The Secrets of REVERSE 1031 Exchanging – What They Aren’t Telling You About Seller Financing

David Moore: Hello, David Moore, and I’m blessed to have my brother Tom with me once again today. Hi, bro.

Tom Moore: Good to be here.

David Moore: The Barter bros. It’s always fun.

Tom Moore: Barter bros, bros Grimm.

David Moore: Bros Grimm.

Tom Moore: Two different names over the years.

David Moore: Bros Grimm from our diving days. Plan the dive?

Tom Moore: Yep.

David Moore: Dive the plan. We won’t go into the other saying we used to have in those days. But anyway, we’re going to address a few 1031 issues today, and it’s always fun to have you here and talk about this stuff. And so, we often get the question, when do we want people to think about an Exchange?

And I typically tell people I want them to think about the Exchange when they’re buying things, because we know when they buy these things, they’re not going to hold them forever. And especially, it’s of concern when we’re talking about how they own things. If they’re going to be buying things as a group, since partnerships are not Exchangeable, I mean, the partnership itself can do the Exchange, but the members of that partnership cannot. It gets to be an issue.

So, we were talking a few minutes ago, Tom, about partnerships and entities doing these transactions. Obviously, the biggest issue with a transaction and Exchange is time, but the second biggest is typically that vesting piece. And you said you’ve had quite a few conversations lately on this topic. What typically is coming up, and what are you having to discuss with these people?

Tom Moore: Yeah. And it certainly is, like you said, we want to get involved with these transactions. It’s good to talk about these things at the time that you’re buying properties. We talk about it all the time. Planning is number one whenever you’re buying property, while you’re holding it, and when you’re looking to sell. But yeah, the issue of vesting in a 1031 Exchange is always huge, because it’s not always the case that a partnership buying property wants to stay together and ultimately Exchange out together in the future.

As far as the Exchange conversations that we have with people, when we get that first phone call coming in, I think we talked about this last time, we always ask how properties are held and what their planning is for the future. It’s quite often that when we do have an entity, like a partnership that comes to us with Exchange questions, it’s quite often the case that they do want to go their own separate ways. You’ve got different partners that either want to buy different properties, or maybe one of them just wants to get out of real estate altogether, and the other one wants to go forward with an Exchange and continue to defer taxes.

Tom Moore: So, it’s really important that we have these conversations with people, and that they have some idea of what they’re going to do in the future. It may make sense for them ease-wise to have a partnership when they go into an acquisition. But if it’s not going to be held for a very long period of time, and they do think that they’re going to go their own separate ways, then best off that they buy maybe as a tenant in common owner instead of a partnership. It might mean a little bit more work on the tax side for them during the hold period, but maybe not. It is certainly going to make things easier when it comes time to sell it.

David Moore: So, if they’re going to own things tenancy in common, it’s very important, obviously, they have a TIC agreement, just as they would have an operating agreement for the limited liability company, too. Even if it’s just a, let’s say, for example, you and I just go buy a place in Sun River as a vacation property, we should have a TIC agreement that spells out what happens if five years from now I want to go and get rid of that thing, and you want to keep owning it. What happens with the loan on it even, right?

Tom Moore: Yeah, it’s certainly a good idea to have a TIC agreement and too often it’s not the case with a situation like that. If we go in 50-50 on a piece of property, which there’s a lot of, most of the TIC arrangements are, it’s either not stated on the deed, in which case it’s assumed it’s 50-50, or there is a stated allocation. I own an undivided 30% of the property, you own an undivided 70% of the property as tenants in common. But that’s not really enough to spell out how that thing should be treated over the hold period and in the future when the property sells.

David Moore: We don’t see that very often, though.

Tom Moore: Not usually, no.

David Moore: You’ve got to have a lawyer that’s going to be doing that, and I always like to say you’ve got to have a lawyer that you’re paying to do the work, not paying to learn how to do the work for you.

Tom Moore: Yep. Yep.

David Moore: And a lot of this stuff, I mean, when you’re looking at any of these agreements, it’s really important that you do your homework to get these things handled when you’re looking at these partnerships. And there’s actually something called a TICer ship that some of these lawyers are coming up with too these days. So, you start looking at, I mean, if you look at the ownership of the property and how things are managed and whether you have to have equal…

Tom Moore: Yeah, no, we get that all the time. I know what you’re talking about. We get this all the time where people will want to go into a piece of property, and for example, we might have somebody that’s selling a piece of property, and let’s say they’ve got $500,000 in cash that they’ve got from a property that they own free and clear. They want to go out and buy into a new piece of property, and they’re going to go into it maybe with another partner. A lot of times it might be an adult son or daughter of theirs that’s going to go into this property, and they want to go into it as tenants in common with them and have the other party buy in. And maybe they’re going out and buying a million dollar property now, and we know our client’s got $500,000 to put into the property.

Tom Moore: Maybe the other partner coming in doesn’t have that much cash. Maybe they’ve only got $50,000 or $100,000 to put into the property, but they want to go in as 50-50 owners, and it just doesn’t work out. You could address these things in a well-drafted TIC agreement, but if somebody’s going into an acquisition of property, and they’ve got five-sixths of the down payment, and they say, well, the other partner’s just going to take on… Yeah, they don’t have that much equity, but they’re going to take on all the debt.

Tom Moore: Well, if there’s a lender in place, the lender is going to have both parties on the debt, and so it’s hard to argue that they’ve got different debt obligations in this acquisition when they don’t have… They’ve obviously got different equity allocations, and if one’s really a five-sixths owner, they should have five-sixths of the debt as well. So having a great partner and having a TIC agreement that has two partners with different loan-to-value and the same TIC, and we actually had, years ago, we had a company that we did a lot of work with that had… We have had several through the years. I think there might be one company that does institutional TIC company that has that, at this point in time, that has TICs that have different LTVs, and I think one of the lawyers we used to do a lot of work with did have the opinion that you could have, and it’s probably part of that TICer ship situation where you could have the TICs in each member. It was sort of using the argument that a condominium project is really sort of the same thing where you’ve got each owner has a different LTV. You could have somebody with an outright ownership, and somebody would have 90% LTV, and that was using that argument.

David Moore: Yeah, yeah.

Tom Moore: So, yeah. Like I said before, it’s certainly something that… Well, we’ve had attorneys that have been comfortable with them having the different equity and loan obligations in a partnership, but you would certainly want to have that addressed in a well-drafted TIC agreement and have an attorney and accountant that is comfortable with it as well.

David Moore: Got it.

Tom Moore: Yeah.

David Moore: So right now, we’re in a situation, a market, where financing can be problematic. We’ve had a number of transactions where financing will blow up at the 11th hour. We might have somebody bumping up against their 180th day, and they’ve got a situation where they’ve got to get the deal done, and maybe the seller is maybe in a situation where they think, “Hey, I don’t care, we’ll let the deal fail.” But they don’t understand that maybe the buyer can’t get the deal done, or if the deal blows up after paying taxes, they’re not going to be able to get the deal done, and what kind of solution they might have, or maybe somebody doesn’t understand if they sell and carry paper what the absolute repercussions are with respect to an Exchange. You want to sort of cover those options, and for the audience’s knowledge too, we’ve got a video on our YouTube channel. If you check out Equity Advantage 1031 Seller Finance, there’s a video up there. Actually, one of our most viewed videos is on this topic. If you can’t fall asleep some night, take a look at that, but why don’t you cover that real quick, and what sort of options people have for that.

Tom Moore: Okay. Yeah. So, as far as seller finance is concerned, and I think I’ll start out with on the buy side, it’s certainly no issue to acquire property where the seller’s carrying financing for you. It doesn’t matter if the lender is a bank, financial institution, or if it’s the seller of the property. No difference as far as the Exchange is concerned. Of course, you’re going to want to make sure that you are, again, using all of your cash to buy the property, and the seller’s carrying whatever is needed to make up the difference, so you wouldn’t be able to come in with a lesser down and still have cash and not have a tax obligation. As far as the sale is concerned, if you’re selling a piece of property and you’re going to carry financing either because the property’s not financeable or just to attract more buyers or whatever the case may be, you can certainly do that, but it does make the Exchange a little bit more complicated.

Tom Moore: If I’m selling a piece of property for 500 grand and I’m going to carry, say, 400,000 on it, that note and trust deed, which is the instrument we would prefer to use, it makes it easier for the Exchange than a land sale contract, but if there’s a note and trust deed that’s drafted up with me as the beneficiary, as the seller, and I receive that at the close of escrow, then it’s going to be taxable to me when I receive those payments. I could certainly carry forward the 100 grand in that example in the Exchange and defer taxes, at least on that portion initially, but when I receive that $400,000, I’m going to pay taxes as I receive the principal payments. If I want to defer those taxes, not have a tax obligation at all on my gain, then the seller financing documentation, that note and trust deed, has to be involved in the Exchange as well.

Tom Moore: So, because we, as a facilitator, step into the transaction as the seller, we not only receive the 100,000 in this example, but we would be the beneficiary on that initial note and trust deed when it’s drafted at the close of escrow. We give instructions to the escrow company that this is the desire of the client. They then draft up that note and trust deed with equity advantage as the beneficiary. Now you’ve got a couple of options moving forward. We have to use that note and trust deed in the Exchange so that it doesn’t go back to them and they pay taxes on it. So, your options are really threefold. You’ve got first option is that you can come in and buy the note and trust deed from us. So, client’s got some cash laying around and they want to buy that $400,000 note and trust deed from us. That’s certainly fine. They can do so. They bring additional cash into the Exchange. We then assign that note and trust deed over to the client.

Tom Moore: Now they can receive those payments and the only thing they’re paying taxes on is the interest income. Second option would be to do the same thing. They would arrange the sale of that note and trust deed to a third party. We used to see quite a few of those transactions selling to a third party, but it seems like the discounting of the note is usually an amount that really is not something that the client’s willing to take. If I can only get $300,000 or $350,000 for a $400,000 note, it’s not worth it to them. But that can certainly happen. If another buyer comes in, again cash comes into the Exchange, we then use that money. We assign that note and trust deed over to the new buyer of the note.

Tom Moore: Third option, which we rarely see, it’s been a few times over the years, but we rarely see it, is that the Exchanger is able to negotiate with the seller of a replacement property for them to take that note as partial payment. So, we come in. We now, as equity advantage as a facilitator, move the $100,000 forward into escrow and then we would assign the note and trust deed over to the seller of the replacement property. Very seldom use the sellers of those properties, unless it’s somebody that maybe the Exchanger and the seller of the replacement property know each other somehow and that person the seller knows that property, it might be a feasible transaction, but it’s pretty rare.

David Moore: They know the property, know the person.

Tom Moore: Yep. Yep. As far as the seller financing is concerned, on the buy side, we sometimes use it when you’ve got, maybe we’ve got a 180 day Exchange period or deadline that’s coming up for our client. And for whatever reason, they are not able to get their financing in place before that 180 days expires. A quick fix to that might be for the seller of the replacement property to do a short-term carryback. You know, if I’ve got, in my example, I’ve got a $500,000 property again, maybe I get $100,000 out of sale. If I’m able to use that as my down payment and seller is able to carry a short-term note and trust deed on that, and that might allow me to then, after the 180 day period, to finalize my long-term permanent financing, then that’s a short-term fix. And it’s able, we’ve had quite a few transactions over the years where that has saved an Exchange transaction.

David Moore: Yeah. We did a big one a couple months ago where it was going to blow up and I believe the seller actually had an Exchange with a different company set up and the other company didn’t understand what was possible. We took the deal over and made it happen because I don’t think the seller understood the deal wasn’t going to be happening because the buyer wasn’t going to have the money to make the deal happen if they didn’t accommodate it. And we stepped in, took the seller’s deal over, took the note, got the deal done, and then ended up making it all happen. So that was a…

Tom Moore: Yeah. That was a big one. If that was not able to go through, it would have been big tax dollars, big tax consequence for them.

David Moore: So, how about buying on a seller carry? Is it any issue with a 1031?

Tom Moore: No. Again, as I mentioned, it’s really no different as long as the client, the Exchanger, is using all their cash from in the Exchange to, as their down payment. It doesn’t matter if it’s a bank or the seller of the property that’s carrying the financing.

David Moore: How about doing a seller carry when you’re in a reverse Exchange? Is that any issue at all?

Tom Moore: On the sales side? If you buy a property and…

David Moore: So, if you’re in a reverse Exchange we’ve already bought your property in a reverse Exchange and now you’re selling, you’re doing the down leg and you do a seller carry.

Tom Moore: Yeah. No, that’s a good question. It can work out pretty well for people, actually. It might bring in a new set of buyers for them. With a reverse transaction, obviously we don’t have cash yet from a sale transaction so the client’s having to come in with cash on the buy side, hopefully that is going to be somewhere around the cash amount that they’re expecting to get out of their sale transaction. So, if we’ve got somebody that comes in with, let’s say they’re selling, we have to go back to some examples. Let’s say they’re selling a $500,000 property that is debt-free and they’re going out and buying a million dollar property on the buy side. If we did a normal delayed Exchange, of course, we’ve got that 500,000, less than closing costs of course, but we’ve got that 500 grand to move forward in the Exchange. If we’re doing a reverse Exchange, we don’t have money, so the client comes in with the cash to make the acquisition.

Tom Moore: If they’ve got 500,000 to put down on the replacement property, it opens up some options for us. But that cash that they take into the closing is going to be treated as though it’s a loan to us to make the purchase for them. So, we give them a note back for the 500 grand in this example and now when they sell their relinquished property, if they’re not able to get an all cash buyer and person’s getting into new financing and we get the 500 out, maybe they sell the property for a lesser amount down. Let’s see, we’ll go back to my $100,000 down and seller carries the… And this is in case a seller or Exchangers carries the $400,000 note and trust deed, instead of having $500,000 in cash to pay back to the Exchanger to pay back that note of obligation that we have with them, we can simply pay the $100,000 and assign the note and trust deed over to him. Now they’ve got both, but it does work well in certain cases for them to… Again, they might be able to attract a whole another set of buyers for that property.

David Moore: So, I guess the thing that people need to understand is, and by the way, if you want to use seller finance, you’re not doing an Exchange. Obviously, it’s an end game for you. Some comments I’ve got for you on seller finance, you need to understand, most people think, and I think you really got to understand this, most people think you’re just going to pay tax on the principal payments at a, whatever… Whether it’s long-term or short-term capital gains tax, as you’re supposed to, right? If it’s all short-term, you’re going to be at normal income. If it’s long-term, you’re going to pay whatever it is. That’s not the case, you’re going to pay tax on debt relief in the year in which the sale occurs and you’re going to pay tax on debt relief and depreciation recapture. So, understand that. It’s not just on the principal payments. Make sure you know that, because I think that’s something that people don’t understand. So, that’s at a biggie, and so, make sure you’re prepared, you’re going to pay tax on those things and all the closing costs in the year of the sale, and that’s something that’s a big, big bite if you’re not aware of that.

David Moore: So, keep in mind that you’ve got to look at that, get enough of a down payment to cover all your closing costs and the taxes that you’re going to be exposed to in the year of that sale. Also make sure you understand, if you’re going to do it and you’re doing it with the intent of having payment over time, that you have an acceleration provision in there, and you better be getting… Better be a first, and that you’re comfortable with what’s there. Look at it and understand, there’s other things out there, if you’re looking at it, you’ve got that risk of a default. So, be aware of that. Understand there’s something called a 721. If you’re looking at it, and you want something without those issues, there’s something called a 721 UPREIT, basically you’re exchanging into a Delaware statutory trust, which is going to give you the ability to Exchange into something with total tax deferral with no risk of default, and none of those tax liabilities, which is a pretty neat deal.

David Moore: Now, you’re going to have the cash flow of the DST for a year or two, and then that DST rolls into shares of REIT. Now, the thing that ultimately is the neatest deal of that whole piece is that when you start selling those shares of the REIT, the tax consequence gets flipped literally upside down, you’re going to be able to sell through your basis with no tax. After you sell through your basis then you start paying the tax on the gain. I think that’s really a neat deal.

Tom Moore: Yeah, yeah. because if you’re taking out cash in a 1031 Exchange, then of course you’re going to get taxed on every dollar you take out up to your gain amount, and then you start getting your basis back out, which is completely contrary to so many clients that we deal with people will call in and they say, Well, I put a 100 grand of this and can I take that out and just Exchange the rest, and the answer is no. The government want their… “their”, that’s the air quotes there for the listening audience. They want their portion of the gain first, your gain first. They’re going to take the tax dollars out as much as they can, then after you’ve paid tax on everything, then you can have your original investment back out.

David Moore: And the other thing I just really want to stress, and Tom, why don’t you explain to the audience too, when is a tax consequence cooked on this note transaction? Do they have the ability? When do they have to make the decision on what they’re going to do with that note? Do they have the ability to work with the note at the pay-off, or do they have to figure out what they’re going to do with the note at the time of close?

Tom Moore: They need to know prior to close of escrow, because if the note goes, if it’s drafted up with them as the beneficiary at closing, that’s boot to them, it’s something that they’re getting, that’s not real estate, that transaction. So, it is taxable. There’s no getting around that it’s going to be taxed if they’re the beneficiary on it. It’s just again, it may be over time, when and if the note pays off. Hopefully it’s going to pay off, but yeah, they’re going to pay tax on it. So, it’s got to be decided ahead of time. We get calls all the time. We have for 30 years, 30 plus years we’ve been doing this, and where people will call up and they say, I sold a property a couple of years ago and carried a note, the note’s paying off and I’d like to Exchange that, I don’t want to get that money and pay tax on it. Well, it’s too late. It had to have been dealt with when the property was closed, because that’s when the property was sold.

David Moore: Do not, do not sell. Carrying a note, let it close, and then expect to do an Exchange when you get the pay-off.

Tom Moore: Yeah, yeah. It always needs to be dealt with, and that’s why we talk about this every time we talk, that people have got to plan for this. If they’re contemplating selling a piece of property, talk to their tax and… They’ve got to talk to your tax and legal people about it. Tax people most importantly, just to find out and what that sale is going to mean to them tax-wise. They may very well have losses that can offset gains. I had somebody called in yesterday, a couple of different people going into a property, one of them was selling a property that they had, I think they said that they had a couple million dollars in write-offs that they could take advantage of according to their CPAs. And I said, Well, I guess that’s nice and not so nice, but it may mean that they don’t have to Exchange. But pretty rare, but definitely a good idea to do that planning.

David Moore: If you have the write-offs, by all means use them.

Tom Moore: Oh yeah, yeah.

[chuckle]

David Moore: So, one more thing we’d like to talk about today, reverse Exchanges. So, something I want to stress, and we have once again, situations where reverse Exchanges are great and they’re there, and if you have to use them, please do. But don’t use them as a first course, I guess what I’d like to say is they’re a great tool, use them if you need to, but I really sort of discourage people from using them as the first course of action. I just feel like they’re a lot more expensive, more cumbersome. They’re more expensive from our side. If there’s loans involved, it’s going to be more expensive money. I think you’re probably going to echo my sentiments on this. We have deals where financing blows up, deals blow up. And so, we end up in a situation where reverses are there.

David Moore: I typically tell people, Look, by the time, if you’re in a situation where we can… If we’ve got a sale on a purchase and there are a few weeks apart, a month apart, if you can buy the gap, do it. I think that what happens sometimes I’ve had a few of these happen in the last year, where a sale will fail and somebody will say, Well, just go ahead and buy the property, and then when your sale happens, we’ll set up the Exchange. And so, the client will buy the property, and then they call us up when the sale happens and they want to Exchange into something they already own, and you cannot Exchange into something you already own. So, it’s really critical that before you sell or buy anything, that you structure the Exchange. So, I’m going to say this again, do not close something, either sale or purchase without having the Exchange structured. So, Tom, you want to sort of explain the basics of a reverse Exchange, sort of what’s required and sort of the nuts and bolts of it?

Tom Moore: Yeah. And so, first off, like you just mentioned, you don’t want to close on anything, a sale or a purchase without the Exchange being set up, you can’t just simply go out and buy property and sell property later and call it an Exchange transaction. The IRS does not allow for the taxpayer to be entitled to both the replacement property and the relinquished property at the same time, so when we’re doing a reverse Exchange, we have to form what’s called an Exchange accommodation title holding company. It’s an LLC. It’s a single member LLC that has our corporation as the sole member, and the Exchange combination title holder, or EAT, goes out and essentially will acquire and hold title to the replacement property, or if the client has a sufficient down payment, it’s equal to what they’re getting out of their sale, it opens up the option for us to take title to the relinquished property instead, but we are taking title to one property or the other when that initial purchase takes place.

Tom Moore: And in the case where we’re taking title to the replacement property, again, we mentioned before, the client comes in with cash on the acquisition because we don’t have any money from a sale transaction yet, so they come into the cash, we treat that as though they’ve loaned money to us to make the purchase, our EAT comes in and is assigned in as the purchaser of that replacement property and holds title. In that case, what we’ve done is we’ve borrowed money from the client, we’ve purchased property in this EAT name and we’re just going to hold that property, we can do so for up to 180 days, but we’re going to hold that property and when their property does sell in the future, that’s when we do the Exchange transaction. And so, it’s a buy now, we hold, Exchange later within the 180 day time period.

Tom Moore: So, when their property does sell, that’s when they are essentially giving us the property, we turn around and sell it to the buyer, and now we’ve got cash from that sale to pay back the note of obligation. And then to transfer ownership to them, we’re going to do so, either through a new deed transfer from our EAT over to the Exchanger, or if the Exchanger is an individual, we can do a membership assignment from our corporation over to the individual. Or in the case of a community, whether it’s an individual or an entity, or in the case of a community property state, we could assign the membership from our corporation over to the husband and wife. Okay?

Tom Moore: If we’re going the other route and we’re holding title to the relinquished property instead, that’s a case where, again, we’ve borrowed money for the purchase, we make that acquisition, we convey that property, we have that conveyed over to the client, and at the same time or prior to that conveyance, or close of escrow on the buy side, the relinquished property is Exchanged or deeded from the client over to our EAT.

Tom Moore: In that case, we’ve done the Exchange up front, we’ve actually swapped properties with them. We’ve borrowed money again to make an acquisition, they’ve given us property, we’ve bought the new property and given them that property, and now we still have that 180-day time period for them to arrange for the sale of the relinquished property that we’re currently holding title to. Same thing happens after the sale occurs, though we are now the seller of the property, they can arrange for the sale. We are signed in as the seller of the property and when the proceeds come out of that sale, we now turn around and pay back the note of obligation to them.

Tom Moore: We don’t have to do another transfer of ownership on the acquisition that’s already taken place. Only downside to that one really, is that a client will have to definitely come up with more cash, they’ll have to come up with a cash amount that is equal to what they’re getting out of their sale in order for us to go that route, and also that there is a possibility of an additional transfer tax because there are at least two deeds in that case, the one from the client to us, and then the subsequent one from us out to the buyer when that occurs. It doesn’t always happen, it depends on the county in which the conveyance takes place, so that’s always a concern when we’re doing a reverse. Where is the… What county is located in… because we have to look at whether or not there’s going to be possibility for a couple of different transfer taxes.

David Moore: That’s a short edition. So, since we’re on the topic of, these are called warehouse or parking transactions too. And if we’re talking about warehouse relinquish or warehouse replacement and improvement Exchange, since we’re on this topic. Warehouse replacement reverse Exchange, is it really same structure as an improvement Exchange too?

Tom Moore: Yeah.

David Moore: So, if you want to build something or we’ve got a situation where you got to improve things or create value, additional value, we can be improving the property, on the title of the replacement property, we can do improvements to it while we’re on title also.

Tom Moore: Yeah, and that can happen if we go about that first scenario where we’re taking title of the replacement property and we’re parking in the replacement property, they may end up with a situation where they think their property is going to sell for about the same as what they bought their replacement property for, market might not be super-hot right now, but in a hot real estate market, they might end up with… It wasn’t too many years ago, people were bidding well high, well up and above over what asking was, and so, if they sold a property for more than what they were anticipating, they may end up with a cash boot situation, but if we’re holding title replacement property it allows us to use all of that additional cash to make improvements if the property needs it. And so, we can improve that property prior to transferring ownership to them and get them a full tax deferral that way.

David Moore: Well, and not that we need to get into the politics of things, but if you want to be building on anything that we’re entitled to, it better be in a state where they’re actually going to issue a building permit in a timeline that will actually allow us to build anything too, so…

Tom Moore: Yeah. It’s a big topic with improvement Exchange transactions, yeah. We don’t want people to be waiting around for permits and burning their 180-day period.

David Moore: You think about, we’ve been doing this for 33 years now. I mean, our fiscal… Our anniversary is 1031. So, think about this, it’s been… We’re approaching 1031 very, very quickly here. So, our 33rd birthday. Happy birthday bro. 33 years in this crazy business, but you think about the number of build-outs that we did in the early years, and I mean up and down the West Coast, and we could actually do improvement Exchanges, but you think about the number of improvement Exchanges we’ve done on the West Coast in recent years, we don’t ever do them. It’s just really sad.

Tom Moore: Especially, yeah. Especially the big cities.

David Moore: Yeah, we just can’t get a permit, there’s no way we’re going to get a permit up and down the West Coast. In Texas, Florida?

Tom Moore: The timing for the permits and the cost of the permits, just time and time again, when people have… They’ll think their permit is in place, and then something comes up, property’s red-flagged for this or that, and delays, delays, delays.

David Moore: And you politicians that talk about, you want low income housing, stop charging $50,000 for a permit if you want low-income housing.

Tom Moore: We’ll leave it at that. People want to build. They do. Yeah, people want to build. Just get out of the way. It’ll happen.

David Moore: Thank you very much for your time today. And if you’ve got an idea for a topic you’d like us to address, we’re happy to do it. And we love doing this stuff. We thank you very much for the interest in what we do, and thank you very much for taking the time to watch our information and look forward to talking with you soon.