Real Estate Tax Strategies for Investors: 1031 Exchanges, DSTs & Depreciation

Marc Lescarret (00:00)

Yeah, on the real estate front, I find a lot of similar patterns on that too. So I even clarify what I do. I manage money, I do hourly planning, and I do a whole bunch of real estate tax shelters. On the real estate front, a lot of people know me well for basically if you’re gonna sell a real estate building, you could lose more than a third of your wealth to taxes, and I help them avoid that.

I am not a ten thirty one specialist, but I get connected with it, but I could get into products called Delaware Statutory Trust that can help you avoid taxes. And I actually did one for myself.

Meghan Escobar (02:06)

Hello, everyone. Welcome back to the Real Estate Pros Podcast hosted by Investor Fuel. I’m your host today, Meghan Escobar, and I have the absolute pleasure of sitting down and bringing an incredible guest to the show today. He goes by the name of Marc Lescarret. Did I do a good job?

Marc Lescarret (02:26)

He did, okay.

Meghan Escobar (02:27)

Excellent. Okay. he is the owner and founder of Marc Alan Wealth Management. And so what we’re gonna be talking about today is what Marc does for individuals in the real estate world, how he helps individuals with tax breaks and just really educating people on how to save money when selling real estate, whether it’s a sale or it’s a death or whatever the case may be, but

I advise you to go ahead and grab your pens and papers because Marc is definitely going to be providing some great insights and value on the show today. So thank you, Marc, for joining us. I’m so happy to have you here.

Marc Lescarret (03:06)

Thanks for having me.

Meghan Escobar (03:07)

Absolutely. And diving in here, and first and foremost, for those who might not be familiar with who you are or what you do as an advisor,

Can you give us a 30,000 foot view of what your focus is these days and what markets you’re operating in?

Marc Lescarret (03:23)

Yeah, yeah. So I help people retire. I help people avoid taxes, especially when they’re selling their real estate. I have a deep research background. I feel like the financial detective. all the time when I was just telling Megan before, whenever I hear the story, I have accountant, have a visor, I’m fine. Every time I look I find something and it’s pretty amazing. it gets me pumped off too on there.

Meghan Escobar (03:47)

Can you go in a little bit more detail on, how you help individuals save money on taxes when selling real estate predominantly? Obviously, we focus on high-level executives in the real estate industry. So what are some of the services that you provide for people in the real estate world who might be looking to save some money on taxes? I think there’s a lot of people out there that might be.

Marc Lescarret (04:11)

Yeah, on the real estate front, I find a lot of similar patterns on that too. So I even clarify what I do. I manage money, do hourly planning, and I do a whole bunch of real estate tax shelters. On the real estate front, a lot of people know me well for basically if you’re gonna sell a real estate building, you could lose more than a third of your wealth to taxes, and I help them avoid that.

I am not a ten thirty one specialist, but I get connected with it, but I could get into products called Delaware Statutory Trust that can help you avoid taxes. And I actually did one for myself.

a couple of years ago, had a place in Parsippany, rented out for many years, and just the pipes kept on breaking and I raised the rent and one day I walked in and I saw just leaky pipes and just just it was a mess. And then like I had to fix it up and then it happened again.

And I’m like, that’s it. So I sold my condo. I did a 1031 into one of my products. And now I’m a 1% holder of self-storage in Gainesville, Florida. And it just got rid of the headache. So if you’re ever gonna sell real estate, that’s a key area. if you’re a landlord thinking about it, or you need help deciding should I keep or should I sell, I also do that too. I follow a thing called cap rate. everyone should be following a cap rate in this world.

Right, think about it. If you own a million dollar property, right, what is it paying you? Right? It’s you shouldn’t have a bond paying more than this property. And one, you shouldn’t be paying taxes on the rent. Yeah, that’s what I find mistakes. Some people, I mean it’s embarrassing. I see two percent or less cap rates. I mean, imagine like a million dollar property, right, paying you twenty thousand dollars a year taxes, right? Full thing taxable. when you can get out of it. You gotta completely avoid your taxes, do a ten thirty-one, get into something that’s paying you four or five percent.

And a good portion of be tax free. So it’s very I help people discover things they don’t know about themselves. so that’s that’s one of my it gets it gets me amped up. really

Meghan Escobar (06:01)

Sure. If you can’t tell, he’s very passionate about this stuff, folks. And thank you for sharing that. And one thing that caught my attention when we were chatting before was the way that you insert yourself into the business. You mentioned, you know your strengths, what you do very, very well. And you also know there’s areas that you don’t go down that lane. However, you are resourceful. And for example,

If somebody needs an attorney, you have a resource for them. if somebody, needs a CPA, you are you’re not a CPA, right? So

expand on that a little bit, like it in a world where everybody wants to be a master of everything, Marc, what what helps you make the decision on, okay, this is where I need to delegate?

Marc Lescarret (07:32)

Yeah, absolutely. So well said. So yeah, I’m not a CPA, all right. I’m not accountant, I’m not a lawyer, but I work with I can work with your lawyer, your accountant, and I point out things. So I have a heavy research background and just a lot of times accountants just they’re so busy, right? They give you like a very narrow slot like next, next, next. They’re overworked, they don’t look at it. one of the times I’m sure a lot of people reach out to me, I give a quick free review, on their tax return, you won’t believe that.

I think the last like four or five tax returns on it, I looked at landlords and guess what I saw? Missing depreciation. Right? So that means your rent’s coming in, you’re paying taxes, and these people are successful. These people are they’re making they’re like forty percent all in. I’m I’m in New Jersey and our tax is out of control. And you’re paying like forty percent rate on on your rent. and this has been going on for years on the two, so I pointed it out and then

The accountants, the CPAs, they get defensive. A lot, a lot of times they have this big thing. And I have a really cool story where I again I don’t want to challenge the CPA head on, right? So you’re the professional. So I have accountant I refer a lot of times to. And this one story was this lady had missing depreciation point. I’m like, this doesn’t look right. She sent the email to the county, and the candidate was like, This is why, blah blah blah. It’s correct. Don’t worry, we sell the property, get it back.

Which by the way was not correct. And I’m like, don’t want to be commenting too much on it. I’m gonna send it to my CPA. I sent it to him. He looked at it, Are you kidding me? And it was all wrong. It’s like and it did we discover the CPA allegedly for the client wasn’t a CPA. He was just a tax preparer and he was doing things all wrong. But like that’s the that’s the things I constantly discover things like that. And I see things like that and missed again and again.

And I saw way too often wrong or sometimes even accountants, they want to there’s a ratio of like a building right to land. it’s I a lot of times accountants say, hey, this is the tax rate or like the building value, let’s do this. And I said, No, no, no, no. I know a lot of realtors and I talk, ask around. I have I have a big network group that I could draw information in and I find things I’m like, no, you could do at a higher value. And I have other guys sending me free info.

And be like, listen, and give the accountant. So rather than like them getting an accountant and say, this is the way, this is it, we just improved it. I just did that for a recent client, recently. up the the tax break, I think some more like twenty, thirty percent higher extra tax break than they should have. So I basically take what you have and I kind of put in tailways, I make it better. So if you work accountant, I could bring up, well, what about this? What about that? And if they question it, we could go somebody else, and then they could, let the countants fight it out, not me.

Or the same with a lawyer too, right? The lawyers, same thing, right? They have a very narrow window for you, and they don’t want to go like full detective, right? It’s like next, next, next. and I ask questions on well, what about this? I could be sitting next to somebody, or in New Jersey, I sit next to them. Zoom, phone call as well, frequent calls, and I ask things that you should be asking. So I kind of take what you do and put it on a steroid. Same thing investment too. Like I run into people

Who love crypto, for instance, and they go way, way. I’m like, listen, this much crypto isn’t good, but let’s hedge it. And I teach them ways to hedge it and do cool things. Some of gold too, right? People, some people love gold, hedge the gold and do kinds. I made have gold things to generate income. somebody wanted most of their wealth and gold. I’m like, hey, listen, if it falls 50%, we’ll protect you. If it yeah, if it does nothing, it gets income. So I again, whatever you have going situation, I can I try to make it better. And I try to honor.

The client’s wishes. I’m not trying to fight them. You say, Hey, like, did you could do this? And then they’re like, wow, I did it and it’s again exciting and yeah, you see my passion.

Meghan Escobar (11:07)

It they don’t know what they don’t know and it and it’s nice to have

Marc Lescarret (11:10)

Exactly, yeah.

Meghan Escobar (11:11)

somebody who is

giving them truth. And yeah, and so we you talked a little bit about, having this team and we talked a little bit about also the importance of that, right? Like building relationships, growing your network, having the right team behind you. When it comes to, networking and growing your personal network, Marc.

What has made the biggest difference for you?

Marc Lescarret (12:15)

Yeah, I mean I had this advisor event many years ago and we have like a little think tank going on. I talked to a few other advisors as well. I think one of the biggest things I did was I took over North New Jersey Real Estate Investment Club and we meet once a month, second Wednesday of the month for nonsense, Randolph New Jersey. And we just I have as many I had forty plus people coming at certain times.

And sometimes a handful, and I go in there and I just pick people’s brains. I’m like, what worked, what didn’t work, and I’m kind of brainstorming. And I feel like some of the stuff I feel like it charity, like I feel like doing good, right? I feel like doing right for people. And some people come in and like they’re gonna hurt themselves. like for instance, I have people come in, they never did real estate investing at all. They’re gonna buy a place of several states away. And I’m not saying what makes you think you’re gonna get the best price on this deal, right? You have

Other local experts who aren’t touching that price, they have more resources, they basically employ themselves. you have to kind of be smart about getting into this on there. And I recommend in that case right a partner, right? Your friend who knows what they’re doing, piggyback, go fifty fifty. And I feel like I save a lot of people because it what would happen without the conversation for these people is that they would have bought real estate, have no experience, they would have lost a lot, it would have been a a wreck, right? You need a little experience to know what you’re doing.

To become a professional edit. Right. So it’s

Meghan Escobar (13:35)

That’s right. That’s right.

Marc Lescarret (13:36)

a monthly forced network. Yeah, I go there. So you never know who’s gonna come in the door. Yeah. A thousand members, over a thousand members. Yeah.

Meghan Escobar (13:43)

You you you just don’t, right? Like you said, sometimes there might be forty people in the room, sometimes it might be a handful, and you show up a hundred percent both times.

Marc Lescarret (13:51)

Yep. You got it.

Meghan Escobar (13:52)

Love that. And another thing that I always like to to bring into this show is moment like we’re talking about all the success and the team and the network and all those things. However, we also know that like as owners and operators and entrepreneurs, there’s always a time, a fail, a business, a deal that had gone bad. Would you mind Marc sharing one of those moments for you?

Marc Lescarret (14:16)

Sure, going bad. hmm. I think it’s probably not starting earlier in my career, right? So like before I

Meghan Escobar (14:22)

A

specific moment where you felt like you needed to pivot really fast or something like that.

Marc Lescarret (14:28)

No, I think I took way too much caution. I started this business way too late on that too. I took a lot of caution, so I kind of think it out. I’m a thinker on it too. I mean, I guess on a personal level, I could tell you something that almost went horribly wrong. It’s actually a really amazing like a a two minute story on it. And

Meghan Escobar (14:46)

Go for it.

Marc Lescarret (14:47)

Yeah, there we go. That’s like exciting one. So this is have you ever seen on like the news like where like a kid just all of a sudden ooze like

The bank like a million dollars. But it okay, so 2006, or actually no, before 2006, but yeah, around that time, I was actively trading options, right? And regul less regulation, right? Before 2008 crisis. And I was doing a thing called naked puts. And I had fun, right? It I was basically making promises to buy stocks lower with money I didn’t have. basically had $5,000, I was just boom, boom, boom, massive trade. And then it would be like in the 30s.

And I remember something for like Lehman Brothers, right? And I had fun, right? 2008, Lehman Brothers, the bank, it was all going down, right? And I would commit to buy the thing if it fell like fifty percent in a month, right? And it’s getting 10%. And by the way, if you have 10%, right, seven times in a row, or that s you make the number seventy-two, you double your money, right? So every call it seven months at ten percent monthly return, you’re basically doubling your money. So I was doing that, and I remember I had written puts on on the Lehman Brothers, and there’s some

Was like a Turkish bank or something. They had the news that they had pulled the funding, and now the stock instead of falling like 50%, it fell like 80%. I remember I was like, I had saw these things that were like five dollars against me, all of a sudden go to like 550 or like it was it was my portfolio. I put it on Facebook like way back when it was like this, like parabolic, and then boom, like it was and I I was I knew some technical analysis, but I had to get out, like it was.

It was going down so quickly. I remember September eleventh, two thousand eight. I got closed my position, but if I didn’t get it if I waited like a week I would owe like a million dollars. I guess they’d be like, Marc, pay up like so that was something where I did like unhedged and like unprotected and it had a little fun with it, but you could get hurt. But yeah, I don’t do stuff like that now, but it was fun because it’s kind of like seeing like testing your your investing limits on that too.

But after that I got so mad I bet against five companies and I was right on two and then I made back my portfolio of the thing. But it was a fun times. But I’m like, holy cow, like some of this stuff is like so risky, it’s like you do like a wrong move, like you lose everything. Like I said, imagine being a kid and now it’s like, you have like a thirty thousand dollar play account, now it’s like banks call them like, Hey, you owe us a million dollars like I don’t even know what happened in the case.

To some level, but not but that was AIG too, two thousand eight, right? They made a bunch of insurance promises they couldn’t keep up with, right? They insured all the mortgages, went belly up, pay up with what? But had to be bailed out by mom and pop. Yeah. But yeah, that was that could change my life, basically.

Meghan Escobar (17:23)

yeah, I really appreciate you sharing that. I think that’s the kind of stuff that most people don’t talk about enough. And it most certainly separates folks who are in the game to stay versus those that are, one bad deal gone wrong and they’re throwing up their hands and waving their white flag to surrender. So thank you for sharing that. And

Yeah. And as far as the, relationships go, I know that’s something that we talked about and I wanna expand on that a little bit more. I think it’s important for people to understand that building the right relationships is really what’s gonna differentiate your success versus non success. And so getting into the room, shaking the hands, I any business is a people business. Yeah. So perfect, perfect.

And before we do wrap things up here, Marc, if somebody wanted to reach out to you and connect with you and learn more about tax opportunities, what would be the best way for them to do that? Is there a social media platform? Is there a website, a phone number?

Marc Lescarret (18:20)

I would say my website is the best. so it’s Marc M-A-R-C Alan A-L-A-N. Is it Nancy? W for wealth M for management.com. (marcalanwm.com)And you go to Learning Center and there’s just all these stories and things that I have discovered. I mean it’ll blow your mind. a lot of like things I constantly get the phrase, you can do that to me, and I’m like, yeah. And it’s again, make sure your accountant approves, right? A lot of the stuff I have, some find the accountants and

teach them a few tricks as well. But it’s very amazing. especially if they want to sell real estate. If they if they’re a landlord, I have lots of clients that match money for landlords. I find that they have too much cash, right? They’re paying too much taxes, taxes keep going. And I can help them turn it off. There’s lots of strategies for that as well. any kind of capital gains concern or taxes too, it gets very complicated. I know we don’t have three hours to chat about it.

But yeah, I’m happy to have a conversation. If people are concerned about portfolio taxes or any kind of capital gains events, right? They sold the house, Bitcoin, crypto. I could most often mitigate it, sometimes eliminate it, and it gets a little it’s a long time to explain what’s a possible and then as a fee only advisor too, I get no commissions on it too. So very transparent on that too. I love that. I could go to my website, learn about it.

Meghan Escobar (19:33)

Yeah, we’ll be sure to drop that link below so you don’t have to bother, typing it, writing it down. You’ll have access right directly to Marc. And I think I don’t know if I mentioned or asked, but are you I know you you’re in New Jersey. Are you solely working with individuals in New Jersey? Are you nationwide licensed? What does that look like? Yeah.

Marc Lescarret (19:52)

I’m nationwide. I can’t do Texas. I’m not registered with Texas yet. If I have one client, most states I have some people, Pennsylvania, New York, New Jersey, Florida, Georgia as well. I have most states I can help out. I think Louisiana and Texas are the exceptions where have to register. But I mean if you have a big deal, if there’s something going on, I could have a conversation on it too, and you know, maybe I’ll register with all the states. But for the most part I could do

all the states on there too. And I do a lot by Zoom, a lot on the phone as well. And it’s always a free conversation to talk to me and I just I bring up things that you you should consider. And a lot of times I find the problem right away too that again that people don’t notice. I mean after having a visor ten years account it I see these amazing things on it too.

Meghan Escobar (20:37)

Absolutely. Absolutely. All right. Well, thank you so much. I appreciate your time. I appreciate your perspective and wisdom that you shared here with the audience today. We most certainly need people that are in this space doing things the right way. As you heard Marc, tell some horror stories of people that could have gone way left, right? thanks so much again for being here and sharing that information for us.

And for those of you that are tuning in and if you got any value from this, please be sure to hit like and subscribe. We’ve got more conversations coming in like this with operators just like Marc Lescarret. I did it again.

Marc Lescarret (21:14)

Excellent. Thank you, Megan. Thanks for having me.

Meghan Escobar (21:17)

Absolutely. We’ll see you all on the next episode.