link patroller and Ernst and young study of macro micro economic studies, really to evaluate.

The whole chain of the chain of command and the whole chain reaction of what happens when you do a 10 31. And so, um, so we were able to educate members of Congress during that time period. And they took the house ways and means committee, which is the jurisdiction for tax. They're the first ones. They have to put something forward and they took it off the table.

Once they realize how important the 10 31 was. But at that time, the members of Congress took that personal property that exists for 10 31. And they took that away from the tax code. So, so the right now the tax code, the thing that exists for the 10 31 is for real property. And that's what we're talking about now is real property.

The, uh, you know, president Biden ran for office. And when he ran, he said he wanted to eliminate the 31, like, like an exchange. Totally. And after he got elected, uh, our coalition came back together and we were able to educate members of Congress again, and to be able to explain to them how important it is and.

He went from eliminating it to saying, he's going to cap it at $500,000. Well, Kevin, if I have a hundred thousand dollars is, is free and commercial real estate is like eliminated. And so, um, so there's a bit of variety of things that we're able to do to educate members of Congress of just how important this is.

And, and what's interesting, Andre is that you've got. Um, this concept of the 10 31 like-kind exchanges out there, it's been the tactical for a hundred years, but there's so many issues that are on the plate in Washington. I mean, it's like if you're a member of Congress, it's like drinking from a fire hose every day of, you know, what's going on in Ukraine crisis, what's going on and, uh, health insurance and I mean, tort reform.

I mean, you, you know, you name it and when you say I'm knocking on the door, hi, I'm here to talk about the 10 31 exchange. I actually had a staff member say no, 10 31. No, it's 11. It's funny. It's like, oh my gosh, we have to educate, educate, educate. Members of Congress come in and out of the, of, uh, Washington all the time.

And like I said, the members of the staff, they're like, you know, 22 years old and they're not really burst in real estate. So the coalition that's made up of like 40, some different organizations, including, uh, which is really fun, the different groups, like the nature Conservancy. And I'll tell you why for that, uh, th the American farm bureau.

Um, you know, all these different groups and it's, it's fun to be able to understand how the 10 31 impacts everybody. So I'll just go through some different examples if I could, if that's okay with you, 

[00:14:45] Andreas Senie: please, by all means the country's far and wide, we and our audience is far and wide through. 

[00:14:51] Dan Wagner: Perfect. So I will, I will highlight that.

So one of the, one of the areas, uh, that we were able to highlight to members of Congress is. This, uh, you know, the concept is the juice isn't worth the squeeze so that the different Ernst young study, um, and Lincoln Petrova study highlight that, um, you know, president Biden thought he was going to get $2 billion by getting a year by getting rid of the 10 31.

And when they do tax, where they were going to do a tax reform and the build back better plan and all that stuff, they were looking at. Basically capping the 10 31 at $500,000 would gain about 2 billion a year for the treasury. Well, all the studies show that. With, um, all of the work that's done through transfer taxes, when properties are, are, are sold, um, all the different depreciation recapture the amount of jobs that get created, that basically you're going to be giving up.

Government's going to be giving up anywhere from. Four to $5 billion or $6 billion of taxes. So there's more taxes are going to be lost than money gained for the treasury. And so that's where we get the term that juice isn't worth the squeeze, but, but the best thing has given examples. So, uh, the under the idea of the 10 31, especially in underserved communities is important to Dell.

So anybody that's a developer, uh, like on the south side of Chicago, Bronzeville, Had, uh, this, uh, IDB Wells housing complex, it was torn down 15 years ago and nothing was there. It was a food desert. There was absolutely nothing there. And so a few years ago, uh, developers started putting in sort of putting, trying to put in a grocery store.

Well, when word got out, he was putting in a grocery store, a big firm from New York, decided to buy this product. From this guy and the 10 31 exchange into this Mariano's big, beautiful grocery store. And they plowed a ton of money into this, uh, this area that really needed it. And so it brought in jobs. It helped reduce crime.

Uh, it, it brought in more economic stimulus. So the 10 31 is the, was the capital. For this area of Chicago Bronzeville to really wake people up and say, wow, the 10 31 is important. And we were on a call with the Congressman from that area who was a Democrat. And we were talking about the 10 31 being important.

And when I explained to him that this is the grocery store that we're talking about, he's like, that's the grocery store I go to? Oh my God. And, and again, people don't realize how close it is to their home. And you have, um, the past president of the national association of realtors is bill brown. Bill is from California and he was the president of the chair of the California realtors will build a big commercial real estate guy.

And he buys apartment complexes. That's what he does. And he said, oh my gosh, Dan, um, being, you know, it's just absolutely crazy. If you were to get rid of the T 31 or capita 500. I said I couldn't buy apartments then because I used the money that would go to uncle Sam. I use that for renovating the apartment.

So he puts in new carpeting, new kitchens, all that kind of stuff. And he uses the pre, the tax dollars that would normally go to uncle Sam. He puts it into the apartment and then he's able to, uh, to make properties that are more downtrodden in an area he's able to upgrade and make them a better place.

And so, you know, that's, that's important too, to know. It's, we've talked about how he usually spends anywhere from seven to $10,000, just remodeling and that's a big deal. So that the idea that of having, um, having capital in underserved areas, You won't, I, that, that is exactly the opposite, what we want to do.

Um, we were able to talk to members of the black caucus, and they're saying, boy right now, uh, when you're talking about building a transformational walls for families and, uh, for the communities of color, to be able to pass that along to their different generations, why would you ever get rid of something that's been in the tax code for a hundred years that has benefited so many people.

Why wouldn't you want, um, why would you want, uh, people, uh, different groups that have, that are looking for growth in their economies for their families and stuff. Why would you get rid of this now? And so that was another really important thing to know about the other interesting aspect is that the different studies that we, uh, that we had, that we're talking about, the Ernst young study, they talked about how, um, You know, at least 568,000 jobs that are created a year.

So the concept of 10 31 is that owners maintain and buyers renovating. So whenever you have someone changing hands with property, they're going to put their own moniker mark on the property. They're going to paint it. They're going to put it a new roof, new asphalt, whatever it is. And all these jobs like attritions all of a sudden gets created and there's labor income.

And in 2021 alone, it was like 27.5 billion. The studies are getting updated and you can go to, um, the, uh, the 10 31, uh, website that we're going to show later to be able to read all these studies, if you want to go and do that. But we were able to talk to our local ear, the Chicago area, uh, in the suburbs DuPage county.

We went to, uh, Frankfurt. Well, he's a business manager of the IBW 7 0 1 local 7 0 1. And we're we went to them and said, Hey, uh, Frank. You know, the 10 31 creates all these jobs for electricians and in this, you know, a big deal because the international brotherhood of electrical workers are a big deal of the world.

And he said, Dan, I, we, we really like jobs, but he said, this is going to surprise you. One of the aspects for private unions, like the IBW is that we have to fund our own pensions. And I'm like, well, yeah, I guess you do that's right. He said, so if you can show me how the 10 31 being capped at $500,000 would hurt.

That's a big deal for us because we invest a lot of pension money and REITs. And so that was like a light bulb went off. Um, so we, uh, we're in limbs able to get baker McKenzie to do a study and they were able to give that to the business manager. And it clearly it showed that the value of reach would go down.

If the 10 31, it was capped at $500,000 because Reid's use 10 31 all the time to go in and out of properties. And so, again, It's deferring taxes. It's that it's not a loophole, you're deferring taxes because you're investing and growing property. You're growing the value of property. And that's a really important part.

[00:21:11] Andreas Senie: Well, and, and, and it's a common misconception that 10 31 exchanges are for the wealthy getting. It goes both ways. So, correct me if I'm wrong here. If I inherit property, I can't manage it. I've never owned a farm. And you know, all of a sudden a family member passes this farm to me or this business and these different, these different assets.

Right. What happens then? I mean, why is it, why is it a valuable to Joe, the plumber as well as Joe, the stockbroker and 

[00:21:38] Dan Wagner: right. So, so, so for, let's say a million dollar gain about 30% of that is going to go to uncle. And, you know, and you clearly, people want to take that money and they might want to go and buy it, you know, do a family vacation to whatever they want to do.

If they take the money, um, w if they're inherited, then they take that. Then they have to pay the capital gains taxes and all the other taxes are related to that. People don't realize their depreciation recapture. There's also the Obama capital gains tax for the, uh, for. All in the Obamacare. Um, so th so roughly it's that every in every place is different.

Every state is different with taxes and stuff, but roughly, roughly, roughly it's like 30% is what's going to go to uncle Sam. So if it is that it doesn't take a brain surgeon understand if you're able to have that 3,000. Work for you and it growing it in your, in your real estate, it's just like working for you as a 401k money.

Does your 401k money is, is working for you. It's growing, you're using T before tax money and it's growing and growing and growing. After you retire, you got this nest egg, then you start paying taxes, same thing with 10 31. And that's what people, once they get their head around that, then they're like, oh my gosh, that it just makes so much sense.

And it works out really well. But the other aspect of all. Which is another interesting aspect is that the other groups that are for the 10 31 are conservation groups. So, so I've actually, I sit on the board of the conservation foundation on behalf of inland, um, and the conservation foundation, their goal is to, uh, clean, they have clean water and such water to the streams, protect open space.

And one of the big, big, the big advocacy things for like the land, a land trust Alliance, the nature Conservancy is to get 30% of our land in America to be open space by 2030. So it was a 30 30 plan and they know that there's not a chance they're going to ever hit that goal. If you get rid of the 10 31 or cap it, because this is a big deal.

Remember farmers are during. And cash poor. So a farmer is not going to want to sell land to a conservation group that th that they're wanting, because they're not going to be able to have the money to pay the capital gains taxes. So the 10 31 is a beautiful thing for people to be able to utilize. And so there's a ton of examples.

Um, there's, uh, uh, rookery bay national as square, uh, S uh,

I quit. Now I had a question, uh, estuary, there you go. Estuary estuary there's in, in, in Florida. Um, so, and it's a beautiful place that was set aside, uh, by the nature Conservancy groups. That was because of the 10 31. You have the Mississippi river watershed in Iowa. A big thing for people to realize is that the Mississippi river gets a ton of nitrates in it from farms.

And so a lot of these nature groups are trying to do. Buffers to clean the water through the different, um, marshes and wetlands. And if they can do that to the water runoff, going into Mississippi, won't hit the golf and create these dead zones that are happening. And so that's a big deal for the Mississippi watershed to have land open space set aside by conservation group.

The other, uh, there's a grassland reserve program in Idaho and in Colorado, the south Boulder Creek watershed, it was a big 10 31 done that protects water, uh, the watershed for the city of Denver to get clean water. And so there's all these different aspects of the 10 31 that people might not be aware of.

But would you, would you look at going into farming a little bit when you look at the farmers. They have this whole, you know, they're in the land, this is a big deal for them. And so you have a farmer and Illinois is a great example. You know, you have these squared off tracks of land and you could have somebody having a attract 20 miles away and what they want to try to do to save.

Uh, fuel and equipment, all that kind of stuff is to try to get stuff compacted together. And so the 10 31 again, cause farmers are dirt, Reggie cash board. They don't have the money to pay the capital gains. There's a lot of 10 31 exchanges going on between farmers and that's, that's a really big deal.

Right? One of one of these aspects related to all of this stuff that we didn't really talk too much about is I can talk at a high, my securities license, my series seven and 63, and I have my real estate license. And I can talk about at a high level of what a Delaware statutory trust is. But now people are really loving this concept that inland created and inland we're the lead market bearer of this product, but people are able to take.

Commercial real estate they're there, they're there income producing real estate and they can 10 31 just like we did with, with the, um, Walmarts you 10 31 into a fracture, share insurance of something that we have. And that's, you know, the goal. And again, I can't guarantee it or like that the goal hopefully is that people get a return, uh, for, um, living income.

And then eventually when we say. They're able to get, um, another, uh, possible return again, that guaranteed back guarantee, not guaranteed, but that's the concept of it. And people really have been enjoying doing that. You have to work with a third party to do it. You have to work with it. When you talk about 10 31, you have a really important person called a qualified intermediary and you work with them.

Um, they're all, they're all at arms length of inland. We don't own them or anything like that. People that you work with, but the, these, these programs and procedures that exist are, are, are just really rock solid. And you work with these great people. These qualified intermediaries, there's a whole industry called the federal, the Federation of exchange accomodators and it's not regulated.

So it's important to get really good. Uh, companies that are bonded and insured and you have some really good companies out there, and it's important to really research that. But, um, the other thing I was going to highlight. Is that during this debate during this last debate that, um, I'm very happy to say this Dow the 10 31 is, is no longer on the table.

One of the other things that we were able to do is inland is very involved in the community. And we know a lot of elected officials and one of the elected officials who was the mayor of Naperville, the new mayor of Naperville, his name is Steve Jericho and he Naperville is the second largest economy in Illinois.

So you have Chicago and then Naperville. So it's not the second largest. But it's the second largest academy. It's a very, uh, it's a really well well-populated terrific academy, um, suburb of Chicago and here in DuPage county. And so we asked the mayor, could he talk to members of Congress? We did a, we did a zoom call with all the members of Congress and their, um, their staff.

Anybody in Washington had the opportunity to learn about a 10 31. And it was so fun to be able to have the mayor be presented on behalf of. I was able to highlight that, uh, just one qualified intermediary company over five years did $450 million worth of 10 30 ones just in the city of Naperville alone.

And the mayor was just shocked by that. He's like, oh my gosh, I didn't realize how important the 10 31 is. He said on the call. He told everybody, okay, everybody take a breath. You got. Well, that's okay though. Free again. And you realize what, you know, what he's focused on breathing. You realize how important air is.

Well, we all take it for granted. We take breathing for granted and he said, I want everybody to know the Congress. You take the 10 31 for granted. It's been a tax code for a hundred years. And you all take it for granted because in his town he had $450 million worth of 10 30 ones done, which meds that you had, medical office buildings that were getting bought and sold.

And when they got sold, they got remodeled and nobody came to the government is the city of Naperville and say, Hey, we want you to, to help us remodel this. They were able to use the pre textile. To remodel, you had this really great example, a long acted avenue, which is a major thoroughfare through the community.

It's very high end. Beautiful. There was a gentleman, older gentleman own a Kmart and the Kmart was dark. There was nothing happened in that Kmart for years. And they, I think they had a nail salon that was open and some other stuff. And the guy had this, all this place paid off for years, but, um, he didn't plan on selling it because he was going to get killed and capital the games and appreciate your capture.

So he's like, I'm going to hold onto this till I die. Well, it was just the most blighted thing with weeds and the community hated it, but guess what? The community was able to work with. The Glasgow came to this older gentleman and said, you can 10 31 exchange into this apartment, apartment complex over here, and it's for sale and you can 10 31.

And you know, you could defer the capital gains and it's phenomenal. And so that's what he did. And so what happens, and this is where we talk about the synergy and the jobs. So there were all these people hired to scrape this huge K-Mart complex industry. Strictly jobs created a scrape to get rid of it.

Then jobs created to build it and they built this brand new, gorgeous Costco, and then jobs were created for people that work there. And so that's when you talk about the 568,000 jobs a year, that this is probably one of the best examples, because you can see just that this is just one community in Naperville, a little snapshot for one time period that happened in about six months.

This happens all across the country all the time. And it's all this synergistic stuff going on in the academy that nobody's paying attention to, but it's already it's happening. It's just generally happening, naturally happy. And it's a big deal. 

[00:31:16] Andreas Senie: Oh. So it's like breathing. It's just been there. It's happening in the background until we, until we're choking.

All of a sudden take air away. Right. We don't know. And you know, it's funny. I've the first time I heard a 10 31 related to a 401k. I went, oh my God, I get it. And I like you. I looked at my series licenses and so forth. Um, it's so amazing. 10,000 people turning 65 1 every day. That's a statistic, right? Uh, many of whom have the portfolios of properties.

I wouldn't call it institutional quality, but a mixed back. And now they can take the sense that you can take this 10 31. They can evolve into the 10 31 DST product selling off this, this major commercial, which can include condos and other things and, and stop answering the phone at 3:00 AM. So not only does this work for a farmer, who's rich, uh, dirt, rich and cash poor, but it works for the guy who spent 10, 20 years.

Building up his portfolio of condos and flats and for four units to get into the next stage of life ahead of his children and then prepare it. It's a. Uh, effective at every, every cycle in stage of your real estate career, it sounds like, is that an accurate statement? 

[00:32:31] Dan Wagner: Absolutely. And, and people realtors are on the call or, you know, on this show should know they're listening is that you cannot get a commission as a realtor for doing a Delaware statutory trust, 10 31.

You have to have a securities license and you have to be with the broker. To be licensed. It's just like, you know, for a realtor to know that you have a managing broker that manages your license, you do the same thing for securities license. And I got to tell you the hardest test I've ever taken. I have a master's degree.

I've been done a lot of stuff. The hardest test I've ever taken in my life. It was a series seven test. And I tell everybody, you know, there's a guide when I pass it on the first try. I'm more of a qualitative guy than a quantitative guy, but, um, it really got into options and stuff, which is airy for me.

But, um, but I want to tell you that the realtor, they might say, well, why would, why would I ever want to try. Promote then the concept of a DSD, because I don't get a commission. Well, the strong, the realtors that really rise above are always there to be there for the client. And that's the most important thing.

And so most of the people who are, you know, the good, the top level realtors, they get it and they know why it's important, but I go around the country. And one of the couple of things I highlight for real tours is that number one, That people should know when you, when you do a 10 31 exchange, there's a variety of things in the law that you have to follow.

And this is where a qualified intermediary can really identify it. There's a, you have a 45 day period to highlight. Um, when you, when you sell it, you have 45 days to identify a property you're gonna go into, ultimately you have to close from the date of the sale to 180 days. It's gotta be done. So there's, there's certain time periods.

You gotta follow a meet and then there's a. 5% of all the, all the 10 30 ones, you have a three property rule where you can ID during that 45 day window, you can identify three properties. Well, realtors are so busy. They usually only identify one and a certain percentage of those fail. So I was at the, um, Texas association of realtors given this 10 31 presentation.

And afterwards a guy comes up to me and he says, oh my gosh, I wish I knew about this DSE because I lost my best friend. And I was confused. I said, Well, did he die? I don't want you, what do you mean? He's like, no, no. I was his broker and I sold his ranch for $15 million and we had a sure-fire deal. We're going to go with 10 30, 1 into another beautiful place.

And the last second it blew up and my best friend had to pay $4 million in taxes. And he's no longer in my best friend. He said, if I would have put that. One of your, what are the DSTs that I would have been able to use that as a backup and my friend would not have lost this money and I, and that would have been phenomenal.

And so now I know people in the realtor world that when they do 10 30 ones, they automatically a standard operating procedure, put a DST down as one of their third, one of their three choices. They want to look professional to their client. And ultimately if their due diligence and everything fails or something fails at the last minute for the exchange, then they save their client.

The other thing is, is that the DST is used to get people off the sidelines. So there's a couple in Manhattan that had a deli and their family owned this deli for years in Manhattan. It's with the property, one's worth a ton, but these senior citizens. They were slaves to their deli. They didn't know how to make money except making sandwiches.

They didn't, they couldn't grasp, you know, what could I do? Cause if they sold the building, they would be killed in capital games and they were just, they thought they were going to die at the deli. Well, a real tour heard my presentation and they went to these nice couple and they explained the DST. All these people started crying because it was their say their saving grace.

They were able to sell their property. The real tour made a commission, but most importantly, they were able to sell it. And they were able to start a whole new life by having. Wonderful. Yeah, there's passive investment that was able as the DSP, but that, that whole concept of the DST was able to be the catalyst for, uh, somebody to put their, their, their, uh, place on the market.

And as you know, now, if cap rates where they are, it's really hard to find a replacement property. And I know that, um, I was at the Beverly Hills association of realtors. And when we were explained the DST, you had people just lining up to talk to me afterwards. In California. It's really hard. When you sell to go back into another place in California, that's going to be really a creative.

And so the thing with the DSE, like, you know, like inland we'll buy stuff in Texas and Florida and Tennessee places that are more positive in regards to the pay, the tax issues. And you know, right now, It's pretty fun when you talk. So this is, this is one of the reasons I just love inland and it's such a great quality company.

Um, we joke a sentence. If there's a Guinness book of world records of somebody doing for merchant real estate deals, joke, ascends, it would, when he's in charge of acquisitions for inland he's one of the founders, his dad was the barber. I had it. So again, these guys come from nothing, but they're brilliant.

Joe purchased, he just purchased, I think just recently. Our 52nd billions piece of commercial. I mean, that's a big deal. Joe has connections that nobody ever could imagine in all around the country and every state, he knows inlands bought stuff in every state except Alaska. Um, and so we have Alaska there's there's that, you know, the rooftops aren't necessarily there, you have more caribou than people, right?

So, um, but, but it's, it's interesting. Cause we have such an incredible process where we do this due diligence. That is phenomenal. And then we also have property managers that have managed stuff for years. Like we, you know, we really have a terrific system down in place. So when you're looking at the whole due diligence at inland ducks, If, you know, the average realtor wouldn't have the wherewithal to be able to do what we do and know what the people we know and get the possible off-market deals and things like that.

So that's why it's a big deal to be able to find a replacement property by having this DSD, because inland has so much to be able to do. And, and what's so cool about the DST. Um, you can have up to 1,999 investors. Um, some of the old ways of doing this stuff was through ticks and in comments. And the problem with texts is that you can only have 35 investors.

So you have to, the minimums are huge to get involved with, but with the DST, the minimums are around a hundred thousand dollars. And so that's a big positive for people. The other huge positive is it. When it's with a tick, um, inland we'd always, whenever we did, you'd have to get all 35 of the investors to agree.

Big tribes that talk about herding cats. I mean, it's really tough, you know, you can have one person that says, yeah, I don't think we need a new roof. Well, yeah, we need to do a roof. Well, I don't think so. I mean, that's, that's all it is. But with the DST, the management is placed upon, you know, like the, the sponsor, like inland, but you know, whoever's whoever does the sponsors place in the sponsor.

So it's really like the investor. No, they're the owners, fractional shareholders of this property and that they're getting on the kind of the cruise ship. And they're just, you know, they're not going to tell the cruise director what's when they're going to stop the ship. I mean, the, you know, the captain knows what they're going to do.

So that's the concept, but you have somebody like inland with all of these years of experience, 54 years, I think now I've experienced. You, you hit, you're able to feel pretty good about it. And our track record just speaks for itself, but, but that's a big benefit for the DST so that you don't have to vote on stuff it's already done for you.

And that's, that's a big deal. The other big deal is that the loans are non-recourse to you. So you can, um, and w if you, um, if you, and you can use leverage as well, so like, I had a gentleman yesterday that met with me that said that he's going to sell a certain amount of his portfolio and it's going to be $50 million, but he has 25 million of debt.

Well, uncle Sam stills, you know, $50 million, you'd have to do a 10 31. You've gotta be able to match the debt. So we usually, you know, inland usually have. The companies that do this have different levels of debt that put our debt instruments and some, you might need more. So we might have an instrument that's 80, 20 or 50 50 levered, or we have all cash deals.

So that's the other really cool aspect of this that it's always available. And, you know, people can always take out money and do a boot and they get that's the extra money left that they want to pay for the tax. They can take a certain percentage out of that, but it's a. The DSC is a really fun to talk about because it really has been a tool that has helped so many people.

And when, uh, when farmers care about this, because a farmer is always having to figure. Well, look at the amount I'm making as a farmer. And then when they figure out, you know, when they work with their financial advisor of this DST, it's like a whole new world for them. It's again, you know, nothing's guaranteed.

I gotta be, I always have to be very careful. I don't want to give the impression that these aren't risks, there's always risk and everything, but, um, but it's been, it's been really fun to see that we're the market leader. And I think we have over 9 billion of assets under management. Um, so I, I love, uh, I love inland and, and what we stand for.

Um, we have, we have a variety of employees and I think we're up to like a, a thousand people, but we've had so many different, um, platforms and companies that we've, uh, Ryan and held. And, you know, we have a mortgage company, a mortgage company. We have a paced bond program for commercial real estate. People can put loans on their property taxes to be able to renovate their properties for green energy and green print things.

We have development company that, um, at any one time, as I think a quarter of a billion dollars going up somewhere around the country. So there's, there's all these different aspects of us. And, um, and it's so much fun because there's, every day is different. And, um, and the company. Um, it's such an ethical company and they have, one of the things I get to do is represent inland and all these fun things.

So w you know, the wellness house is something that inland is big, uh, we've been involved with, or I think it's been over 20 years and we were one of the major sponsors of their wellness house walk. And if anybody's had cancer in the lives of, well, this house provides free holistic cancer, um, uh, treatment to, uh, to anybody that needs it and our community.

And that's a big deal. And, you know, like I said, the conservation foundation, everybody, you know, they're not making more land. So keeping our land clean and safe is good. And, um, and inland is all a part of all that. And so it was pretty fun to represent inland, um, as an advocate, bringing people together.

And then, you know, it's just, it's the total American way, helping main street Americans invest in stuff and to protects one of the most important aspects of our tax code that nobody really knows about. And that's the. 

[00:43:21] Andreas Senie: 401k of real estate forever known as the 401k, you know, 

[00:43:25] Dan Wagner: where that came from. I gotta be honest with you Dan Goodwin.

He's our chairman CEO. He's I mean, he's the smartest man I've ever met in my life. And, uh, and he was, he was telling me that he's like, you know what? This is really like the 401k real estate. And so that's where, that's where the idea came from, is from him. And, and that is, and I gotta tell you underwrite, that has been the best thing to be able to explain to people, especially.

Like I said, the members of Congress and their staff, because they get it. It's like, ah, it's not a loophole. It's not that cat's getting rich. And this, this is for the average Joe, and it works out great. And you should know what are the, what are the other aspects of the 10 31? Um, the people, uh, the people fair to talk about is that when you, when you 10 31 exchange.

And you die, your heirs, get everything with a stepped up in basis. So all of that means that the tax that's owed is wiped away and it starts a fresh when someone dies. And so people think, oh my gosh, 10 31 never pays taxes. These studies, don't lean to patrol this study and the earth studies showed that over 80% of all deals done in America, commercial real estate, 10 31 deals.

And in a taxable event, it's only a smaller percentage that people get a stepped up basis and they're able to move on. But that's part of our culture in America. That it's been a wonderful thing for farmers to be able to do, because if you realize. When I, I went to, uh, I represented inland at a variety of farming events.

And when I was kind of, they called me a green horn when I went to a affirming event and I was at my booth and I would go up to a farmer and said, oh, would you like to know when you want to sell your land? I wa you know, you could do this DST and this farmer wanted to throw it out. He's like, you know, what did they kill me?

And I, and I had somebody had to pull me aside and say, you can't say that to a farmer because farmers are so proud. They're like, You know, some people are eighth generations here. They've had this one for 150 years. Well, you know, how would they had this farm for so long? How, how has that. Because of the 10 31 exchange, because that there's no way that a farm family could pay the capital gains tax.

If you didn't have the stepped up basis, they're just the farms farm families would exist anymore. It just be simply a conglomerate that would own farms and the family farm would not exist if you didn't have the 10 31. And that's a 

[00:45:44] Andreas Senie: big deal, not just farms way out development, redevelopment, any, any of these areas.

Major cities, depressed areas. It is the extra incentive to show up as a developer. It's that part of the capital 

[00:45:56] Dan Wagner: stack? Absolutely. Oh my gosh. Absolutely. And 

[00:46:01] Andreas Senie: he pays money as well as you're going in and there's, there's so much there. And then inland, uh, to your point, it has. Uh, expertise in almost all sectors.

I'm not mistaken between confidence, which is a great 

[00:46:14] Dan Wagner: thing. It's really fun. These guys. Um, one time, I think we're the fifth largest owner of, uh, of retail space in America. Um, we had, uh, all this stuff, uh, you know, throughout the years where, you know, our, our retail now is more, uh, grocery anchored shopping centers.

Um, but we, uh, we, we, we were an office now. We're, you know, we haven't been an office. The big thing that we do is multifamily is a big sector for us. Then the other sector that we're really into is, um, self storage. Those are terrific. And then of course the Amazon, uh, you know, in the industry areas for warehousing is a big deal.

And then we have another fund that we do, um, uh, mobile homes where mobile home. Um, so that's a different, that's not part of the DST, but that's, that's a different thing we do, but it's, you know, w w it's amazing the kind of context the joke is sends a has, and the inland has with this extra it's experts all over the place.

I mean, the folks that the Keith Lampi, who is the CEO of our, um, of our. Uh, 10 31 company and 90 Kiefer bomb and, um, roles. And God, we, we have some really top level people in the country that they look to. They speak to all it's all around the country, different things about, uh, how this, you know, what w what our strategy is to purchase stuff.

And, um, it's, it's so much fun. And our development company, Tony Casaccio has been doing that for many years. So you have people that, uh, this is my pen. I'm really proud. I, this is my, my 18 year pin at inland. That company pride and culture is such a big deal. It's unusual for people to stay at a company a long time.

We have people that have been here. You know, they have 25 year pins. People have been here for 30 years. Nobody wants to leave because it's a family. And when you have people that are so ethical and you work with them and you know what, you know, these teachers, again, they start in our company where they are able to save people and put other money back in the company to make sure to save them.

That ethics has transferred throughout all of who we are, and this is our culture. And so it's, it really is across the board. And, and when we do philanthropic things, when we do other things, it's, it's just really amazing to work here. So, um, I, I love these four teachers are just absolutely incredible people and it's fun.

And they, you know, they're involved in the company, running the show and they're doing a great job and it's fun to be able to be. 

[00:48:34] Andreas Senie: I love it now, I've, I've been lucky enough to, to graze the halls at inland to meet quite a few, uh, inland nurse. And if, if those of you who don't get to meet them, just look for the inland 4040, 30 under 30.

I mean, you guys really take care of your own. It's an incredible place with incredible people. And. Uh, as their record shows, incredible success. And that is, that is something you absolutely need with DSTs is a good track record. And that's what things people need to be aware of. It sounds like they can get educated well, anywhere they can call inland.

When should somebody start talking to a fiduciary or start thinking. 

[00:49:11] Dan Wagner: Well, that's a, that's a great point that this is, you know, the question is, is there, um, is there ever a time when, uh, you can't do a 10 31 and the answer is when you sell and take possession, the money you can, when you take possession of money, you, the 10 31 can no longer exist.

You have to first work with a qualified intermediary. Um, because there's is everyone knows in the commercial real estate world. It's very complex. There's, there's limited partnerships. There's ticks, there's all this stuff that people, uh, this group I talked to you yet. There were three family members and they had a land trust, and they're trying to figure out how to get out of the land trust to be able to break stuff up.

And so the first had to talk to a qualified intermediary that's most important. And you want to do that, actually this client, um, they have to use. That they play. And then two years is when they're going to sell their portfolio, but they're really smart to do it now is talk to coffin intermediary, and then they find out you find your financial advisor who can do DSTs and they can explain to you all the different aspects of them and you know, the different portfolios that could exist for them and to get into different things and to diversify.

And the other really cool aspect of DSDs is that you don't put all your eggs in one basket. You're able to put your own stuff in a fractional interest in Florida, a fractional interest in Texas. I mean, it's great to, to break that stuff up, to be able to figure that out. Um, again, real estate, isn't a, isn't a hundred percent deal.

I mean, we had DSTs that had, uh, you know, they had hotels and, you know, during that, during COVID, whatever that hotel was, was a good deal, you know, but, and now they're coming back, but, but you know, things happen. Real estate deals are real estate. Uh, but Inland's track record is what you have to take a look at and you can't, you know, I don't guarantee anything, but that's what you look at is what have people done in the past.

And that's a great example. What do you have a company that's been around for 50 some years, these guys have experienced these incredible cycles of downturns and all that kind of stuff. And, um, and they're able to, to get back up on top and, you know, during the oh seven downturn, uh, you know, these guys were the first to come out of.

Doing, um, CMBS deck. Um, we in Lynn was the first to do CMBS that out the whole country. So, um, so if you are interested in, uh, in doing anything with, um, with the DST, you want to find out more about it, call inland, um, we'll be happy to, uh, to have you talk with our experts. The other thing is if you're interested in just in the concept of the 10 31, I put on your, I think I sent you the website that the Federation are changing ambassadors, have the 10 31 tax

So that's a really good one to go to, um, all the LinkedIn control studies or all that stuff gets updated all the time. And so there's just a new update that you can take a look at. And the Federation of exchange accomodators um, they have that the Institute for portfolio alternatives does this stuff, a DCIS is another group that does this stuff.

Um, there's so many organizations that are all working together to fight on the behalf of commercial real estate. It's pretty. And the, the big, uh, the big kahuna is the national association of realtors. And when you, so just to listen to this, every member of Congress has a realtor attached to them. So that realtor is someone that might've run their campaign.

Who've might have babysat them. When I, when we were having this latest discussions with members of Congress, I was able to be on phone, on zoom calls and personal meetings with 70 members of Congress. And I'm able to talk to the national associates realtors. They gave me the local person who's connected to that member of Congress that Senator or Congressman or woman, and.

It blows their minds. You have all these people on the zoom call talking about all the statistics and then, you know, sometimes their eyes glaze over because it gets boring, you know, like, oh yes. But what ended up happening is at the end, I talk about, Hey, you know, FMA wants you to know that she wants you to know that the 10 31 is super important to the realtors.

And they're like how the act, you know, FMA know it was my babysitter. Ethel may ran my campaign and it's, it's been great. I have triplets and I was able to talk to a member, a Senator, a big, very important Senator who had triplets. And I would never have known that. He's like, how did you know I had triplets, I play while this person said it.

So that wakes them up. And so it's, it's just, it's always connecting to that local connection is everything. The realtors are phenomenal. They do research. Um, it's been, they've been incredible. And when people think that are in the commercial world, well, like inland, we're probably one of the largest commercial organizations ever involved with NPR.

And some people say, why would you ever be involved with them? They're 90% residential while they're 90% resident. They do 51% of other legislative stuff is proportional. And that's people that realize that it's super important. And so, um, inland is a very big supporter of, uh, of their, our pack. And, uh, and I know I'm, I, I donate to that.

They have a present circle where they identify members of Congress and you donate to, and, um, it's, it's really, it's pretty amazing. I, uh, I, I'm very proud of being a realtor. I'm proud of all the organizations that were before. Um, I'm the chair of the IPA pack. Um, in another organization, uh, we raised money for Navy REIT, uh, national associates, real estate, investment trusts, um, all, you know, all these folks, the real estate round table.

All these folks are. Just brilliant people who have helped protect the American way. And thank God for that because everybody's so busy, you'll pay their bills and raising their family. It's wonderful to know you have some really top level people out there that are fighting on your behalf. And I'm really proud to say the inland we're li we're we're leaders in all that.

And we invest our profits into belonging, to all these different organizations. And that helps our people that invest with us that helps everybody. And so it's, it's really fun and it's an honor to be able to represent our company with this and, um, and be able to talk to guys like you, Andre, you told me you're a great guy and I, you are.

[00:55:15] Andreas Senie: Oh, no. As I said, lucky enough to admit many lenders and it's Jonathan is fantastic, true broker. Um, right here, 

[00:55:24] Dan Wagner: he was a teacher too. 

[00:55:26] Andreas Senie: I do, I do know that he's, uh, he's just a nation networker and, um, but it sounds like for every commercial practitioner out there, if you're not up to speed on the DSTs, you need to get there.

We're headed into a down. Downturn, potentially the DST is going to help incentivize these markets, these different places to transact, and it's no cost to reach out and figure out what to do. Correct. Someone calls you no cost, no risk, no cost, all upside. Very much like the CPA slots. You can ask questions, 

[00:55:59] Dan Wagner: right?

You bet ask questions and then, you know, you interviewed, I think Anna Marie equality, she's really great and stuff, but. It's it's, it's simply asking questions and qualified intermediaries. They won't charge you a financial advisors. Won't charge you. And so it's important to know you can get all the information at your 

[00:56:15] Andreas Senie: fingertips.

Well, and thank, thank God for inland spending, putting their money out there to protect everyone else in the. Really, they started it, they protect it and they continue 

[00:56:25] Dan Wagner: to, and it's really, it's the, it's the philosophy of Dan Goodwin and, um, you know, Bob, Bob joke sends and ballparks. These four teachers, um, are still, they have the hand on the tiller and they're running the show and it's, it's really cool.

We have a really terrific staff that, and it's fun to have them at the leader at the. 

[00:56:46] Andreas Senie: Yeah, you could almost say that they're still teaching the industry a thing or two,

we were talking, it was such an animated conversation. We blew right past the markers, but to our audience, to everyone. Thank you for tuning in we're here at the top of the hour, Dan, I can't think of know. Coming in and educating this group, the audience myself, and all the work you do up in the hill. 

[00:57:10] Dan Wagner: Uh, I love it.

It's I love being an advocate and a, and I love coming at your life from inland and you get to see Illinois is a land of Lincoln. So Lincoln is my hero. My favorite book has ever read is from Doris Kearns Goodwin, a team of rivals. If anybody who ever wants a great book to read, read that it's terrific about.

[00:57:27] Andreas Senie: I love it. Um, coming from, coming from Chicago from Illinois, there you are at inland, uh, Mr. Mendoza, if you can start to bring us out, we'll wrap up, but to all our listeners again, thank you. Everybody stay safe, please tune in every month. Same time, same great channel. And then I want to have you back. Hey, I'm always 

[00:57:47] Dan Wagner: ready for it yet.

This is great. You're good. 

[00:57:50] Andreas Senie: I appreciate it and appreciate all you do. And, uh, for those tuning in download our show anywhere you get your audio, apple podcast, Google podcast, Stitcher, Spotify, or just ask, ask your Alexa to tune into the cracker round table in various sunny. Also, please, don't forget to subscribe to our YouTube.

There's a host of great content, including sector interviews with experts like Dan and Anna Maria from inland. Please do share rate and review us. And thank you everyone for tuning in as always punctual as ever. This is top of the hour. I look forward to seeing you next month.