TRM-2025MarApr

OPERATIONS

Stop Trying to Anticipate the Market

INVESTMENT STRATEGY

Your Shortcut to Energy Asset Ownership

The Bet on Housing Market Recovery THIS FREQUENTLY OVERLOOKED INDICATOR SIGNALS UNEXPECTED PRICE, DEMAND ADJUSTMENTS.

DESIGN Design With an Outside-In Strategy

JAN-FEB 2025 $ 5 .95 US :: $ 6 .95 CAN MAR-APR 2025 $ 5 .95 US :: $ 6 .95 CAN

Experience what the Think Realty Phoenix REI Summit has to offer Network with professionals in our packed vendor hall and at the cocktail reception. Meet vendors specializing in REI tools, products, and services. Attend sessions and specialty workshops on a variety of investment strategies. Level up your deal flow and partnerships with the biggest names in the business.

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PUBLISHER & CEO Eddie Wilson MANAGING EDITOR Carmen Fields FULFILLMENT COORDINATOR Blair Pierce

DESIGNER Kat Hungerford CONTRIBUTORS Luke Babich

Daren Blomquist Merrill Chandler Dominion Financial Services LLC Troy W. Eckard Alex Kaddah Gaylene Rogers Lonergan Bruce McNeilage Taylor Miller Joel Moyes Real Property Management Damon Riehl Jeff Roth John V. Santilli Jim Tannehill Michele Van Der Veen Skyler Wilson

HEY! LET’S BE FRIENDS! GET SOCIAL. STAY CONNECTED. Like, Follow & Share for the Latest Real Estate News, Trends and Insights from Think Realty Are you following Think Realty on social media? Things move pretty fast in real estate. Don’t miss out on the latest trends, tips, insights and news from your trusted resource for all things real estate investing! Follow. Like. Love. Share. Comment. You can do it all with Think Realty’s social media channels. Join the conversations in Think Realty social communities and connect with like-minded members who range from first-time to seasoned investors.

SUBSCRIPTIONS :: The annual subscription for Think Realty Magazine is $39.99 in the U.S. Order online at www.Think- Realty.com or call 816-398-4130. Provide your full name, address and telephone number. DISCLAIMER :: Think Realty Magazine, its owners, con- tractors, distributors and their respective representatives do not provide tax, accounting, investment or legal advice and make no guarantee as to the effectiveness or success of any investment or tax strategies discussed herein. Please consult your own independent adviser as to any questions you have or decision you are contemplating. ABOUT THIS MAGAZINE :: Think Realty Magazine is a publication of Affinity Real Estate Media LLC. Reproduc- tion or use of any editorial or graphic, without permission, is prohibited. We are not responsible for the content of any paid advertisements. For reprint rights; to obtain a detailed state- ment of our privacy policy; and for all single-copy requests, address changes and other subscription inquiries:

CHECK OUT OUR SOCIAL MEDIA AND CONNECT WITH US - AND OTHER INVESTORS - TODAY!

@WETHINKREALTY

thinkrealty.com | 3

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4 | think realty magazine :: march - april 2025 NMLS ID #2478266. For more licensing information visit https://nmlsconsumeraccess.org. Loans made or arranged pursuant to California Finance Lenders Law License 60DBO- 183355. AZ Mortgage Banker License #1047792, FL Mortgage Banker License #MLD2457, Idaho MBL-2082478266, MN license #MN-MO-2478266, NV Mortgage Company License #5858, OR Mortgage License #2478266, UT Mortgage Entity License #13576219. This is not a commitment to lend. All offers of credit are subject to due diligence, underwriting and approval. Not all borrowers will qualify and not all borrowers that qualify will receive the lowest rate or best terms. Actual rates and terms depend on a variety of factors and restrictions may apply. CV3 Financial Services, LLC reserves the right to amend rates and guidelines without notice.

Letter From The Editor

Strategy Beats Guesswork F or many years, real estate has been viewed as a stable investment. However, investors assessing the best return on investment are increasingly influenced by economic fluctuations, changing demographics, and technological advancements. Historical data remains a valuable resource, but considering additional variables is essential for a more strategic approach to market predictability. This issue of Think Realty aims to shed light on the complexities of market predictability, offering insights that can help both seasoned investors and newcomers make informed decisions. In recent years, inflation, inventory, interest rates, and housing affordability have all been factors to consider when making investment decisions. Sure, there is money to be made in any cycle of the real estate market, but making informed decisions based on trends in the market is essential. Arizona, for example, is a market that has sustained success and maintained its reputation as a stable market to invest in due to strong population growth, a strong rental market, and low property taxes. Think Realty will be in Phoenix, Arizona, March 27-28 hosting our REI Summit. Our speakers and sponsors will share valuable information on current trends, both for markets and lending trends. Visit www.thinkrealty.com/phoenix to see the full speaker line up and educational track information. As always, it is imperative to use multiple sources of data and information when making investment decisions. Although historical data and predictive models can be invaluable, staying vigilant is also key to navigating the real estate market successfully. Being informed empowers us to make strategic decisions, even when there is uncertainty. Understanding how these myriad factors interact can influence your ability to anticipate changes and seize opportunities in an ever-changing market. Knowledge is power, but success comes from effectively executing and applying what you’ve learned.

CARMEN FIELDS MANAGING EDITOR

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Inside This Issue

FEATURE PAGE 30 The Bet on Housing Market Recovery THIS FREQUENTLY OVERLOOKED INDICATOR SIGNALS UNEXPECTED PRICE, DEMAND ADJUSTMENTS.

DAREN BLOMQUIST

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C O N T E N T S

OPERATIONS Stop Trying to Anticipate the Market Instead, diversify your capital and dial into a stable volume vs. margin strategy. Alex Kaddah PAGE 8 Time Your Strategy to Market Cycles The real estate market isn’t just seasonal— change your marketing strategy to synchronize with your audience’s mindset and appetite. Skyler Wilson PAGE 10 The IRS Rule That May Cost You 15% Failure to properly handle FIRPTA withholding can leave buyers responsible for a hefty tax bill. Gaylene Rogers Lonergan PAGE 12 Maximize Profits, Minimize Uncertainty A well-designed business operating system ensures data-driven decisions. Jim Tannehill PAGE 16 INVESTMENT STRATEGY Your Shortcut to Energy Asset Ownership If you’ve been considering mineral rights, Section 1031 tax exchanges are a powerful tool to defer taxes while preserving equity. Troy W. Eckard PAGE 20 Build Wealth After Service Leverage VA loan benefits, take advantage of tax incentives, and apply your skills by investing in rental property. Real Property Management PAGE 24 Market-Proof Your Strategy Think real estate is slowing down? Think again. With the right insights and tools, 2025 could be your most profitable year yet. John V. Santilli PAGE 26 MARKET & TRENDS Stable Markets Aren’t Easy Street Less market volatility is good for long-term strategy but harder on short-term returns.

Midwest Multifamily Market Outperforms Nation Near-perfect benchmarks signal: If you aren’t considering Midwest investments, you’re missing out. Jeff Roth PAGE 38 Can the Office Market Recover? Real estate investors must align with evolving workplace trends and economic pressures. Taylor Miller PAGE 40 13 Tips to Spot Emerging Cities Use these indicators to dial into new markets—before they boom. Luke Babich PAGE 42 It’s Time to Toss Your Market Model If your analysis still prizes these three metrics above all else, prepare to be outmaneuvered. Bruce McNeilage PAGE 44 FUNDING How to Make Lenders Compete for Your Business Prime your deal for multiple bidders to earn more—and more favorable—terms. Damon Riehl PAGE 48 Your Borrowing Method Is Holding You Back Unlock faster, easier access to capital with automatic underwriting. Merrill Chandler PAGE 50 Flip More, Risk Less Use 100% loan-to-cost (LTC) financing to offload exposure on your next project. Dominion Financial Services PAGE 52 DESIGN Design With an Outside-In Strategy Sticking to a home’s essential elements will help you create a more salable product. Michele Van Der Veen PAGE 54

PAGE 10

PAGE 40

Joel Moyes PAGE 36

PAGE 48

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Operations

Stop Trying to Anticipate the Market INSTEAD, DIVERSIFY YOUR CAPITAL AND DIAL INTO A STABLE VOLUME VS. MARGIN STRATEGY.

ALEX KADDAH

A s Oscar Wilde once said, “expect the unexpected.” This phrase eloquently encapsulates the private real estate market. Striking the right balance between flexibility and rigidity is crucial. A firm foundation of sound business practices ensures successful underwriting, even in the face of market volatility. THE RISK OF RELYING ON A SINGLE CAPITAL SOURCE When building a business, it’s essential not to rely solely on a single capital provider or line of credit. That institution

could decide it has exhausted its funds, leaving all your pending loans, whether five or 500, in jeopardy. Diversifying your funding sources provides the flexibility and adaptability needed to consistently close quality loans, regardless of unforeseen challenges. Your organization must be prepared: Have plans and think through scenarios. There are two fundamental ways to make money in our industry: high volume with low spread or lower volume with higher spread. Not a single company that does high volume with high margins has ever succeeded. Run as far away

as possible if someone ever tells you they do that. In fact, companies that do run on riskier business models have never failed to go under. Why? Because of market volatility. We never truly know when the market will rise and fall; however, we do know it follows a cyclical pattern and is bound to happen. The second the market turns, those companies seemingly go under overnight, stop lending, leaving hundreds unemployed—uncertain about where their capital stands until the market turns right again.

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50 states. This directly ties to what the Federal Reserve does nationally, even if we are in the private real estate industry. At the same time, local market variability plays a crucial role in determining real estate trends. While many lenders market themselves as “national,” the reality is that 95% of their portfolios are composed of local loans, with only 5% spanning broader regions. Why? Because nobody knows a market better than those who are in it.

held and sold loans provides financial stability and flexibility.

LEVERAGE TECHNOLOGY FOR SMARTER DECISIONS. A loan origination system (LOS) that prioritizes data-driven insights can help lenders track market trends and borrower behavior effectively. By fostering flexibility, maintaining sound underwriting practices, and embracing innovative tools, lenders can position themselves to thrive in any market. In real estate lending, expecting the unexpected isn’t just advice—it’s a necessity for long-term success.

ADJUSTING TO MARKET SHIFTS

Even though rates dropped across the board, just over 10% of states are still seeing rising rates. Sometimes lenders cannot combat rates because they must remain competitive. However, a common strategy among lenders is to increase the number of points charged to the borrower. For example, in Michigan rates dropped from 11% to 10%; however, the average points increased from 2 to 3, allowing lenders to maintain their overall take-home revenue. This illustrates how lenders adapt to market changes— shifting their pricing strategies to remain profitable despite rate fluctuations. Although perfect market predictability remains unattainable, adopting strategies that would have worked for successful lenders can help organizations lend with greater confidence. DIVERSIFY YOUR FUNDING SOURCES. Relying on a single capital provider increases risk. Instead, lenders should establish multiple funding relationships to ensure liquidity during market shifts. HOLD AND SELL LOANS STRATEGICALLY. Maintaining a balance between

ALEX KADDAH

Alex Kaddah has been at the forefront of leveraging cutting-edge technologies to drive innovation and efficiency within the industry. With a master’s degree in analytics and artificial intelligence and several years of hands-on experience, Kaddah has helped Liquid Logics implement advanced data-driven strategies and solutions that significantly enhance business operations. Before joining the family enterprise, Kaddah gained valuable experience as a Division 1 athlete, developing

IS IT POSSIBLE TO PREDICT THE MARKET? When it comes to predicting market trends, my Financial Investment 3000 professor taught us that top analysts spend 100 hours a week and get paid the big bucks to make financial decisions to outperform the market, only to get beaten by a monkey throwing darts at a dart board. That’s not to say you should go out and purchase a dart board, but there is some truth behind the logic. The last quarter of 2024 saw interest rates and loan amounts drop across the board, in 38 of

people and personal skills in a high-stakes, high-performance

environment. Outside of work, Kaddah is passionate about all things sports. If competition is involved, Kaddah will be there watching or competing.

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Operations

Time Your Strategy to Market Cycles THE REAL ESTATE MARKET ISN’T JUST SEASONAL—CHANGE YOUR MARKETING STRATEGY TO SYNCHRONIZE WITH YOUR AUDIENCE’S MINDSET AND APPETITE.

SKYLER WILSON

R eal estate is a game of cycles, and every savvy investor knows it. It’s no secret that what goes up must come down. In real estate, these patterns can feel as predictable as the seasons, at least to those who know where to look. Understanding these cycles isn’t just an academic exercise; it’s the secret for successful marketing strategies. If you’re in the business of buying, selling, or investing in real estate, knowing how

to align your marketing efforts with the market’s natural rhythm can mean the difference between boom and bust. Think back to the early 2000s. Real estate was skyrocketing. We enjoyed low interest rates and easier access to credit. Everyone and their neighbors were jumping into the market. Then came 2008, and we all know how that went. What’s fascinating is how these ups and downs follow familiar patterns—

patterns that savvy marketers can tap into to make smarter decisions and drive better results. Let’s break this down.

THE FOUR REAL ESTATE CYCLE PHASES Every real estate cycle has four key phases: expansion, peak, contraction, and recovery.

During the expansion phase, there’s high demand, rising prices, and optimism

10 | think realty magazine :: march - april 2025

in the air. Marketing during this phase is about standing out in a crowded market. This is the time to show off your properties, highlight unique selling points, and capture that buyer FOMO (fear of missing out). Social media ads showcasing stunning visuals of homes or investment properties work wonders here. People want to feel like they’re part of the action. Then comes the peak. This is where things get dicey. Prices are at their highest, and the market starts feeling a little too hot to handle. Marketing strategies during this phase should shift to cautionary tones. Focus on educating your audience about value and sustainability rather than riding the hype train. Thought leadership content, like blog posts about avoiding overpaying or webinars on smart investing, becomes crucial here. You’re not just selling a property; you’re selling peace of mind. Now, the contraction phase—a polite way of saying the market’s tanking. This is where many businesses panic and slash their marketing budgets, which is a huge mistake. If anything, this is the time to double down. Why? Because when everyone else goes quiet, your voice stands out. Marketing during a downturn should focus on affordability and opportunity. Highlight deals, foreclosures, or properties with high ROI potential. Think of it as the real estate version of “buy low, sell high.” The final phase is recovery. The market starts to stabilize and confidence slowly returns. This is the perfect time to rebuild trust with your audience. Showcase success stories, testimonials, and case studies. People are looking for

reassurance the market is back on track, and your marketing should reflect that optimism without being overly flashy. BE A CHESS MASTER So, how does this tie into your marketing plan? Simple: Market predictability allows you to play chess while everyone else is playing checkers. By understanding where the market is in its cycle, you can tailor your messaging, target the right audience, and allocate your budget more effectively. For example, let’s say you’re working in Akron, Ohio, a city currently experiencing a housing boom. Your marketing should focus on urgency. Use phrases like “Act Now,” “Limited Time Offers,” or “Properties Moving Fast” to tap into that psychological need to act quickly. Conversely, during a downturn, your messaging should emphasize stability and long-term value. Words like “Safe Investment,” “Affordable Options,” and “Future-Proof” will resonate more. This is also where technology comes into play. Predictive analytics, AI tools, and market trend reports can provide invaluable insights into where the market is headed. Imagine running a campaign targeted at first-time homebuyers just as the market begins to recover. Or launching a video series on smart investing during the peak phase, positioning yourself as the voice of reason in a frenzied market. But let’s not forget the human element. Real estate is, at its core, a relationship business. Historical patterns may guide your strategy, but authenticity is what seals the deal. Share real stories. Highlight the human impact of these market cycles. Show how a downturn became an opportunity for a young couple to buy their first home or how a

savvy investor capitalized on a recovery phase to grow their portfolio. The takeaway here is that market predictability isn’t just about knowing what’s coming; it’s about using that knowledge to craft marketing that resonates. The key is to stay adaptable, authentic, and aligned with what your audience needs. So, the next time you’re planning your marketing strategy, don’t just look at where the market is. Look at where it’s going. Anticipate the needs, fears, and dreams of your audience at each phase of the cycle. Because in real estate, as in marketing, timing isn’t just everything—it’s the only thing.

SKYLER WILSON

Skyler Wilson is an entrepreneur obsessed with video production and marketing. It started with making YouTube videos in middle school,

then interning at a marketing firm and church, mastering editing and live production.

Wilson founded video production and marketing company Shift Z in 2022 and Retro Current Marketing in 2023, targeting music artists and real estate pros. He offers a fresh perspective, blending creativity, leadership, and processes. Wilson has a degree in marketing from the University of Georgia.

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Operations

The IRS Rule That May Cost You 15% FAILURE TO PROPERLY HANDLE FIRPTA WITHHOLDING CAN LEAVE BUYERS RESPONSIBLE FOR A HEFTY TAX BILL.

GAYLENE ROGERS LONERGAN

D id you know real estate buyers in the U.S. are required to ensure the seller is either a U.S. citizen or has a U.S. government-issued tax identification number? Otherwise, the buyer could be responsible for a 15% tax bill to the IRS, based on the Foreign Investment Real Property Tax Act (FIRPTA) established in 1980. The purpose of the law is to ensure all foreign investors pay the IRS the taxes due based on gains from the sale of U.S. real property. THE CHALLENGE If the seller is not a U.S. citizen or does not otherwise have a tax ID number issued by

the U.S. government, then the government holds the buyer responsible to have the necessary exemption documentation, or the buyer must withhold up to 15% of the gross proceeds and pay it directly to the IRS. If the money is not withheld according to this law, the buyer may also be required to pay penalties. Normally a buyer satisfies this requirement by having the title company obtain an executed and completed Evidence of Non-Foreign Status form from the seller. This form must include the seller’s U.S. taxpayer ID. This typically settles the matter unless the seller is indeed not a U.S. citizen or does not have a tax identification number. If the seller

does not have the required tax ID number, then unless the seller is willing to have the buyer withhold 15% of the gross proceeds from the sale, the seller must file certain documentation with the IRS, which can delay the sale of the property. FIRPTA EXEMPTIONS Many real estate investors and the professionals who advise them are aware of certain exemptions to the law, such as a personal residence exemption (depending on the price of the sale), a withholding certificate, and affidavit of non-foreign status. An often-missed requirement, however, is related to a potential foreclosure. If a

12 | think realty magazine :: march - april 2025

[U.S. real estate buyers] are required to ensure the seller is either a U.S. citizen or has a U.S. government- issued tax identification number.”

GAYLENE ROGERS LONERGAN

▷ THE RECIPIENT MUST ENSURE NO SUBSTANTIVE WITHHOLDING LIABILITY IS INVOLVED IN THE TRANSACTION. Consulting with a real estate attorney about all the documents necessary for a legal real estate transaction before the transfer can save the transferee, whether a buyer or a lender in a foreclosure situation, a lot of money, time, and aggravation. This article is provided for educational reasons exclusively and is not meant to be construed as legal advice. The Lonergan Law Firm, PLLC, will represent you only after being retained and that agreement is made in writing

property owner transfers the property title to the lender as a deed in lieu of foreclosure instead of going through the foreclosure process, the transaction may also be required to comply with the withholding requirement. However, the transaction can still be considered exempt from FIRPTA provided certain conditions are met. These include: ▷ THE RECIPIENT OF THE PROPERTY MUST ASSUME ALL DEBT (IF ANY) SECURED BY THE REAL PROPERTY. ▷ THE TRANSACTION MUST NOT BE STRUCTURED FOR THE SPECIFIC PURPOSE OF AVOIDING ANY REQUIRED FIRPTA WITHHOLDING.

Gaylene Rogers Lonergan founded The Lonergan Law Firm, P.L.L.C., a real estate law and banking law practice and real estate closing office, headquartered in Dallas, Texas, in 2000. She has been serving clients throughout Texas since then. Lonergan has more tha 40 years’ experience dealing with virtually every aspect of commercial and residential real estate law, banking, and title transactions.

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Real ROI

The real difference in using Real Property Management—optimizing your ROI.

Using the right professional property management firm can help you earn more, not less. As the largest single-family residence management franchise in North America REAL Property Management has more than 30 years of experience doing just that for clients. There are many ways REAL Property Management can help maximize your investment and even help you with ways to monitor financial goals for your real estate. That’s the Real Difference.

Visit www.realpropertymgt.com to learn how Real Property Management can put our experience to work for you, giving you real commitment, real ROI and real peace of mind.

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Real Property Management is the trusted leader in reliable, cost-effective management of residential properties. With local expertise, highly-trained and responsive teams, independently owned and operated Real Property Management franchisees collectively manage tens of thousands of properties for individuals, investors, and institutions throughout North America.

We Offer:

Comprehensive Marketing and Advertising For each day a property is vacant, that’s

Online Reporting Owners maintain control of their property and keep tabs from afar using their own online account, with easy access to updates on property activity, including vacancies, leasing, maintenance, property evaluations and financial reports. Cost-Effective, Reliable Maintenance Relationships with preferred vendors result in discounted equipment and services. Maintenance staff is available 24/7 to handle emergencies and to make sure maintenance is timely, cost-effective and done in a professional manner. Timely Rent Collection Nothing affects cash flow more than late or missing rent payments. In addition to offering incentives for paying rent on time, our collection processes are professional but tough, and we are extremely diligent in collecting rent through a systematic, timely process. Strict and Compliant Evictions Even with careful placement there is occasionally a tenant who needs to be evicted. Our offices are knowledgeable in state and local landlord and tenant laws. If rents are not paid on time, we strive to minimize costs by following the legal steps quickly and efficiently to get the property leased again.

money lost. Professional management costs are easily offset by shorter vacancy. Our advanced planning and heavy advertising gets vacancies filled fast.

Thorough Tenant Screening and Selection

Placing the wrong tenant can quickly cost you more than professional management fees. We make every effort to find tenants who will pay rent on time and take care of the property with the use of criminal, credit, and employment checks. Full-Service Leasing In addition to advertising properties and screening tenants, our full-service leasing process also includes rent-ready guidance, market rent analysis, professional showings, move-in property assessments, and professional tenant education at lease signing. Routine Property Evaluations Regular assessments of both the inside and outside of your rental property ensure tenant compliance with the lease and identifies maintenance needs to preserve your property.

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Operations

S taying ahead of market trends and making informed decisions are the hallmarks of a successful investor. If you feel like you’re constantly playing catch-up or making decisions based on gut instinct rather than data, it’s time to reevaluate how you operate. Enter the business operating system (BOS), a framework designed to streamline your processes, improve

efficiency, and give you clarity to navigate an unpredictable market.

WHY A BOS MATTERS Imagine running a real estate investment portfolio like a well-oiled machine. With a BOS like the Empire Operating System, you gain a comprehensive roadmap that aligns every aspect of your business, from lead generation to deal closing and portfolio management. It’s not just about improving efficiency; it’s about building a scalable system that can adapt to market changes while keeping your goals front and center. The real estate market is influenced by numerous variables (e.g., interest rates, economic shifts, policy changes, and demographic trends). Without a structured system, it’s easy to get overwhelmed by the sheer volume of information. A BOS allows you to focus on the key metrics that drive success, ensuring you make data-driven decisions rather than reactive ones.

SPONSORED CONTENT Maximize Profits, Minimize Uncertainty

PREDICTABILITY: THE HOLY GRAIL OF REAL ESTATE INVESTING

A WELL-DESIGNED BUSINESS OPERATING SYSTEM ENSURES DATA-DRIVEN DECISIONS.

While no one can predict the future with absolute certainty, a BOS gives you the tools to analyze trends and anticipate market movements. For instance,

JIM TANNEHILL

16 | think realty magazine :: march - april 2025

consider the housing market trends of the past decade. Investors who had systems in place to monitor key indicators like inventory levels, interest rates, and population growth were better positioned to seize opportunities during booms and mitigate risks during downturns. By implementing a BOS, you create a foundation of predictability within your operations. This doesn’t mean you’ll avoid risk entirely, but it does mean you’ll have the foresight to adapt and pivot as needed. For example, if rising interest rates are predicted, your system can help you evaluate the potential impact on cash flow for your existing properties and provide guidance on whether to refinance or hold steady. A GAME CHANGER FOR REAL ESTATE INVESTORS The Empire Operating System is designed with entrepreneurs in mind. Its step-by-step approach helps you: CLARIFY YOUR VISION. Define where you want your business to go and what success looks like for you. This ensures every action you take aligns with your long-term goals. CREATE CONSISTENCY. Standardize processes so tasks are completed efficiently and effectively, whether managing tenant relationships or closing a deal. IMPROVE ACCOUNTABILITY. Empower your team with clear roles and responsibilities.

A BOS gives you the tools to analyze trends and anticipate market movements.”

estate market. Investors with robust systems were able to weather the storm, while those without a BOS struggled to adapt. Whether you’re facing a global crisis or a local economic downturn, a BOS ensures you have contingency plans in place and the ability to respond swiftly. For example, during the pandemic, many investors had to pivot to virtual tours and online tenant applications. Those with systems already in place for digital marketing and tenant management were able to transition smoothly, while others scrambled to catch up. This highlights the value of having a proactive, rather than reactive, approach to your business. FIRST STEPS Implementing a business operating system might seem daunting, but the benefits far outweigh the initial effort. Start by identifying the areas of your business that feel chaotic or inconsistent. Is it lead generation? Property management? Financial tracking? Once you’ve pinpointed the gaps, you can begin to build systems that address them. The Empire Operating System provides a comprehensive framework to guide

growth, whether you’re expanding into new markets or increasing the size of your portfolio. MARKET DATA INSIGHTS One of the biggest challenges in real estate investment is translating market data into actionable insights. With a BOS, you’re not just collecting data; you’re turning it into a strategic advantage. For instance, if data shows an increase in demand for affordable housing in your area, your system can help you decide whether to acquire new properties, renovate existing ones, or adjust your rental pricing strategy. Moreover, a BOS helps you identify patterns that might otherwise go unnoticed. Perhaps you notice a seasonal trend in tenant turnover or a correlation between marketing spend and lead quality. Armed with this knowledge, you can fine-tune your operations for maximum ROI.

When everyone knows what they’re accountable for, productivity soars. ADAPT TO MARKET CHANGES. Use data-driven insights to stay ahead of trends, making it easier to pivot when the market shifts. SCALE SEAMLESSLY. A scalable system ensures you’re prepared for

RESILIENCE IN UNPREDICTABLE TIMES

The COVID-19 pandemic underscored the importance of resilience in the real

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you through this process. It’s not just about creating systems for the sake of it; it’s about aligning your operations with your vision and equipping you to thrive in any market condition. In the world of real estate investment, unpredictability is a given. But with a business operating system, you can turn uncertainty into opportunity. By streamlining your operations, improving decision-making, and staying ahead of market trends, you’re not just surviving—you’re thriving. So, if you’re ready to take your real estate business to the next level, start by implementing a BOS. With the right systems in place, you’ll have the tools, confidence, and clarity to navigate the market’s ups and downs and achieve lasting success.

JIM TANNEHILL

Jim Tannehill has been an entrepreneur for more than 10 years. He is Empire Certified, Trainual Certified and an expert in LucidCharts. A business coach, Tannehill has consulted with more than 100 companies in many different industries and verticals. As chief operating officer of Empire Operating Systems, Tannehill oversees the complete operating picture for the company and ensures that all Empire clients are moving forward in the Five Phases of Business.

18 | think realty magazine :: march - april 2025

With the arrival of a new presidential administration, real estate investors are bracing for policy shifts that could shape the market in the years ahead. Historically, transitions in power bring a mix of policy changes that influence the markets—some immediate, others gradual. While no one can predict with certainty what lies ahead, understanding the potential implications and remaining adaptable is critical. Changes in tax policies, interest rates, and housing regulations are among the key areas that may influence real estate investing strategies. TAX POLICY: WHAT TO WATCH Tax policy is a pivotal factor for real estate investors, particularly during transitions of power when changes to capital gains taxes, deductions, and 1031 exchanges often come under review. Adjustments to capital gains rates, for example, could discourage property flipping, prompting investors to hold assets longer, which may lead to greater market stability. On the other hand, policies like permanently extending mortgage interest deductions could make homeownership more appealing, driving demand and potentially elevating property values. As these potential shifts unfold, investors must stay informed to adapt their strategies and seize emerging opportunities. INTEREST RATES: A BALANCING ACT Interest rates are one of the most immediate factors influencing real estate. Although the Federal Reserve operates independently, its policies are often determined by broader economic goals set by the administration. If controlling inflation becomes a priority, rates may rise, increasing borrowing costs for acquisitions and development. Alternatively, if economic growth is a central focus, rates could dip, making capital more affordable and fueling market activity. While there were hopes for interest rate reductions in the near future, real estate investors should prepare for rate fluctuations that can significantly impact both short- and long-term financing strategies. ADAPTING TO REGULATORY ADJUSTMENTS Regulatory changes and programs aimed at tackling housing shortages and affordability challenges could also impact the real estate market. Adjustments to building and permitting regulations, for example, have the potential to bring more homes to market faster. “He’s bringing a lot of people from the real estate industry into his administration who understand how growth takes place. If we’re able to remove some of the red tape—then we’ll be able to expedite these projects,” said Bo Belmont, founder of Belwood Investments, during a recent episode of Unconventional with Bill Tessar, the podcast hosted by CV3 Financial Services’ CEO. At the same time, new regulatory measures—such as expanded rent control—could impact profitability in certain markets, requiring investors to stay agile, informed, and adaptable to uncover opportunities in a changing landscape. SEIZING OPPORTUNITY IN UNCERTAINTY While change often brings uncertainty, it also opens doors to new opportunities. Investors who stay informed and adaptable are best positioned to capitalize on trends, such as increased demand for new construction developments and growth in secondary markets. At CV3 Financial Services, we are committed to empowering real estate investors with the tools and insights needed to succeed. By combining innovative financing solutions with a deep understanding of market dynamics, we help you stay ahead—no matter the political or economic climate. The Impact of a New Administration on Real Estate Investing NAVIGATING CHANGE:

(844) 721-3733 | www.CV3financial.com/think-realty

NMLS ID #2478266. For more licensing information visit https://nmlsconsumeraccess.org. Loans made or arranged pursuant to California Finance Lenders Law License 60DBO-183355. AZ Mortgage Banker License #1047792, FL Mortgage Banker License #MLD2457, Idaho MBL-2082478266, MN license #MN-MO-2478266, NV Mortgage Company License #5858, OR Mortgage License #2478266, UT Mortgage Entity License #13576219. This is not a commitment to lend. All offers of credit are subject to due diligence, underwriting and approval. Not all borrowers will qualify and not all borrowers that qualify will receive the lowest rate or best terms. Actual rates and terms depend on a variety of factors and restrictions may apply. CV3 Financial Services, LLC reserves the right to amend rates and guidelines without notice.

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Investment Strategy

I f you’ve ever considered diversifying your portfolio, mineral rights might be a valuable asset to explore. This article will guide you through the basics of a Section 1031 exchange, how it works, and how to use it to acquire mineral rights, all while deferring taxes that would otherwise be due upon the sale of a property.

WHAT IS A SECTION 1031 TAX EXCHANGE?

A Section 1031 exchange, named after Section 1031 of the U.S. Internal Revenue Code, is a tax strategy that allows you to defer paying capital gains taxes when you sell one investment property and use the proceeds to buy another similar property. The primary benefit of a 1031 exchange is the ability to defer taxes on the sale of real estate, which can be particularly beneficial for real estate investors looking to reinvest without taking a significant tax hit. This tax-deferred exchange applies to like-kind properties, meaning the property you sell must be of the same nature or character as the property you purchase. The tax deferral is a powerful tool for growing your investment portfolio because it allows you to use all your equity for reinvestment

SPONSORED CONTENT Your Shortcut to Energy Asset Ownership IF YOU’VE BEEN CONSIDERING MINERAL RIGHTS, SECTION 1031 TAX EXCHANGES ARE A POWERFUL TOOL TO DEFER TAXES WHILE PRESERVING EQUITY.

rather than to immediately pay capital gains taxes on the gains.

HOW DOES A 1031 EXCHANGE WORK? The mechanics of a Section 1031 exchange are relatively straightforward. Here’s a brief overview of the process. SELL YOUR PROPERTY. Start by selling a property that qualifies for a 1031

TROY W. ECKARD

20 | think realty magazine :: march - april 2025

exchange (typically an investment property, not your primary residence). IDENTIFY A REPLACEMENT PROPERTY. You have a limited amount of time—45 days from the sale—to identify the property you want to acquire as a replacement. The IRS allows you to identify up to three properties, but there are specific rules on which properties you can identify and how you must do so. CLOSE THE DEAL. After identifying the replacement property, you must complete the purchase within 180 days from the sale of the original property. USE A QUALIFIED INTERMEDIARY. The IRS requires you to use a qualified intermediary (QI) to handle the funds during the exchange. This ensures you do not have access to the proceeds from the sale, which would disqualify the exchange. IT’S A TAX DEFERRAL, NOT AN ELIMINATION. Keep in mind that a 1031 exchange does not eliminate tax liability on the property being sold; it simply defers it. However, using the exchange structure can be a way to defer taxes while growing your investment. You’re probably wondering whether a Section 1031 can be used to acquire mineral rights. The short answer is yes. You can use a 1031 exchange to acquire mineral rights as long as the transaction meets certain requirements.

This tax-deferred exchange applies to like-kind properties, meaning the property you sell must be of the same nature or character as the property you purchase.”

(e.g., oil, gas, coal, and precious metals) from a specific parcel of land. If you own mineral rights, you might lease those rights to an energy company or mining operation, which then pays you royalties based on the extraction of resources. Acquiring mineral rights can be an appealing way to diversify your investment portfolio, especially in areas where energy resources are abundant. They have the benefit of being unburdened by many of the liabilities associated with traditional real estate, like maintenance and tenant issues. However, mineral rights are distinct from the real estate on which they sit. They represent a separate asset class from the physical land, which is why it’s important to understand how Section 1031 exchanges apply to them. USING A 1031 EXCHANGE TO ACQUIRE MINERAL RIGHTS To successfully acquire mineral rights through a 1031 exchange, you must ensure the exchange is between like-kind

UNDERSTANDING MINERAL RIGHTS

Before diving deeper, it’s important to understand what mineral rights are and why they can be an attractive asset to own. Mineral rights give the holder the legal ability to extract minerals

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properties. This can be a bit tricky because mineral rights are considered intangible property, and real estate is considered tangible property. However, the IRS allows for the exchange of both tangible and intangible property as long as they are used for business or investment purposes. The key factor in a 1031 exchange involving mineral rights is that the properties being exchanged must both be held for investment or used in a trade or business. Here are some important points to consider: BOTH PROPERTIES MUST BE HELD FOR INVESTMENT PURPOSES. The property you are selling and the mineral rights you are acquiring must both be used for investment purposes. If you are selling a rental property and acquiring

The IRS allows for the exchange of both tangible and intangible property as long as they are used for business or investment purposes.”

mineral rights can vary depending on the location, type of resources, and existing leases, so due diligence is key to making a sound investment. USE A QUALIFIED INTERMEDIARY. As with any 1031 exchange, you must work with a qualified intermediary to handle the exchange of funds. The QI will ensure the exchange complies with IRS rules and can help you navigate the complexities of a mineral rights transaction. A Section 1031 tax exchange is a powerful tool that can help you defer taxes when selling real estate, giving you more capital to reinvest. If you’ve been considering mineral rights, a 1031 exchange can be an excellent way to do so while preserving your equity. However, because the process can be complex, it’s crucial to work with professionals, including real estate experts, tax advisers, and attorneys who can guide you through the intricacies. At Eckard Enterprises, we have 40 years of experience helping accredited investors directly own mineral rights and other royalty-generating energy assets. We’ve seen firsthand how 1031 exchanges have

helped our clients expand their portfolios beyond traditional real estate. Reach out to our team at info@eckardenterprises. com to learn more about mineral rights and the benefits they have to offer.

mineral rights that you intend to lease out for royalties, this could qualify as a like-kind exchange.

TROY W. ECKARD

MINERAL RIGHTS CAN QUALIFY AS LIKE- KIND PROPERTY. The IRS has determined that mineral rights can be considered like-kind property with real estate when both properties are held for investment. This means that if you’re selling an investment property, you can use a 1031 exchange to acquire mineral rights, as long as the mineral rights are also intended for investment or business use. DUE DILIGENCE IS ESSENTIAL. Although the IRS allows the exchange of mineral rights, the process can be more complicated than a typical real estate transaction. You must carefully evaluate the mineral rights you are acquiring, ensuring they are legally sound, and you may want to consult with experts to understand the potential for extracting resources from the land. The value of

Troy W. Eckard uses his four decades of oil and gas expertise to lead Eckard Enterprises LLC and make direct ownership of oil and gas assets possible for high-net-worth investors. Since 2019, his company has secured $850 million in capital across more than 90 projects and acquired mineral rights, working interests, and the second- largest natural gas pipeline in the Gulf of Mexico. Eckard currently owns interests in more than 7,000 wells and has distributed $110 million in cash flow to investors during the last four years.

22 | think realty magazine :: march - april 2025

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Investment Strategy

SPONSORED CONTENT Build Wealth After Service LEVERAGE VA LOAN BENEFITS, TAKE ADVANTAGE OF TAX INCENTIVES, AND APPLY YOUR SKILLS BY INVESTING IN RENTAL PROPERTY.

REAL PROPERTY MANAGEMENT

A s a veteran, you have a set of skills and background experience that can make rental real estate investing a great fit. In fact, the discipline and resilience you developed during your military service are the same qualities that contribute to success as a rental property owner. What’s more, investing in rental properties such as single-family homes

offers you a path to financial stability and long-term wealth building.

interest rates. This can give you an edge when investing in single-family rental properties. In some cases, you could also use your VA loan to finance multifamily properties, allowing you to live in one unit and rent out the others. Veterans, therefore, may have lower barriers to entry into the rental property market, offering a strong foundation for building a profitable portfolio.

LEVERAGE YOUR VA LOAN BENEFITS

Access to VA loans gives veterans a distinct advantage when investing in rental real estate. Unlike other types of mortgage loans, VA loans offer benefits like lower down payments and favorable

24 | think realty magazine :: march - april 2025

DIVERSIFY AND STRENGTHEN YOUR FINANCIAL PORTFOLIO As investments go, real estate is one that offers more consistent gains over time. In fact, for long-term wealth building, there is no better investment. For this reason, even if you have investments in stocks or bonds, investing in rental real estate could be a great way to strengthen and diversify your portfolio. Real estate tends to be less affected by market fluctuations and can help stabilize your overall investments in volatile times. This can help mitigate risk and keep your net worth growing. GET SUPPORT One of the best-kept secrets to investing in rental property is to have the right property manager on your team. A quality property manager can take over the day-to-day tasks of rental property ownership, allowing you to invest without taking on the overwhelming responsibilities of property management. At Real Property Management, we are committed to helping veterans succeed with rental property investing. If you’re ready to explore how rental property investment can work for you, Real Property Management is here to help. Contact us today to discuss your goals and learn how we can help you build a successful rental portfolio tailored to your needs. Contact your local office today for expert advice and assistance in managing your property at www.realpropertymgt.com.

that can be used in the future to finance additional properties or support a comfortable life in retirement. Plus, when a property is managed well, the monthly rental income can offer short-term stability while building toward long-term financial security.

USE YOUR MILITARY EXPERIENCE TO YOUR ADVANTAGE

As a veteran, the skills you learned in the military are a valuable asset. This is especially true when it comes to investing in rental properties. For example, advanced problem-solving, organization, and working in teams are all key skills the most successful real estate investors possess. Your ability to collaborate can help you more effectively work with renters, property managers, and contractors. And, having training in handling unexpected situations calmly can be invaluable in rental property management. TAKE ADVANTAGE OF TAX BENEFITS AND DEDUCTIONS Certain tax benefits also make investing in rental properties a smart choice for veterans. For example, when you own a personal residence, you cannot deduct expenses like property repairs, mortgage interest, and depreciation. But these items become a tax deduction when you own a rental property. As a veteran, you may also qualify for additional tax benefits. Check with your tax professional to see what might be available for you and to determine how to maximize the benefits available to you.

BUILD FINANCIAL SECURITY AND STABLE INCOME Another reason veterans should consider investing in rental real estate is the opportunity it offers to build a stable income stream that can supplement your pension or other income sources. Unlike renting, when you buy a property, your investment typically appreciates over time, creating equity

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