Assets and Taxes - How To Build Wealth Through Real Estate - w/ Demetrios Salpoglou

Episode Date: April 20, 2026

In this episode, Kent Fitzpatrick, AIFA®, GFS®, MSCTA© sits down with Demetrios Salpoglou the CEO of Boston Pads. They breakdown the entire process of how anyone can make wealth through Real Estate.Connect w/ Asset Strategy:Website: www.assetstrategy.comConnect w/ Boston Pads:Website: www.bostonpads.comSponsoring real estate investment companies, receive management fees from DST structures. While these fees are thoroughly disclosed upfront, they can have an adverse effect on cash flow levels.Getting potential DST investors fully acquainted with the DST structure and being comfortable with it, is one of our main objectives. We will present all DST properties to clients with a private placement memorandum in addition to our educational materials and conversations. The full disclosure document includes detailed information about all relevant aspects of the DST, including disclosures of risks. We welcome any questionsyou have along the way by calling 855-676-1031 when considering ownership of a beneficial interest in a DST.DST 1031 properties are only available to Accredited Investors (typically defined as having a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years; or have an active Series 7, Series 82, or Series 65. Individuals holding only a Series 66 registration may not automatically qualify; verify your status with your CPA and Attorney. If you are unsure if you are an Accredited Investor and/or an accredited entity, please verify with your CPA and Attorney.There are material risks associated with investing in DST properties and real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potentially adverse tax consequences, general economic risks,development risks, long hold periods and potential loss of the entire investment principal. Current offerings are not represented by the photos. Future offerings will differ from those shown and may look significantly different.Because investor situations and objectives vary this information is not intended to indicate suitability for any individual investor. Tax or legal advice should not be construed from this material. If you have questionsregarding your specific situation, discuss them with your tax and legal advisors. Advisory Services offered through Asset Strategy Advisors, LLC (ASA), a SEC Registered Investment Advisor. Securities offered through Concorde Investment Services, LLC. (CIS), member FINRA/SIPC. Insurance Services offered through Asset Strategy Financial Group, Inc. (ASFG). ASA, CIS and ASFG are separate companies. IRC Section 1031, IRC Section 1033, and IRC Section 721 are complex tax concepts, therefore you should consult your legal or tax professional regarding the specifics ofyour particular situation.ia-sd-r-a-892-4-2026

Our topic today is one, I think we both enjoy a lot, which is building wealth through real estate when you're already running a business. So to me, that says side hustle. They say that eight out of ten millionaires were made in real estate. The question is, how did they do it? Where would someone who's just getting started? Where do they begin? I'd say in real estate, you have to look at it as ready, aim, fire. You can't do this willy-nilly. And I think that the most important component of it.

Welcome to another episode of Assets and Taxes. Kent Fitzpatrick. I'm managing director here at Asset Strategy. And with me today is my friend and colleague, Demetrius Salpoglo. Thanks for having me. Thank you. Yeah, you did a great job. A tongue twister. Demetrius is the head of Boston Pads. I'm going to have you talk about, you know, what you guys do exactly in just a moment. But our topic today is one. I think we both enjoy a lot, which is building wealth through real estate when you're already running a business. So to me, that says side hustle. So Demetrius, tell me a little bit. about you and Boston Pads.

Well, thanks for having me, Ken. So Boston Pads is the technology platform that provides nine different office locations in the state of Massachusetts with thousands of apartment leasing options. So what we do is we power multiple brokerages to get real-time rents, real-time data, to basically move apartments at scale and empower the consumer, empower landlords, just optimizing that whole entire apartment leasing process. So we've done that for over 20 years and we've rented the most apartments in the history of New England.

How many properties or doors are in your system? We just broke 300,000 units, which has been a huge goal and milestone for us. Yeah, we have over 19,76 landlords. We're also approaching 20,000 landlords, which is also a huge accomplishment for us. Is your data focused in Greater Boston? We've actually expanded.

We started in Boston, Boston Pads, and then we kept growing into Greater Boston, and now we have satellite locations in Framingham, I'm sorry, in Worcester. We've got satellite locations in Woburn and Fall River, and so we continue to grow. We've got properties all across the state that we service, including Cape Cod. Fantastic. Well, in preparation for this conversation, because I used the word side hustle, I wanted to share with our audience what came up in chat, ChbT's top 10, side hustles for 2026. And in this, I don't know if this is in any particular order,

but first is freelancing. Second is digital products. Third is content creation, monetizing audiences. Fourth is e-commerce, you know, kind of niche stores, if you will. Fifth is AI automation consulting, which is interesting. But if we had this conversation a year ago, that wouldn't have been on the list. Sixth is local business services, maybe landscaping, cleaning, mobile detailing. Seven is online courses or coaching or consulting. Eighth is affiliate marketing. Ninth is stock photo digital assets. And tenth is gig economy or flex work.

So real estate, which is our topic, wasn't necessarily on the top 10 per se, but is it because there's a high cost of entry, you know, kind of the capital requirement? Is it more complex? Is it a slower start to the get-rich-quick scheme of, you know, building wealth? What's your thoughts in terms of how real estate compares to that stack? Well, having, you know, multiple offices in the city of Boston, I can absolutely tell you it's the cost of entry. It's the barrier to entry because those jobs are, especially in a college town like Boston, you have college students that constantly come and see us and want to work and do a lot of the AI and technology work and affiliate marketing work and marketing work. And that's really like they're cutting

their teeth in the city of Boston. So I think from like looking at it from that perspective, it's quite frequent. What I think most college students don't have young professionals don't have is capital or the knowledge to put together. deal. So what you tend to see is landlords start much later, you know, investment properties, I believe, like the average first-time multi-family buyer is about 52 years old, which is much older than your single family. Well, and even the average age is 40 years old for your first-time home buyer, just given the environment. Yeah. And so I think that's a capital requirement. And, you know, if you actually did it right, I think most people make a mistake and they buy.

a single family first, whereas if they were a little bit more strategic, there's many more benefits to owning a multifamily first. So maybe they held that a little bit longer instead of 42, maybe 44, and bought a multi-family with a little bit more capital. They'd be setting themselves up better. You might need to have an understanding spouse because I actually, I did that at 29. I bought a multifamily, so you got to have a good partner to allow you to. You absolutely do. Yes, you absolutely do. Yeah. My wife had to live in a four-bedroom apartment with me when we own three multifamily. And it was like, okay, when are we going to get that single family? But it certainly worked out for the best.

So do you think that my comment about kind of get rich quick versus get rich slowly has a factor here? Because I look at it that. If someone has a good day job, they have their benefits and their 401K and everything else and they're punching the clock 9 to 5, maybe one of these top 10 side hustles where they're doing dog walking or artistry or whatever is on the side, allows them to build a war chess to ultimately work towards buying that one family, two family, three family. So maybe these things are all sequential. What's your thoughts?

I think you're spot on. I think today with inflationary tendencies, everything being more expensive, I think, you know, I see people trying to come into real estate and do a side hustle themselves, but not on the acquisition side per se, but trying to do real estate as a part-time gig, if you will. And that's really not the way to do it because you can't be in real estate part-time in terms of being a real estate agent. The market's too fast. But in terms of doing what we're discussing in those top 10 that you just described, absolutely, I think to build your wealth, you need to have a side hustle for most people, over their primary job to build that wealth, to them buy that multifamily. And then maybe position themselves into a little bit more passive, if you will, rather than all those things that you just described are extremely.

active that you have to do. Maybe this is probably kind of a curveball for you, but, you know, so outside of, you know, needing the capital for that, for that down payment, I want to talk about kind of the marketplace and the timing and things like that, but I want to ask you about mindset because, again, there's a little bit, there's a lot of moving parts to this, right? So even if I say, hey, gee, my rich uncle, you know, he made a fortune in real estate and he had a very modest job and now he owns, you know, 50 properties or whatnot, you know, not everyone is wired the same way. So can you kind of riff with me a little bit about mindset of that, you know, true future landlord? Because you've probably seen some that they're not going out

it the right way and others that are like, holy cow, this kid or, you know, lady is going to really take off. Yeah, a great, great set up there structurally. I think that a lot of people come to real estate and don't really understand the vagaries and the complexities of it. But they're certainly interested in it because they've seen so many people become successful in real estate. They say that eight out of 10 millionaires were made in real estate. The question is, how did they do it? Right. And so most of the asymmetric gains you're going to see, like your huge hits in real estate, revolve around value add and repositioning the asset or building that property. And I think that if you inherited money and you're going to go into real

estate, that's great, but you have to have a plan because if you don't have a plan, you're going to fail and you're going to buy an overpriced property. You're not going to understand the cost structure. You're not going to know what it is to do. So I think having a good steward or, you know, a Sherpa or a coach that takes you through that process, that's vital for you building your real estate portfolio. Well, I want to get back to the value of the data that you've compiled over the last couple decades and kind of the, that coach or, you know, pilot, if you will, that you've created with your team. Because there's a lot of elements about not just identifying the property, making sure the numbers are right. Well, now I've got to fill the property,

and am I in the capacity to do property management? So I want to get into that, but I want to just first share on that mindset. I was listening to a podcast the other day, Rod Cleef, and he summarized it into four things. I think it's worth sharing with our audience today. So number one was goals, which you talked about. So designing your life. So if I am going to buy this, two family or whatnot. You know, maybe I'm a computer engineer, you know, working, you know, 12 hours a day to begin with, but am I, is it realistic that I'm going to be able to paint the kitchen and remodel and be the general contractor?

So I think about, you know, envisioning what your life would look like if you executed this as a side hustle. Number two is the decision, like, because we can be talking about that. I think the difference between an entrepreneur and a non-entrepreneur is actually, you know, making that decision, taking that leap of faith. you know, taking on those risks. Sure. Yeah. Three is really that, maybe that first, you know, decision,

but then the first step is to take action. And then I think four is the focus. And I think that I want to bring that back to your data because if I see a, you know, property for sale, I've got the down payment. Well, I need to know all of the data. If this thing's going to fail in, you know, 18 months or it's going to sit vacant and it's going to crush everything I worked for. 100%.

I'd say in real estate, you have to look at it as ready, aim, fire. You can't do this willy-nilly. You really have to line up your ducks and do a lot of research up front. And I think that the most important component of it, first, is understanding the rents in each neighborhood, the real-time rents, studios, one-beds, two-beds, three-beds, four-beds, five-beds, asset classes, how you're going to, you know, position yourself against the competition, days on market,

vacancy rates, real-time vacancy rates, availability rates, all those things matter. In each, not only... So don't rely on what's happening in the property now? No, that's just there. That's how I look at it. Now, there's existing rents, and then you're going to have some, I call them the CRE guys that are going to tell you, well, this is the projected rent, and they're going to give you some... And here's a cap rate.

Well, I want to know in-place cap rates, for sure. What is the existing rents right there? And then I want to go and look and see, is there an upside, right? So now, that takes a little bit of research to do. But the research is certainly worth it, especially if you're buying your first multifamily. So you want to have some degree of confidence that you can execute a value ad play.

You know, just buying, in Massachusetts, it's very difficult to just buy an existing three family as is or multifamily as is and expect it to, you know, cash flow. And it's some considerable number where you're like, this is great. I've never ever bought one in my life like that, ever. And I've been doing this,

I've been doing real estate. Because if there were, they'd be gone in. They'd be gone in two seconds, right. They'd be a line out the door for them. So every property I've ever bought, it's either like total gut renovation, reposition the asset, putting it on the right leasing cycle, understanding the market leasing cycles, and also ground up new construction in a certain neighborhood.

What would you put there? Right? So I think it's important to have a coach in your first few. I think after you've done maybe two, three, four, or five, then you kind of get it, right? And so what I notice with most landlords, especially with side hustles, they'll cluster in one neighborhood. They don't want to learn five neighborhoods.

That's too much. They want to know the rents, the cycle, the leasing cycle. Now, if that neighborhood becomes not as good or as profitable, they start looking in other areas and stuff like that, because you know, market saturation or et cetera. But I would say, like the most important thing to simplify it is understanding what the real rents are because that's your base and making sure that you're not vacant to your point, right? So you're going to fill quite quickly.

So seeing a high occupancy rate in a certain neighborhoods is super important. And then understanding how do you set those leases up structurally for, you know, picking up the right rent at the right time to get rewarded. So I want to fall up on that because I think maybe the perception of a buyer is, oh, you know, yeah, I got to go. There's a listing broker. I'm working with my local broker who's taking me around. You know, that's great.

That's an important role. But I think what you're describing is really truly a business partnership. because it's not just a transaction. It's all the analytics that go into making a smart decision up front. So talk to me about that. But then I also want to know after the transaction, what else happens? Where's the value added? Great, great question.

So I'll see if I can unpack that separately. If I'm a first-time multifamily buyer, I want to know the rents. I want to know the leasing cycle. I want to know what it is that I need to do. So what it is that I need to do, let me. Let me define that real quickly. How much money do I have to put into this property, right? And so maybe I want to go in advance with a contractor to know my outcome.

So if I'm buying it, let's say it's a million dollars, and I have to put $200,000 into it to get it to perform at the level that I want. I want to factor both of those numbers and understand that. On the other side of that math equation, there's a positive cash flow, or it's dramatically changed the formula where I can get significantly higher rents. And so that's the first thing that I want to try to figure out. So before I even purchase something, I'm probably showing up with my contractors to get several estimates, if that makes sense. So again, following ready, aim, fire. Once I fired and I purchased that property, away I go. It was really funny that you mentioned the side hustle.

So I called a real estate agent the other day. We're having a discussion. And it was late at night. She had texted me. I said, what are you doing? She goes, oh, we're painting. My whole family's painting a multifamily we just bought together. She goes, we've been doing it every weekend and renovating and do it.

I go every Saturday and Sunday, she's all the way to midnight. Yeah. Right. And so there's your double side hustle. Absolutely. So you become very handy when you own a multifamily. Yeah. And I see that historically kind of a lot where when, and same thing when I first started.

Like you buy your first multifamily. You obsess about every detail. You're like, you know, is it going to work? And you put in all this effort. You're doing crazy hours. And so that there becomes an inflection point in that where like at first, yourself managing. And so you've got your business, let's say it's your, you own a restaurant and your restaurant seven days a week. And you're kind of brass tax, right? You buy your first one.

You can easily manage your first one by yourself. You're going to have a few, you know, burps and hiccups. Hopefully you got a good family network or a good support structure that allows you to leave the office or whatever you're doing, your restaurant to make sure to deal with those little problems. But what happens is, and I see this a lot with landlords, it becomes an inflection point where maybe they still own that restaurant or they own two, but now they've bought and they're getting into about 20 to 25 units, and that's when they have to make a big decision. And it becomes, well, I can't sell.

Am I all in? Am I all in? Right. There's kind of the inflection point that I see. I either have to hire a property manager and absorb that cost of that property manager, so my overall profits going down. So it becomes a business decision for that landlord. Well, your side hustle is becoming your primary business.

Your side hustles become your primary, which one's more profitable? Now, if you love what you do because you love being a chef at a restaurant, you're like, okay, well, some people just love what they do. And so even though they're making more money on that, they still want to, they get a property manager. I'm sorry, they get a property manager to try to, okay, I'm getting less of a return, but I can be more passive. If they love what they do, they're like, well, maybe I'm just going to sell off my business and go all in into real estate.

And that's usually where I see it at about 20 to 25 units. Of course, you know, results vary neighborhoods. Sometimes if it's in a gateway city or town, maybe that's 30 or 40 units. It depends on, you know, the asset class and the customer, etc. Yeah. I want to maybe bring up some of the tax benefits to that too because, again, you know, if people are looking at, you know, NOL net operating, you know, losses or net operating income, I should say, you know, you have your gross rents, you have your insurance and your brokerage fees

and your maintenance and, you know, water and sewer and all these expenses. And then you have a depreciation offset. So, you know, I want to have a cash flowing property. And as you said, it's pretty rare that the property that's, you know, listed on MLS is going to pencil out right out of the gate. So your point is well taken that I need to expect not just, you know, to afford the down payment, but what are the things I'm going to do, you know, above and beyond that? Before I kind of get into a tax example, talk to me about monetizing amenities. Because, again, if rents, you know, based upon your data, you know, for a particular name, neighborhood, maybe you can give an example, because I don't really know what the rents are

and say Somerville versus Cambridge versus, what other things can you do that maybe aren't, you know, just on the, today's balance sheet that you could help, you know, leverage that income strength side. Yeah, so I think the first thing you do is if you're going neighborhood by neighborhood, a city by city, town by town. So it's not town by town. It is neighborhood specific. Yeah. So like in Boston, you could have, in Cambridge, you could have multiple neighborhoods that are totally different in their rent structure and how they approach it because it could be defined by how many luxury buildings are in that the density of luxury. Now, I would never want to compete if I've got five luxury buildings going up and I've got a building with studios,

one beds and two beds, right? Now, that could be irrelevant if I have three beds and four beds because luxury buildings usually never build three beds at scale. So that could be irrelevant to me. In fact, it could work out in my favor if I'm building high quality four beds that are more affordable than the luxury. So then you get into your amenities now. So then you go, okay, so now I have my defensive posture and then what can I add that drives up the value of the rent. And you can furnish places. So, you know, before Airbnb was ever popular short-term rentals and they came up with all these fancy acronyms, you know, we were doing furnished rentals, which was just furnished the place and add more rent. Right. And that's not just for the traveling nurse. I mean, that's

no, no, it's for, yeah, it's for everybody, you know. And so some people, you know, and so some people, I mean, especially near high traffic, well, look at the city of Boston, right? You've got a lot of, it's a perfect example of Schumpeter's model of creative waves of destruction, right? So you have high-tech companies that start very small with hockey stick-like growth, consolidation of an industry and their maturity really, really fast. It goes at scale at Boston. So you have a lot of transient people that come to Boston to do a tech job, an AI. I mean, you see how fast AI is going.

So some people don't know. where their career path is and they want to furnished rental because they're doing either a tech gig for a year or two. They came from San Francisco. They're going to be in Boston. They might go back to San Francisco. So buying a lot of furniture for someone or college students, etc., or international students. It makes it easy. They're like, I just bring my toothbrush. Great. I'm in and out. And that's like because otherwise you have to sell all that furniture. You're dragging all that. I mean, can that add $100, $200 a month? Oh, yeah, absolutely. And in some cases, you could see more $300 a month. Yeah, it really depends on the neighborhood and, you know, what the real-time rents are there,

and then what clientele you're actually targeting, if that makes sense. Now, I know, I think it's build.com is in New York. Is that the name of the app? There's a technology where I can basically turn up the heat on my digital thermometer, or I can arrange dry cleaning. Are you seeing applications like that? Maybe it's more of a tech amenity that you can sell that? too yeah we've implemented it every one of our properties wireless like wireless locks

wireless thermos everything everything so ours are soup to nuts where and it's actually quite easier and actually the technology is getting even better and better where one of our biggest drawbacks is when we put in all these wireless systems for doors with like not building from ground up but an existing retrofit was we had to go replace the batteries for people to get in. So it kind of changed a little bit. Like, in other words, instead of going around every year and changing locks, you know, your tenants move in and out,

you're just changing battery, so it's somewhat easier. But there's some new technologies that have come out. We're really excited about. We're going to actually roll them out where the charge off of your iPhone can then be put in front of the lock, and it will charge it because it actually absorbs a little bit. Yeah. So you won't have to.

Kind of like when you put your phone down. Yeah, exactly, right. And so now, oh, I'm going, this is great. So we're about to go try this at one of our properties now to beta test that we do. We'll scale it and roll it out and we'll show it to all the landlords. Now, how about EV chargers? Do you, is that being an amenity that? It is an amenity.

You see it generally in the more bigger luxury buildings with bigger properties. You don't see it in the, you know, if you're talking about Boston, right, you have so many triple deckers in greater Boston. I think there's like 32,000. Not a lot of parking either. Yeah, it's a little bit different, right? So, like, there's, I think there's 32,000. and if I'm not mistaken, triple-deckers in Dorchester alone, just as an example, right? So that would be, you know, you're not going to find a lot of EB charges there because, you know,

now, if you grab three plots, knock those three, three families down and build 25 units and do a nicer spacing, it lends itself to it. So I think, you know, it's more of a size, you know, size and scale scope when you do those EB chargers. Yeah. All right. So I want to get back to possibly some of the tax benefits because, again, we'll go back to our original thesis. You know, I'm, you know, working. I start my side hustle. Maybe my side hustle is helping me afford to build a little down payment. I ultimately want to buy a little income property.

I'm ready. I've got the mindset that we talked about. So I'm ready to execute. I work with a team like yours to help me, you know, understand the numbers, the demographics, the rents, the post-transaction, you know, activities. What I wanted to share with the audience is really the mindset of tax, because I think a lot of people confuse, you know, there's three kinds of tax. There's basically your non-passive, which I'll call active. You know, think of that as your W-2 day job, whether it's, whether you're,

you know, W-2-1099K1, it's where you're, you know, materially participating on a day-on-day-out basis. The second one is what we're talking about here, which would be passive income. So all rental property is, or all real estate investment property is passive by nature. And I'll talk to you a little bit about material participation. And the third type of income is capital. So think about capital gains, you know, dividends, so forth. When we had a client that she was a really good W-2 earner, surgeon, the husband was working part-time, volunteering, helping with the kids, so forth.

And she thought it would be a good idea to start buying rental property. because she wanted some of the tax benefits to it. I said, well, the problem you're going to have with that is you have offsets to your good earner. She was a good earner in W-2. You have your 401k and your HSA and your charitable and itemized deduction, so forth. But for that real estate portfolio, it was, you know, passive income. You have your 15 lines of expense plus depreciation. So she had, you know, passive losses, pigs and pals. Passive, you know, income generation is offset by pales, passive activity loss. And With the one big beautiful bill, I think it brought back into the spotlight doing a bonus depreciation, meaning any asset that has a 20-year life expectancy or less, residential, as we're talking about, has a 27-and-a-half year, non-residential. Think of office or self-storage or other asset classes 39 years. But when you do what's called a cost segregation, I can take elements of that residential asset and move them into five, seven, or 15-year elements. So I walk into the apartment building and there's carpeting. Maybe that's seven-year asset. Maybe there was a paved parking lot. That's a 15-year asset. So when you do a cost egg, I could move.

It depends, you know, maybe somewhere around 30% of that building value into stuff that's bonus depreciable. Now, the reason I bring this up is because now I can have this supersized passive loss that's suspended. Still doesn't help my good earner, the W-2, until one of three possible. things happen. One, in your world, I'm a real estate professional, real estate professional status, so reps. So what does that mean? It means I have to be in the trader business of real estate. It doesn't mean I have to be a licensed broker. There's about a dozen different categories that I have to put in 750 hours a year and no more in any other business. So that's number one. Number two, if that property was a short-term rental,

then the average stay is seven days or less, and I materially participate. Again, there's five tests. People say the 100-hour rule or 500-hour rule typically. And the third is the self-rental rule. So if I'm an engineering firm, I buy my building, then I don't have to, by nature, I'm going to materially participate. So when I take this supersized, suspended passive loss,

because I bought that rental property, I did a cost segregation. I had an engineer kind of itemized it. Now I can use this supersized loss if I meet one of those three categories and I materially participate. In my example with the surgeon, you know, her husband could meet those hours while she was still a good breadwinner. So, you know, that's, I think there's something to be said about that because I think people don't understand that, hey, it's not, I'm not going to get a deduction against my ordinary income. I'm going to get a deduction against my passive income unless I mean. meet one of these these categories yeah i i did a cost sag and it was awesome um and i i think that

what it allowed me to do in that instance um because we do a lot of new construction and got renovations so and that's really what you're targeting right if you have um heavy input in and you do it quickly you have heavy input out in terms of numbers that you can use and so we did a cost sag and we were immediately able to go buy another building in the tax savings alone. Well, Uncle Sam becomes your partner. Uncle Sam's my partner, right? And so then we went and bought another building, and we started gutting right away. And so what it does is I think it increases the velocity of real estate spending, and it allows you to have more courage to do more construction projects faster rather than waiting for the delayed tax implications. So, and I think it

also depends on where you are in terms of your age and your aggressiveness and how much you can handle per year. So it's certainly one of the great tools, I think, in the toolbox. And then it comes down to how many do you really want to do each year? Because you don't want to manage chaos, right? Correct. And for us, it's ready, aim, fire, get one, get it completely leased up, stabilize the asset. Okay, it's looking great, positive cash flow. Let's go look for another one. I think sometimes new investors get too aggressive and they try to do too many at once. And that's when the wheels start to fall off and they're over leveraged. And so I think, you know, having, to your point, having a plan and having a strategy in place, one at a time, stabilize, get them perfect,

get the next one, that's probably the best way to go. Well, another point you made me think about is if, let's say, I kind of tripped and fell on the first one, doesn't mean you have to hold on to that doesn't mean you have to sell and trigger all kinds of, you know, taxes on that either. You can still do the 1031 exchange, you know, investment property to investment property. And maybe it wasn't the right neighborhood. Maybe it wasn't the right asset class, you know, whatever it was. But it allows you to kind of reset without triggering those taxes. Oh, 100%.

We see this all the time where either they inherited the property. It had no debt. It'd been paid down over a long period of time. But the assets underperforming in and of itself. The neighborhood changed. the rents went down. There's more attractive rents other where you can do some leverage there with the amount of equity you have there and scale up.

So, I mean, a 1031 is an incredible vehicle. And I think that, you know, it's probably what, and to your point, even if one, you have a failing asset, that's okay. I just did, we do a lot of portfolio management for landlords. I have a larger landlord. And they had one that was really not performing. And you'll see it in bigger landlords' portfolios. I go, which one's your flea?

You know? And they go, they always name one. They always have one. That's my worst property. I go, okay, why don't we get rid of that one? So instead of saying like the whole thing, because they're looking to make moves, I go, find me your worst performing property. Let's do the analysis on that.

Okay, now let's go outperform that. So what we did for one of our clients was sold a property that was, you know, had fallen down disrepair. And we looked at the pro forma to add in about $500,000 to bring it up to speed. And I said, well, if we put the money in this, and I love doing construction, I love, you know, renovating. I go, it still doesn't make sense. We looked at the real-time rents and I'm like, I can go get you something right now that's performing better and we don't have to do the construction. Re-deploy the capital. I was just talking with her yesterday and she's like, she wrote, it's an A-plus. You know, like we did an A-plus deal. We didn't have to wait six months for construction. We didn't

have to do anything. We redeployed that capital to a better location. Bang, instant cash flow. I mean, that to me, what I'm hearing is consultative approach. It wasn't transactional. You added a lot of value by taking a step back and saying, wait a minute, let's reassess the situation. Yep. What makes the most sense. Yeah. And I think you probably have situations too where maybe someone's at the end of their landlord cycle.

They want to go play golf. They don't want to be getting the calls in the middle of the night. They've been hands on maybe many years. Maybe the math doesn't make sense to outsource to a property management company. I think that's where, you know, from a wealth management standpoint, you know, we have instruments like Delaware Statutory Trust or 721 upreats or charitable planning or the, you know, opportunity zones. There's a number of things that can basically, if someone is done, but they don't want to trigger all those taxes, that I think that's where we become more consultative working with, in conjunction with the realtor to say, hey, maybe it is time to sell. Maybe it's not time to buy that next property. you're not at that stage anymore.

Yeah, 100%. So I see three phases of landlords, having done this for 30 years, right? You have your... They all have scars in their back? Yeah, for sure. So, you know, you start, you know, your initial landlord,

and you bought your first properties, then there's your landlord that starts to scale up and start really doing it. Then there's your landlord that plateaus and says, I'm exactly perfect where I am. I don't want anymore.

I don't want any less. And then there's, hey, I'm getting older. it's time to start disposing, unwinding, and repositioning that. And so you're absolutely right. You'll see someone that says, I want to put 30% of it into commercial. I want to put 30% of it into, well, maybe I'll do a DST. Maybe I will spread it out.

Maybe I'll move it down south. I have a lot of landlords aging in place right now. And the answer can be a combination of those things. Absolutely. Yeah. You have to look at all of them. But I think, you know, as they approach, you know, generally speaking, mid-60s and past, they start saying, Demetrius, what are my options?

Because you're right, they're tired. I had a landlord told me the other day, I'm 72 years old, I'm not fixing another toilet. And, you know, so there's some inflection point. Sometimes it's just, bang, I'm done. It was that last, whatever it was, showing up the property at 2 o'clock in the morning. And I think that's where you step and you say, here are your tools, because you're going to lose millions of dollars if, you know, if you have a big portfolio and you're selling, but you're not selling strategically. Yeah. And so you should be selling strategically and doing all the vehicles that are out there.

guys have a lot more vehicles that, you know, like I come to you guys for understanding a lot of the vehicles because they change all the time. They do. They do. And maybe just for our audience, I'll just kind of maybe summarize what some of those tax headwinds are because it's not just the federal capital gains. If it's long term, it's 20%. It's not just the state capital gains. You know, we're here in Massachusetts. It's 5%, possibly 9% with the millionaire's tax. That could be a topic for another conversation. Right. For sure. But it's also that net investment income tax, that 3.8%. And then we talked about depreciation, depreciation recapture is taxed as ordinary income up to 25%. So it caps out. But the gutcha one that I think a lot of people don't realize is recapture depreciation, because

when I did do that cost segregation, which helped me buy the next property and whatnot, if it's the end of the rainbow, and I don't, and I'm not going to do a 1031 exchange, well, I shifted things into that five, seven, or 15 year categories. Let's say I'm four years into. it well I'm going to have recapture on things that were elements in seven and 15 years and that's taxes ordinary income so I think you know a lot of people don't factor in all of those headwinds so I think kind of planning that that exit strategy is you know is critical I think that's again where we can work in conjunction as being consultative to that landlord yeah 100% I mean it's complicated right so you know I always say it's not what you earn it's what you keep right

because you have to look at, right, it's post strategy. Okay, I'm a landlord, I mean, I'm 56 years old. So I am looking and listening closely to my landlords that are older than me, if that makes sense, and listening to their, because that's what you do all day. You talk with landlords, all day, investors and stuff. And you can hear their strategies and now they think through them and you're going, okay, that's good to know because that's my future maybe in 10 or 20 years, right? And so I'm like, okay, good to know.

So I'm also in their mind thinking I need to deploy these strategies as well. It's so complicated. But if you nail it right, I mean, real estate's absolutely incredible. And the opportunities that you can do with it are amazing. But I do think that as a general rule of thumb, as a landlord gets older, he or she wants to do less. It's just kind of the way it is. And they want more of that off ramp to a property where they don't have to be as active. Because generally speaking, multifamily properties,

you're going to have more touches every day than you would a commercial property. And certainly when you move over to a DST, there's no touching anymore. That's just passive. And that's probably a little bit better if you think about it. Maybe you're making a little bit less return, but you're able to travel the world. You're able to receive checks. And you're just, you're now actually enjoying your golden years rather than I got to drive and go fix the toilet for the 40th time.

Not everyone is ready to give up that active hands-on, you know, landlord role. That's right. So the shift into passive, you know, maybe it happens gradually. Or in some cases, it happens all at once. They say, I've just done. That's right. I want to go play golf in Florida. So I guess bringing this back to where we started in terms of the whole idea of real estate, you know, as a side hustle.

You know, I've got my day job. Where would someone who's just getting started, where do they begin? Maybe that's where we should come back to. Well, I, to oversimplify, where do I live, right? So let's pretend I live here in Framingham or Whalen area. I want to buy a property within 15, 20 minutes max. Because I can support it. Right, exactly.

So because you're probably going to go there a lot more. You're just going to obsess about more details. You're going to want to check it more. You're going to have more problems. You don't understand. You maybe have not built that network of contractors, electricians, plumbers, framers, roofers, people that you need, handyman, handy people, whatever. Because shit's going to happen?

That's right. That's right. And so that's why you want to be closer. As you get more ensconced than it and become better at it, I think you can go out a little bit further. And now, so then you can go and hit maybe richer waters, if that makes sense. So then your playing field opens up. You know, I own stuff in other states, like example, I own stuff in Arkansas. I've never been there. But I can manage pretty effectively from an iPhone and understanding. you know how to renovate properties remotely and understand a lot of that stuff now would i do that at my first

i would never do that for my first multifamily right that would be but but i guarantee before you decided to buy that you lined up all of those support people that's right that's right right so and so that's part of the the age becomes ready aim fire becomes wisdom right where if you have the right ingredients in place you can make you can execute those roles they be they they become natural to you over time so starts I guess the key takeaway start small start local start close and then start building your network and then you'll understand cost structures you'll understand all these leasing cycles you'll understand a lot of those things and you naturally accretively become better at

it as you go and then I think really that inflection point really is about 20-30 units where you go, you know, I'm making more money now on my real estate than I am on my job or whatever. Which one do I like better? Those are the questions, do I need a property manager? Do I want to continue to be a doctor? Do I, you know, I see a lot of doctors come out of, you know, that doctors love real estate. Lawyers love real estate. And, you know, eventually they're like, you know, I just don't want to be a doctor anymore. I just want to, you know. And I, so I think from the day you start your career, a lot of people are, are, are, are, are, are, are figuring out the 20-year off-ramp or the 30-year off-ramp into a passive investment.

I think that's how you would start. And then maybe just my last question for you, and I'll wrap it up today for our viewers. Is there any particular asset class? I mean, we've been talking about single-family, multi-family, but does that trump other asset classes? Well, I think it's important to become an expert in what you do, right? So I don't own industrial. You know, now I'm sure I could learn how to do it. it's a question of how much brain cycles do I have in the course of the day.

Do I want to stay the master of what I'm doing so I can do it a lot faster and scale with less stress? So I think if you have multiple, if you're chasing multiple waterfalls, that might get a little bit too diffuse. Well, and a higher cost of entry, too. Higher cost of entry, all those things. I think it's, you know, go slow and follow the same principles that you did. If you're going to go into a whole new thing, industrial, you name it, warehousing, whatever, you're still going to have to start small and go ready, aim, fire, and understand the key parameters. So I would say just focused on multifamily, start with some of the stuff we talked about today as your key basis points,

and then replicate those, trying it in another asset class. Fantastic. Well, listen, I want to thank you for this conversation. Hopefully it was valuable for our audience. I guess the way I'd wrap it up, a couple things. The math has to make sense. the mindset. We talked about, you know, kind of being ready and executing,

and then three, having that right team. And I'd say between Asset Strategy, Boston Pads, we all bring something different to the table. So if we can be a resource, please reach out to us our contact information at the end of this video. So thank you again, Demetries. Thanks for having it. It's been a pleasure.

It's a pleasure. Thank you. Bye now.