Real estate can build real wealth, but Ryan Finch is clear about the part people like to skip: it is not passive just because rent checks show up. In this episode of Fiduciary Alchemy, Craig talks with Ryan, founder of Tangible Wealth Solutions LLC, about the difference between owning real estate on paper and actually carrying the risk, work, stress, and responsibility that come with it.
Ryan’s story starts early. At 19, he used room-and-board money, savings from a painting business, an FHA loan, roommates, and carefully structured help from his parents to buy his first rental property. The deal worked, but not because it was magic. It worked because the numbers mattered, reserves mattered, repayment discipline mattered, and he had to learn the business by living inside it.
Craig and Ryan dig into the less glamorous side of real estate: market cycles, the 2008-2009 downturn, fix-and-flip hype, vacancies, maintenance, tenants, managers, and the emotional strain of assets that do not always behave. Ryan makes the case that even self-managing landlords should price management into their return calculations, because that return is often payment for labor, not just capital.
The conversation then moves into tax-aware exits and more passive ownership paths, including 1031 exchanges, Delaware Statutory Trusts, and mineral rights. Ryan explains how investors can reduce hassle, diversify, and defer taxes, while still remembering the tradeoff: less day-to-day control does not mean no real estate risk.
Want to learn more about Ryan Finch's work? Visit Tangible Wealth Solutions at http://www.yourtws.com.
Connect with Ryan Finch on LinkedIn at https://www.linkedin.com/in/ryandfinch/.
You can also reach Ryan directly at 720-338-1650.
Think you'd be a great guest on the show? Apply at https://fiduciaryalchemy.com/podcast/apply/.
Want to learn more about Craig Andrews' work? Check out https://fiduciaryalchemy.com/.
1031 Risk Disclosure:
There is no guarantee that any strategy will be successful or achieve investment objectives;
Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
Potential for foreclosure – All financed real estate investments have potential for foreclosure;
Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. The secondary market for these investments is very limited, and early sale is not guaranteed.
Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits
For more information on Emerson Equity, please visit FINRA’s BrokerCheck website. You can also download a copy of Emerson Equity’s Customer Relationship Summary to learn more about their role and services.
General Disclosure
Not an offer to buy, nor a solicitation to sell securities. All investing involves risk of loss of some or all principal invested. Past performance is not indicative of future results. Speak to your finance and/or tax professional prior to investing. Any information provided is for informational purposes only.
Securities through Emerson Equity LLC Member: FINRA/SIPC. Only available in states where Emerson Equity LLC is registered. Emerson Equity LLC is not affiliated with any other entities identified in this communication.
Oil and Gas Investment Risks
Private investments in oil and gas are high risk, including, but not limited to the following considerations:
Political Risk – Federal or local governments could enact regulations/legislation that could adversely affect the oil and gas industry, thereby negatively affecting your investment.
Geological Risk – Oil and gas production can be negatively affected by the difficulty of extraction and the possibility that the accessible reserves in any deposit will be smaller than estimated. There is no guarantee that any drilling operation will be successful.
Supply, Demand, and Price Risk – A reduction in oil and gas prices, a decrease in demand, or a surplus of available supply can reduce or even eliminate investment returns.
Cost Risk – Unexpected or increased operating expenses can reduce or even eliminate investment returns.
Dividend Cuts – Any dividend payments can be reduced or eliminated if the company is unable to earn enough revenue to fund the payments to investors.
Oil Spill Risk – In addition to the cost of repairs, clean up, potential fines, and potential litigation, oil spills can negatively affect the reputation of the company, all of which can reduce or eliminate investment returns.
Key Points
[1:29] Ryan explains how he bought his first rental property at 19 using room-and-board money, painting-business savings, roommates, an FHA loan, and parental co-signing.
[3:04] Accountability made the deal work: Ryan describes how his parents required repayment discipline and a reserve account before backing the purchase.
[7:08] Real estate offered Ryan a path toward control: he wanted enough rental income that he would not have to rely entirely on a salary.
[10:42] Real estate is not a steady climb: Ryan contrasts slow Fort Collins appreciation with boom markets that later suffered painful downturns.
[13:43] Upmarkets can hide weak operators: Ryan explains why fix-and-flip hype and easy appreciation can make everyone look smart until the cycle turns.
[16:40] Rental returns are earned: Ryan calls real estate a contact sport and reminds investors that calls, asset management, tenants, and managers are part of the return.
[17:09] Self-management still has a cost: Ryan argues that landlords should price management fees into return calculations even when they do the work themselves.
[18:03] Real estate is not emotionally neutral: Ryan warns that vacancies, repairs, tenant issues, and underperformance can overwhelm the wrong investor.
[23:07] The 1031 exchange can defer taxes: Ryan explains equal-or-up replacement value, like-kind property, and how investors can keep compounding.
[23:56] A 1031 exchange does not have to be one-for-one: Ryan describes how investors can diversify across multiple replacement properties.
[23:16] Passive options exist inside 1031 planning: Ryan introduces DSTs and mineral rights as 1031-compatible paths that can reduce landlord responsibilities.
[26:40] Less hassle does not mean no risk: Ryan explains that passive vehicles may reduce management headaches, but investors still carry real estate risk.
[27:20] How to reach Ryan: Ryan points listeners to yourtws.com and shares his direct phone number.
Episode Transcript
Speakers: Craig Andrews, Ryan Finch, Compliance Choir
[0:00] Craig Andrews: You never know how much time you have
[0:02] Craig Andrews: For me that stopped being an idea and became reality on August 22nd, 2021
[0:09] Craig Andrews: The doctors put me on a ventilator and told my wife to call hospice so she could prepare for the day
[0:15] Craig Andrews: They planned to pull the plug
[0:17] Craig Andrews: Six weeks later, I woke up to an entirely different reality. I could not walk. I could not talk
[0:22] Craig Andrews: I could not even lift my own arm
[0:25] Craig Andrews: And I woke up realizing something else
[0:27] Craig Andrews: I had not made the right preparations for my family
[0:30] Craig Andrews: The plans I thought were pretty good fell through when it mattered most
[0:34] Craig Andrews: That is why fiduciary alchemy welcomes voices that would have warned me about the holes in my plans
[0:39] Craig Andrews: My hope is that you live a long and prosperous life
[0:42] Craig Andrews: But I also hope you make better plans than I did
[0:46] Craig Andrews: So tune in take notes and stay with us through the end when bluesman Grendel and the compliance choir
[0:52] Craig Andrews: Bring a word of caution today. I want welcome Ryan Finch. He's the
[1:02] Craig Andrews: founder of tangible wealth solutions
[1:06] Craig Andrews: Ryan hopes accredited investors and families navigate tax-aware strategies
[1:11] Craig Andrews: including 1031 exchanges
[1:13] Craig Andrews: DSTs private placements and other alternative investments
[1:19] Craig Andrews: Ryan's work often begins where real estate taxes legacy and risk collide
[1:26] Craig Andrews: And one of the things I just learned that I find fascinating
[1:30] Craig Andrews: He bought his first rental and became a landlord at age 19
[1:37] Craig Andrews: Ryan welcome
[1:38] Ryan Finch: Thank You Greg. I appreciate you having me
[1:41] Craig Andrews: so
[1:43] Craig Andrews: 19
[1:45] Craig Andrews: Man that's I mean I joined them. I was in the Marines when I was 19
[1:50] Craig Andrews: But I don't know that doesn't seem to have the same weight or gravity as you know
[1:56] Craig Andrews: you're just signing a big note and I
[2:00] Craig Andrews: Have so many questions, but how did you do that? You have no credit?
[2:04] Craig Andrews: Yeah, you had no credit. How did you pull this off? Yeah, so I freshen your college
[2:09] Ryan Finch: I'd read a book on invest in real estate and I became really passionate, you know, I was looking at the math the numbers
[2:15] Ryan Finch: I was I was gonna transfer schools and the maze of main reason
[2:19] Ryan Finch: I chose the school I chose was I saw the price point of the home that I could afford and
[2:25] Ryan Finch: That if I rented the other three bedrooms out, I could live basically for free
[2:29] Ryan Finch: So I went to my parents and asked for my second-year room and board and cash up front and then I had ran my own painting business
[2:36] Ryan Finch: I've done one of those
[2:37] Ryan Finch: you know how to run your own painting business companies and so that was enough for my down payment and it's about six months of
[2:44] Ryan Finch: Trying to convince my parents to co-sign because I needed to get an FHA loan did not have credit
[2:49] Ryan Finch: I needed to convince them which took us several months and then they they agreed to give me my
[2:57] Ryan Finch: Cash up front for the first-year room and board use the cash from the painting business and and then was able to sign the loan at 19
[3:04] Ryan Finch: And then my parents had very strict
[3:08] Ryan Finch: Rules about you know, how I repay them how I have to not just live for free
[3:13] Ryan Finch: But I have to start paying rent into a reserve account
[3:15] Ryan Finch: But they they really kind of put some belts and suspenders around it to help guide me on my first home
[3:21] Craig Andrews: Wow, what were their what were their fears because I mean looking obviously it was the right move in hindsight
[3:28] Craig Andrews: Yep, but what they were were they afraid would happen?
[3:32] Ryan Finch: Some is maintenance right? I a lot of arguments when I was a kid over mowing the yard
[3:37] Ryan Finch: Getting out there and mowing and making sure you know I was gonna take care of the yard of this house
[3:42] Ryan Finch: You know, I'm gonna have to fix stuff on my own
[3:44] Ryan Finch: I'm in you know, it's a big responsibility of you know
[3:46] Ryan Finch: Your roommates trash this thing that's gonna cost you a lot of money to fix it
[3:50] Ryan Finch: So a big part was on the being responsible of
[3:53] Ryan Finch: Maintaining a home and really taking that step that no one's gonna be there to do it for me
[3:59] Ryan Finch: And that was one of their biggest concerns and then you know
[4:03] Ryan Finch: they I think they saw the passion that I wanted to do it and that
[4:07] Ryan Finch: You know, I really wanted to make this a success
[4:09] Ryan Finch: And if I if I didn't if I failed in those things then the returns that I was to also trying to get from an investment
[4:14] Ryan Finch: Side would kind of fall short. So that was really what they what they kind of did and then
[4:19] Ryan Finch: They were like, okay, but just know that this could be you know
[4:23] Ryan Finch: This this could not work out and then if we have to step it and sell the home
[4:27] Ryan Finch: You're gonna owe us and be basically paying us back for a very long time. So
[4:32] Craig Andrews: Wow
[4:34] Craig Andrews: well, and I think I
[4:36] Craig Andrews: Mean I admire that I admire that I
[4:40] Craig Andrews: Kind of a side story. It's gonna sound related but I'd say it's the same. I I know somebody
[4:46] Craig Andrews: Got busted for dealing drugs and their parents
[4:50] Craig Andrews: Hired the attorney and the attorney said I will not represent your son unless he signs an agreement that he's gonna pay you back in full and
[5:01] Craig Andrews: You know anything about this this is a lawyer who's sitting there saying
[5:07] Craig Andrews: Yeah, this is a lucrative case for me, but I'm only gonna take it as long as I see a path to
[5:13] Craig Andrews: Responsibility and seems like you know, your parents were doing the same thing. It wasn't you know, because there's so many parents
[5:19] Craig Andrews: I see it so frequently
[5:21] Craig Andrews: where they give their kids money they never hold them accountable and
[5:26] Craig Andrews: Their kids go off and become art majors, you know students to be art majors, you know, and they and they never term productive
[5:36] Craig Andrews: Not bashing art, but you know, it's
[5:39] Craig Andrews: You have to have a plan for how it's gonna pay for itself
[5:43] Ryan Finch: Yeah, and it was a big ask on my side my parents grew up very conservative
[5:48] Ryan Finch: You know work very hard for what they have but you know owning your home and
[5:53] Ryan Finch: Save it into a 401k and then my father had a pension
[5:57] Ryan Finch: That was kind of the you know the top of where they're you know kind of wealth-building and what what they were looking to
[6:03] Ryan Finch: Move towards and so owning a property or a home other than the one you lived in
[6:09] Ryan Finch: Wasn't really on their radar as a as an investment or a way to build wealth
[6:13] Ryan Finch: So it also took some just talking with them and convincing them of like, you know, here's what other families have done
[6:18] Ryan Finch: Here's how they built wealth and this is the direction I want to go in so for them
[6:23] Ryan Finch: It wasn't like oh well we bought a rental a long time ago, and this is how it worked out
[6:26] Ryan Finch: It was you know very unique
[6:29] Ryan Finch: New concept for our family kind of the we know be the first generation of our family to try and buy and own
[6:34] Ryan Finch: Rentals or to own a home other than the one you lived in so that was a big big ask on my end too because
[6:41] Ryan Finch: They also they hadn't had experience with that yet, and I really wanted to try it
[6:45] Craig Andrews: Yeah, had you been reading guy kiyosaki or something or yeah rich dad poor dad was one of the first books
[6:51] Ryan Finch: I read and when I saw just how the cash flow cycled and then there were some other books
[6:55] Ryan Finch: I then started reading and then
[6:57] Ryan Finch: Was just reaching out to some other mentors or people that I had heard had rental properties
[7:02] Ryan Finch: And was just like how'd you do it? How'd you you know, what do I would be aware of?
[7:05] Ryan Finch: I just was so fascinated by that concept of
[7:08] Ryan Finch: You know passive income how to build wealth and then I also like the idea that I could pursue a job that I really enjoyed
[7:16] Ryan Finch: But I didn't have to rely a hundred percent on that salary in the future
[7:20] Ryan Finch: And so I that was a big goal of mine was eventually to own enough rentals where I didn't have to work
[7:25] Ryan Finch: I just kind of saw it as you know
[7:26] Ryan Finch: I could eliminate that need in the future if I wanted to but I couldn't get control unless I owned rental
[7:31] Ryan Finch: Properties, that's what I saw as my but the one way I felt confident. I could get some more control of my life down the road
[7:38] Craig Andrews: Yeah
[7:40] Craig Andrews: Well, and it's I mean let's throw something in here for the compliance, you know
[7:43] Craig Andrews: This doesn't always work right you have past performances and and so I actually you know back back in
[7:52] Craig Andrews: December of last year my wife and I moved from an Austin suburb to an Austin bedroom community
[7:59] Craig Andrews: And it was a good move for us because housing prices were on the way down
[8:04] Craig Andrews: in yeah, well everywhere but more so here and
[8:09] Craig Andrews: So it let us get in I was talking to a realtor the other day and he said yeah prices are still going down
[8:15] Craig Andrews: And so that's just kind of the reality of the business, but did you did you think about that was that a concern or?
[8:24] Ryan Finch: Yeah
[8:25] Ryan Finch: Fascinating things so I bought that home in 2001 in Fort Collins, Colorado
[8:30] Ryan Finch: And then I remember you know looking reading
[8:33] Ryan Finch: You know reading the news and and then I graduated and I was working as a commercial real estate analyst for US Bank to enlarge
[8:40] Ryan Finch: Real estate deals, but Fort Collins was appreciating at like 1% a year
[8:44] Ryan Finch: Maybe two and so my home was going up, but very slowly and then during that time, you know
[8:51] Ryan Finch: 05 0607 I'm reading about Las Vegas with these really large price increases
[8:57] Ryan Finch: Aero Phoenix, Arizona with these big price increases and was looking at my home in Fort Collins like wow
[9:03] Ryan Finch: What if my home in Fort Collins instead of appreciating what 1% was in double-digit returns and was a little envious of like some of these other markets
[9:12] Ryan Finch: Then when the 0809 crash happened, you know Fort Collins was a very stable market
[9:18] Ryan Finch: So, you know, I had just barely you know got up slowly flattened and then you know after the crash
[9:23] Ryan Finch: It kind of went up, but it was a very interesting thing to see. I'm not sure how I would have reacted to of
[9:28] Ryan Finch: You know if my home had gone up that much in appreciation
[9:30] Ryan Finch: I might have been able to pull money out and double down and who knows so I'm very fortunate that I
[9:36] Ryan Finch: Saw that market cycle, but I didn't have to participate in the
[9:41] Ryan Finch: Super big up and then the super big downturn
[9:43] Ryan Finch: I was on the the boring steady
[9:46] Ryan Finch: Appreciation curve in Fort Collins during that time, but I remember reading articles looking me like man
[9:50] Ryan Finch: That city is growing at 20%
[9:52] Ryan Finch: You know being a little bit jealous envious
[9:54] Ryan Finch: But then seeing the other side of that where I didn't have to participate in such a big
[9:59] Ryan Finch: Downturn when things that when things fell apart in some of those markets. Yeah. Yeah, we were pretty fortunate in Austin
[10:06] Craig Andrews: You know the housing prices, you know, I think the growth was still outpacing
[10:11] Craig Andrews: the crash where where things got stupid was during COVID and
[10:16] Craig Andrews: you know the price at the price of houses like literally doubled during COVID yeah, and
[10:24] Craig Andrews: You know, fortunately, I'd bought my house back in 04
[10:28] Craig Andrews: So even with the you know the recent correction. I was still
[10:32] Craig Andrews: way way ahead
[10:35] Craig Andrews: On that but that was ever a long, you know, that was over 20 years 22 years of home ownership
[10:40] Craig Andrews: Yeah
[10:42] Ryan Finch: Yeah, we we like to remind clients to like real estate does not all you know, somebody will say oh, they're not making more land
[10:47] Ryan Finch: It's like what real estate does not you know, it goes up over time, but it is not a steady
[10:52] Ryan Finch: Steady climb like there are pullbacks. There are things that go wrong and we like to remind people of that
[10:57] Ryan Finch: As well because I think some people get that notion
[11:00] Ryan Finch: It's also kind of like the gamble gamblers fallacy where people only tell you about their big wins
[11:04] Ryan Finch: And talk about their big losses and I think that same thing in real estate is no one at the you know
[11:09] Ryan Finch: At the dinner party is talking about like oh, you know
[11:11] Ryan Finch: I had this real estate deal and then this happened and this happened
[11:13] Ryan Finch: I had to sell it at this this big losses
[11:16] Ryan Finch: They usually keep those to themselves
[11:17] Ryan Finch: But it's the I bought this home and then the next market skyrocketed and that that's usually the only ones you hear about
[11:22] Ryan Finch: Even though the there's a lot of the other types of stories to you
[11:27] Craig Andrews: well
[11:29] Craig Andrews: Here's something I've seen and so I know some I know a couple people
[11:34] Craig Andrews: I know a couple people one
[11:37] Craig Andrews: Was big in the rentals
[11:40] Craig Andrews: You know starting five six years ago
[11:43] Craig Andrews: And he was already planning his early retirement
[11:47] Craig Andrews: And
[11:48] Craig Andrews: My wife was talking. Oh, he's killing it. He's killing him like
[11:52] Craig Andrews: Uh, but it was one of these deals where he was paying into some group
[11:57] Craig Andrews: That was going to make him smarter and one of my one of my stupid questions is
[12:03] Craig Andrews: Well, if these guys have you know discovered a machine that just prints money
[12:09] Craig Andrews: Why aren't they just doubling down on it?
[12:12] Craig Andrews: Yeah, and
[12:13] Craig Andrews: and uh, and I think it's
[12:15] Craig Andrews: And I know somebody else who
[12:18] Craig Andrews: Unfortunately, I think is presently learning that lesson who's investing a lot, you know, they're gonna become a house flipper
[12:24] Craig Andrews: And my wife and I were talking about that and you know, of course the famous house flippers are Chip and Joanne and Gaines
[12:30] Craig Andrews: And they were nearly bankrupt
[12:33] Craig Andrews: Years ago the thing that kept them from going bankrupt was a tv show. That's how they made their money
[12:38] Craig Andrews: Yeah
[12:42] Craig Andrews: But the you know, it kind of reminds me I see these people saying hey, we're going to sell you the secret formula
[12:48] Craig Andrews: And it feels almost like the folks that were selling shovels and pickaxes during the california gold rush
[12:53] Craig Andrews: Yep
[12:56] Ryan Finch: Yeah, we uh, I always think an interesting with the fix and flip model is you you tend to not find a lot of
[13:01] Ryan Finch: career fix and flippers
[13:03] Ryan Finch: Yeah, um, you know, I have met some there are some people that have been really successful at over a long period of time
[13:09] Ryan Finch: But I feel like that's a very small percentage
[13:12] Ryan Finch: But I I know a lot of people that did fix and flip for a period of time
[13:16] Ryan Finch: Well, there's six months two three years, but they kind of they double down double down
[13:21] Ryan Finch: um, and then they they have that one deal that
[13:25] Ryan Finch: Really, uh, you know throws them for a loop and then they kind of back off and don't do it again
[13:30] Ryan Finch: So it is interesting when you look at
[13:32] Ryan Finch: Uh, the fix and flip model or some of those things where a lot of you know,
[13:36] Ryan Finch: They a lot of guys are a lot of people sell the
[13:38] Ryan Finch: Those books and and return and on how to get these big returns and you just wonder
[13:43] Ryan Finch: Uh, the other thing is some of those can be really successful during an upmarket, right?
[13:46] Ryan Finch: It's like well
[13:48] Ryan Finch: And an upmarket in real estate where we have declining interest rates declining cap rates makes everyone look like a real estate hero
[13:55] Ryan Finch: And then you have your first downturn and it's like oh now you you know
[13:59] Ryan Finch: You see like the famous phrase like when the the tide goes out, you know
[14:02] Ryan Finch: Who's swimming without a bathing suit?
[14:04] Ryan Finch: And so I think that happens a lot with real estate when you have your first downturn
[14:08] Ryan Finch: Um, you can see like who's a really good operator?
[14:10] Ryan Finch: Who's not because some people they had great returns and they're multifamily
[14:13] Ryan Finch: And then we had this most recent kind of downturn
[14:16] Ryan Finch: And then you know the really good ones even struggled
[14:18] Ryan Finch: But then people who couldn't operate well and they were
[14:21] Ryan Finch: Waiting for shrinking cap rates to save them or lowering cap rates to save them really got hurt. So I think you see a lot of that
[14:28] Ryan Finch: When we when we look now on the passive side at sponsors
[14:32] Ryan Finch: We want to see you know, how have you done through cycles and that that's a pretty good indicator to us because
[14:37] Ryan Finch: We've seen plenty of people who've done really well in an upmarket
[14:40] Ryan Finch: But they haven't been tested yet. And so you just aren't sure how they're gonna gonna react
[14:45] Craig Andrews: No, that's really interesting
[14:48] Craig Andrews: And you know the you know, so for me, I mean I look at this and I think
[14:55] Craig Andrews: I
[14:56] Craig Andrews: It's it's not that disbelief guy kiyosaki and everything that he's laid out
[15:01] Craig Andrews: I'm not challenging any of that
[15:04] Craig Andrews: the things I struggle with are
[15:08] Craig Andrews: That's a lot of complication in my life. So I want to go buy a property
[15:13] Craig Andrews: and
[15:15] Craig Andrews: You know, it's like right now in in Bastrop where I live now. It's it's a little bit of a depressed market
[15:21] Craig Andrews: It's a great time to be a buyer
[15:24] Craig Andrews: And you can kind of name your terms and you know, I could buy some properties turn them into rentals
[15:30] Craig Andrews: But then I just kind of worry
[15:34] Craig Andrews: Do I really want that hanging over my
[15:37] Craig Andrews: neck and so for me, I
[15:39] Craig Andrews: I've known multiple times in life. I should buy a house when I didn't when I was in
[15:44] Craig Andrews: Um, when I just graduated college, there was a house if I bought it
[15:48] Craig Andrews: It was it was in Raleigh. I went to school in Raleigh and Raleigh is one of those markets that just went up up up
[15:55] Craig Andrews: Uh happens frequently in college towns like four kill ones
[15:59] Craig Andrews: and
[16:01] Craig Andrews: um
[16:02] Craig Andrews: And I didn't and I look back at that and I think I probably should have and there was a couple opportunities for me to do that
[16:08] Craig Andrews: But it's just a part of my personality where I get a little
[16:12] Craig Andrews: Nervous and I talk myself out of it
[16:15] Craig Andrews: Um, am I missing something? I mean, I would say probably so would be you know, let's say you're the the real estate doctor
[16:23] Craig Andrews: What's your diagnosis of me?
[16:26] Ryan Finch: Yeah, mine would be, you know understanding your limits and what you want and then
[16:30] Ryan Finch: But I learned this from a really good friend of mine who owned quite a few rentals that became a client actually
[16:36] Ryan Finch: Uh, he's like people don't get that real estate as a contact sport
[16:41] Ryan Finch: And I think that's the best way to describe owning rentals is you can make these really good returns
[16:46] Ryan Finch: But you're earning them, right? You're taking the call. You're either managing that asset yourself or you're managing the property manager
[16:52] Ryan Finch: I mean, you're truly taking on a job
[16:55] Ryan Finch: And I I think people need to recognize that and then one of the things when we have a client come in and we're analyzing
[17:01] Ryan Finch: Their current property is like, oh, well don't put management fees in there. I I do that myself
[17:06] Ryan Finch: And my argument my opinion is
[17:09] Ryan Finch: You still should put what that would cost you to pay someone else because that percentage of your return
[17:15] Ryan Finch: You're working for that. That's like a job to you. So say something was paying, you know x dollars a month
[17:21] Ryan Finch: Really not all of that's your return if you're doing the property management
[17:24] Ryan Finch: You're getting paid an hourly job for that an hourly fee
[17:28] Ryan Finch: And that where most clients have agreed once we've explained that some don't agree with that
[17:31] Ryan Finch: But I think you've got to understand it if I just put that in a stock or if I just put that in some type of fund
[17:38] Ryan Finch: I don't have to do all that work and that's truly a hundred percent return
[17:42] Ryan Finch: You know, that's none of my work. And so I think that's a way of explaining to people is
[17:48] Ryan Finch: It can be a really good way to get ahead, but you're going to earn it
[17:52] Ryan Finch: And anyone who says it's easy
[17:54] Ryan Finch: I would be very skeptical of because um, I don't think there's anything easy about the single family rentals, but I
[18:00] Ryan Finch: And I and it's not for everyone because
[18:03] Ryan Finch: We also have, you know, how people return how people react to a downturn or how under performance
[18:09] Ryan Finch: It's amazing how
[18:11] Ryan Finch: Somebody can be like, okay. Yeah, we knew we talked about this. We knew this was going to happen
[18:14] Ryan Finch: We're going to work through it and then you have other people where they just oh my god
[18:18] Ryan Finch: The water heater went out. I can't believe it or the roof had a leak or I had a tenant
[18:22] Ryan Finch: I'm now a victim and they're just so emotionally
[18:25] Ryan Finch: Just enraged about it or just kind of off their off the rocker about it that you're just like
[18:31] Ryan Finch: Man, this is not the right type of investment for you
[18:34] Ryan Finch: Because this is going to affect you physically mentally emotionally real if you're someone who's a little more
[18:39] Ryan Finch: Low-key or can handle the ups and downs doesn't get too excited on the ups and two down on the downs
[18:44] Ryan Finch: Then real estate rentals can be good
[18:46] Ryan Finch: But I think it challenges people sell it as this a great investment to everyone
[18:50] Ryan Finch: And there's a mental capacity component of the actual investor that I don't think goes into
[18:55] Ryan Finch: to account of
[18:58] Ryan Finch: You know the this isn't for everybody
[19:01] Craig Andrews: yeah
[19:02] Craig Andrews: well, I mean I've seen some
[19:04] Craig Andrews: I've seen some rentals around Bastrop that
[19:08] Craig Andrews: sat empty for months months and months and months
[19:12] Craig Andrews: And then they decided to sell it and it sat empty for months
[19:16] Craig Andrews: until they eventually sold it and
[19:21] Craig Andrews: It's it's tough and I think that's you're right about having the stomach
[19:26] Craig Andrews: There was something else you just said I want to circle around this because I thought it was a really good point when you were talking about
[19:34] Craig Andrews: The maintenance, you know in the management bake that into the cost
[19:38] Craig Andrews: I had a guest on my other podcast leaders and legacies
[19:42] Craig Andrews: who
[19:43] Craig Andrews: Did a lot of
[19:45] Craig Andrews: multi-use development
[19:48] Craig Andrews: And I I threw out the option and said well, you know be great
[19:51] Craig Andrews: You know you could you know you could put your office in one of this and basically charge you know not charge yourself rent
[19:57] Craig Andrews: And he told me so that's a really bad idea
[20:00] Craig Andrews: He said if your business
[20:03] Craig Andrews: Can't sustain market level rent you have a business problem. There's a broken. There's something broken in your business model
[20:11] Craig Andrews: Charge yourself full rent now. You're on the back end. You're still getting it anyway
[20:16] Craig Andrews: Charge yourself the market rate for rent
[20:20] Craig Andrews: Because if you can't pass that test you have something broken in your business model
[20:24] Craig Andrews: And sounds like what you're saying is kind of the same thing
[20:27] Craig Andrews: If you can't build management fees into it and you say i'm just doing it myself
[20:31] Craig Andrews: You you have a broken business model
[20:34] Ryan Finch: Yes, I've uh seen that where um with family owned restaurants where they own the building
[20:41] Ryan Finch: Yeah, and they're able to you know, the restaurants able to survive because they're able to discount themselves rent and sometimes
[20:48] Ryan Finch: We've done an analysis where we've shown like
[20:50] Ryan Finch: You would actually make more money
[20:53] Ryan Finch: as a landlord
[20:54] Ryan Finch: If you you closed up shop and rented this at market rate
[20:58] Ryan Finch: You know and just think of how much you know potentially simpler that could make your life
[21:01] Ryan Finch: But we have seen that a lot
[21:04] Ryan Finch: Where the the owner occupants
[21:06] Ryan Finch: They think by well it's supporting my business and it's like well your real estate business actually may be better
[21:11] Ryan Finch: Renting to someone else, but I think that's a
[21:14] Ryan Finch: Something people forget to look at or think about
[21:16] Craig Andrews: yeah
[21:18] Craig Andrews: Now one of the things I heard about
[21:20] Craig Andrews: Certainly not as young as you but was this
[21:23] Craig Andrews: vehicle called a 1031 exchange
[21:26] Craig Andrews: And my understanding of it is
[21:28] Craig Andrews: You know if I have a property
[21:31] Craig Andrews: And I sell that property
[21:34] Craig Andrews: That I can defer the taxes as long as I go buy another property
[21:39] Craig Andrews: And I cover that under the 1031 exchange now. I'm this said in my world, so I'm sure I got some things wrong
[21:44] Craig Andrews: Please correct what I got wrong. Yeah, absolutely
[21:47] Ryan Finch: So yeah with a 1031 exchange to defer all the gains you got to go equal or up
[21:51] Ryan Finch: You got to buy the same amount of property
[21:54] Ryan Finch: Or more and then it's got to be like kind that's very broad
[21:58] Ryan Finch: So you could sell a single family home by an industrial building you could sell
[22:02] Ryan Finch: condo and buy agricultural land
[22:04] Ryan Finch: But it's really real estate held for investment purposes sold
[22:07] Ryan Finch: For a real estate held for investment purposes and then the 1031 exchange
[22:12] Ryan Finch: The the benefit for wealth building is it allows you to keep compounding
[22:16] Ryan Finch: And building your real estate
[22:19] Ryan Finch: Without paying taxes all along the way
[22:21] Ryan Finch: So if you had to pay taxes after every transaction
[22:23] Ryan Finch: Just think how much longer it would take you to build your net worth or income up to a certain level that you're trying to get to
[22:29] Ryan Finch: So that's a benefit of the tax code with the 1031 exchanges
[22:34] Ryan Finch: Going from one rental to the other and so you'll see someone sell one single family home try to buy a bigger multi-family home
[22:41] Ryan Finch: But one misconception is they think they have to go one to one
[22:44] Ryan Finch: So like I sell a million dollar
[22:46] Ryan Finch: Property i'm going to lever that up and buy a two million dollar apartment building. Yes, that could work
[22:50] Ryan Finch: You could sell a million dollar property and buy
[22:53] Ryan Finch: Two five hundred thousand dollar properties
[22:55] Ryan Finch: So you could actually diversify as long as the total of what you invested in is equal or above what you sold
[23:03] Craig Andrews: Now that keeps me in the landlord business
[23:06] Craig Andrews: So this is I need I wouldn't be a landlord it is
[23:09] Craig Andrews: so
[23:11] Craig Andrews: Do I have to be a landlord to take it keep being a landlord if I went to a 1031 exchange?
[23:16] Craig Andrews: Yes, so a lot of people that's the the misconception
[23:19] Ryan Finch: That's a big part of what we try to educate clients on is
[23:21] Ryan Finch: When we run into clients who say like all right, Ryan, I don't want to be a landlord
[23:25] Ryan Finch: But I also don't want to pay this huge capital gain. What are my options when you're looking at all your options
[23:31] Ryan Finch: You've got your direct real estate where you can continue to be a landlord and then you also have
[23:36] Ryan Finch: some other non
[23:38] Ryan Finch: More passive investments so two of those that count for a 1031 exchange
[23:42] Ryan Finch: Like kind in the IRS's eyes one is called a dst and that stands for Delaware statutory trust
[23:49] Ryan Finch: Uh, it's for accredited investors and that's where you can be a partial owner
[23:53] Ryan Finch: Of a commercial property. So maybe you're a partial owner of a industrial building in texas or a multifamily property in north carolina
[24:02] Ryan Finch: But it allows you to be a partial owner of a bigger property
[24:06] Ryan Finch: Um, you're no longer a landlord. You're giving up control
[24:10] Ryan Finch: So that's one thing that can be hard for people
[24:11] Ryan Finch: Some people really want to control the the sale or exit of their real estate
[24:15] Ryan Finch: But if someone wants to be truly passive that is a vehicle that's available to them
[24:21] Ryan Finch: And then another one that most people aren't aware of is oil and gas mineral rights because that's the real estate below the ground
[24:28] Ryan Finch: And so you can be uh, you know the best reference point for that is that you know, Beverly Hillbilly, right?
[24:33] Ryan Finch: They own the mineral rights and they were able to move out because they didn't have any operating costs or anything like that
[24:37] Ryan Finch: And they could just earn their royalty check
[24:40] Ryan Finch: But mineral rights are another uh investment that counts for a 1031 exchange
[24:44] Ryan Finch: So in the irs size that is like kind
[24:47] Ryan Finch: Uh property and then though those ones, uh, you know, you're not a landlord
[24:52] Ryan Finch: You're just receiving royalty checks and then within the dst
[24:56] Ryan Finch: That sponsor who you're trusting with your capital who they manage the dst
[25:00] Ryan Finch: They manage the property manager. Sometimes they're one in the same
[25:04] Ryan Finch: They're operating that and then they're they're distributing out the net cash flow to the investor. So those are two
[25:10] Ryan Finch: Uh passive ones. I've done that personally. So as I built my personal portfolio up
[25:15] Ryan Finch: Um, I had rentals here in colorado and in multiple states
[25:19] Ryan Finch: I personally have been selling as well and going into the dsts and mineral rights personally to become to be more passive as I've
[25:27] Ryan Finch: You know, I had my own property management business, which which I sold several years ago
[25:31] Ryan Finch: And I I'm you know, how I'm helping clients is the same thing. It's I just I've done it for a long time
[25:36] Ryan Finch: I don't want to deal with it anymore
[25:38] Ryan Finch: With the the direct real estate and the property management and the issues
[25:42] Ryan Finch: That come with that might much rather be a passive investor. So that's um, really what what I help clients with now
[25:48] Ryan Finch: But also personally how I've shifted from I thought I was going to own and operate properties forever
[25:52] Ryan Finch: And then once I saw this and and where the stage of life I'm in now
[25:56] Ryan Finch: Where my opportunity costs of taking that call or going and fixing something on a weekend or dealing with property managers
[26:03] Ryan Finch: You know takes away from time with work with my kids
[26:05] Ryan Finch: And so to me that cost is significantly higher than than years ago and when it was like, oh, I had a free saturday
[26:11] Ryan Finch: Anyway, I'll go take care of this and keep trying to build my net worth
[26:14] Craig Andrews: Well, that's really powerful. I mean it's you know kind of wrapping it up. It sounds like
[26:21] Craig Andrews: It's it's a journey that at the beginning looks like being a landlord, but there's an easy off ramp
[26:28] Craig Andrews: Where you still avoid paying the tax man. You're still able to defer
[26:32] Craig Andrews: That and offload the job of being a landlord
[26:36] Craig Andrews: Yeah, exactly. It's uh, it's great as long as you can let go of control
[26:41] Ryan Finch: And recognize that you have not eliminated real estate risk, right? Like those uh buildings that you know, they still have tenants in them
[26:47] Ryan Finch: The industry building still has a real company that's renting that that could run into trouble
[26:53] Ryan Finch: So you can't eliminate real estate risk, but you can eliminate a lot of the
[26:58] Ryan Finch: hassles and
[26:59] Ryan Finch: management pieces and then also you can diversify because you can put
[27:03] Ryan Finch: Smaller investments and have it into multiple ones instead of all in one house or all in one building
[27:09] Craig Andrews: Well, ryan, this has been fascinating. Obviously, it's very complicated. Folks need help working through it. How can people reach you?
[27:17] Ryan Finch: Yeah, they can uh, you know come to our website
[27:20] Ryan Finch: www.
[27:23] Ryan Finch: Your y o u r t w s dot com or they can reach out to me personally
[27:28] Ryan Finch: Uh, my my phone number is 720 338
[27:31] Ryan Finch: 1650 and we're happy to you know me my team we're happy to answer questions
[27:36] Ryan Finch: and really what our goal is to make people aware of their options
[27:40] Ryan Finch: And uh, just knowing like our if here are your goals here your different options
[27:44] Ryan Finch: Just so that people are aware of them where they're not calling us
[27:47] Ryan Finch: Uh, I mean like I should have talked to you a year ago
[27:49] Ryan Finch: I should have talked to you two years ago
[27:50] Ryan Finch: So that that's our big goal is reach out to us. We'd love to share with you your options
[27:54] Ryan Finch: Help you walk through it just so you um, you know, know what your choices are before you before you move forward with your next uh next decision
[28:01] Craig Andrews: Well, thanks for coming on uh fiduciary alchemy
[28:05] Craig Andrews: Thank you craig. I really appreciate you having me
[28:09] Craig Andrews: Thank you for tuning in to fiduciary alchemy
[28:12] Craig Andrews: The coolest financial podcast you're likely to find
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[28:32] Craig Andrews: Now some folks ask craig, what is it you do? Well, I'm telling you now. That's no mystery at all
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[28:56] Craig Andrews: But don't leave yet stick around a minute more and listen to blues man grendel and the compliance choir
[29:02] Craig Andrews: Deliver a word of caution
[29:04] Craig Andrews: Just for you
[29:20] Compliance Choir: This podcast is for information
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[29:25] Compliance Choir: That is all
[29:29] Compliance Choir: It is not financial tax or legal advice to guide your call
[29:37] Compliance Choir: Nothing here's an offer
[29:40] Compliance Choir: Nothing here's a buy or sell no recommendation no solicitation
[29:49] Compliance Choir: I'm saying it plain and well
[30:05] Compliance Choir: Performing ain't no promise
[30:08] Compliance Choir: Of what tomorrow brings
[30:10] Compliance Choir: And people lose on all kinds of hopeful things
[30:19] Compliance Choir: Every investment carries with
[31:00] Compliance Choir: Compliance
[31:02] Compliance Choir: Blue they're not the same is the whole that is right for you
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