45 Days to Get It Right: The Truth About 1031s

Aviva (00:00)
This week's listener of the week is Left On Red. I don't know why they did that, but Left On Red, thank you for leaving us a five star review. And for those of you listening, if you leave us a five star review below, you might be next week's listener of the week. Week, week.

This week on Commercial Real Estate Secrets, We have Chassidy Goolsby. Chassidy is a 1031 expert. Pull out your phone and follow her at the 1031gal. Chasiddy, thank you for being on the show today.

Chassidy Goolsby (00:34)
Thank you so much for having me. the beginning is my favorite part, by the way. The week, week, week.

Aviva (00:43)
Well, you know, reviews are huge for podcasting. And so when people do leave us reviews, we like to shout them out. So thanks to everybody who leaves us reviews. Chassidy, tell me about who you are, what you do and how we got here today.

Chassidy Goolsby (00:52)
for sure.

Yes, so first I'm originally from Texas. I'm actually located in Denver, south of Denver, Colorado now, but my name is Chassidy. I specifically focus in 1031 exchanges and really grew up in the real estate world. When we moved here to Colorado, started focusing on 1031s and it's like my little corner of real estate.

Aviva (01:29)
is if I were a fifth grader, can you explain what a 1031 is?

Chassidy Goolsby (01:34)
Yes, so a 1031 exchange is a tax vehicle that is completely allowed through the IRS and it allows you to defer your capital gains tax. So in doing so, when you sell one property and you take those proceeds and you use them to put back into another property, you are able to defer 35, even upwards of 40 % in taxes that you would normally pay if you just sold.

your property outright.

Aviva (02:06)
Amazing, thank you. So for everybody listening who doesn't know what a 1031 is, it's a highly advantageous tax saving mechanism when buying and selling real estate. Now, ⁓ well, you know, you're a professional. I just pass paper back and forth. No, I'm just kidding. So.

Chassidy Goolsby (02:21)
Yes, you subbed it up a little quicker than I did.

Aviva (02:31)
I was maybe seven years into the business and I was exposed to a reverse 1031 exchange, which led me to realize that there is more than just the classic 1031 exchange. Can you tell us about the different exchange types and what they are and how we can use them?

Chassidy Goolsby (02:55)
Yes, so typically you're coming across 1031 exchanges and they're in a forward manner. So people refer to them as a forward exchange or even a simultaneous exchange where that's almost like a property swap. And that is where the property is sold first and then the new one is purchased. In a reverse exchange, the purchase is done first and it's actually held by a holding entity and what

we call it a EAT E-A-T and the property's held and then that owner has 180 days to then sell their relinquished property. they're not, reverses come into play when a lot of times they don't want to be under the gun for that first 45 days to lock down a new property. so other than reverses, so we have forwards, we have reverse.

Aviva (03:43)
By all means.

Chassidy Goolsby (03:48)
There's improvement exchanges and that is where you can actually utilize the proceeds to make significant improvements on the property. And outside of that, there's even non-safe harbor exchanges that fall out of the 180 days. They're more risky, of course, but there's actually a lot of creative solutions within the 1031 space that most people normally don't come across.

Aviva (04:17)
Tell me about this construction thing.

how does this work?

Chassidy Goolsby (04:21)
So it can work really however that owner is needing it. So if they're buying a property that's almost dilapidated and they just want to scrape it and build new, they could use it on a property that needs significant improvements. And what happens is it's set up in the same structure as a reverse where an entity has to essentially park or hold that property. And then the construction expenses are ran through the exchange account.

And then at the 180 days, the property is given back to the owner at that point.

So a lot of planning comes into play with those because you really need to make sure that you have plans in place so that the funds in the exchange account are eaten up and used by the 180 day period.

Aviva (05:00)
Yeah, they didn't.

Okay, because then you would be taxed on the remaining funds. You know, they didn't teach us this in real estate school. Literally.

Chassidy Goolsby (05:17)
correct.

They

don't, they don't, I mean I have a license too and they don't teach you anything about practicing real estate. So yeah.

Aviva (05:31)
So you were using a few buzzwords. You said 45 days, 180 days. For maybe somebody who isn't familiar with the 1031 exchange, what are those days and why are they important?

Chassidy Goolsby (05:45)
Yes, so total exchange period is 180 days. The first 45 days of the 180 day period is really the most critical and the most one that people make mistakes with because they're either under the gun and they're not prepared. So the first 45 days is where you have to identify what you want to purchase. And that is a...

very big kicker because as of day 46, you cannot change what you've identified. If a property that you were under contract with falls through, you're pretty much screwed, you know, unless you have some backup options. And it's not something that we can change as a QI. Unfortunately, that's a set IRS role. that 45 days is really the most important.

Aviva (06:37)
So you have 45 days to identify three properties, correct?

Chassidy Goolsby (06:44)
So there's actually three different ways to identify properties. The first being most common, which is up to three properties. So whether it's one, two, or three, most widely used, most recommended because you're not restricted to values on the properties that you identify. There's another role, which is a 200 % role. So if you go over three properties, the combined value of those properties cannot exceed

200 % of the value of the property you're selling. And then the last and final rule, which is more of like a fail safe, the way we see it is that if you bust the 200 % rule, the IRS says, well, you fall under the 95 % rule, which means you have to close on 95%, basically everything that you identified. And if not, your exchange is busted. So.

Those are, so there is three different ways, but most commonly used is up to three properties. It's the, there's no restrictions with that.

Aviva (07:48)
Every time I talk about 1031s, I learn more and more and I get like more irate that I didn't know about it in the first place, but I suppose that's real estate is just getting in the trenches and learning something every day. Okay, I have a practical application question to a deal that I'm working on right now. While you're here, I figured I might as well ask. Say I'm working with a buyer.

Chassidy Goolsby (07:51)
Ha ha!

Yes.

Yeah.

Let's do it.

Aviva (08:17)
just sold a property, we're in the 45 days to identify. We have identified a portfolio, a two property portfolio. That would work for, so does that, ⁓ no, it would work, but my question is, does that qualify as one property or two properties when identifying?

Chassidy Goolsby (08:29)
Yes.

So

when you say portfolio, what is the structure of the deal? it, cause that's what it all comes back to. Normally when I think of portfolios, it's in like a manner of a DST. But so explain to me a little more of how these properties are actually set up in the portfolio.

Aviva (08:56)
That's a good question. It's essentially two properties side by side owned by the same ownership group. I think they're strategically being sold together because one is an office building. So it's the idea is like coupling an office building with a warehouse so they could probably move the office building faster for more money is my assumption. Yeah.

Chassidy Goolsby (09:22)
The way,

if it's under one contract, to me that would, and it's one property in a sense, I would consider that as one property on your ID form, but just be mindful of the values and you know, that she's, what we always recommend is that they replace into equal or greater value. So as long as that's there, then they'll have full deferral.

Aviva (09:49)
Fascinating. Thanks for answering my tactical on the street question.

Chassidy Goolsby (09:55)
No, those are like those are the best and we just I did a class the other day and it ended up turning to a roundtable discussion of like I have this deal going on that deal that deal and I'm like, I loved I love it. So Yeah, real-world application is really the best way for everybody to retain all these, you know rules and regulations

Aviva (10:14)
Yeah, because we have to. If we're not figuring it out in real time, a book isn't going to teach you it anyway. So, you know, when you talk about practical application, it's been a really interesting few years in the commercial real estate landscape, right? Interest rates started turning on us in 2022. And we're feeling the after effects now.

Chassidy Goolsby (10:16)
Hahaha

No.

Aviva (10:40)
I specifically feel that in 2025, pretty aggressively. From your vantage point on the exchange side, what have been the ebbs and flows of the last few years in the business and what do you predict the future will look like?

Chassidy Goolsby (11:01)
Great question. It's really, I think it depends on.

different asset classes right now are doing different things, right? So, and then different types of owners are doing different things. So there's a lot of owners that have sat for a while only because when they go in to replace their new property, obviously the terms are not working out. It's not really advantageous for them to do an exchange right now.

There's been a lot of people waiting, but at the same time, there's still these great little pockets of real estate, off-market deals that are still going on, creative ways. I talked to a hospitality broker, they're turning this big franchise into more of a boutique style.

People are getting so creative because of the market conditions. And I think that's allowed things to keep progressing. And it's also allowed all of us in the industry to enhance our skills because we're having to work harder to get deals done, especially on the broker end. But even on my end, I see and I hear things and not just on a 1031 side, but I try to provide value or connect people or, know, because obviously we're, I'm in strict guidelines with the IRS.

but I'm always like, well, what if we could do this and what if we could do that or structure it this way to allow them to do a 1031 still? So I think, you you're hearing a lot of like, as far as, you know, the market and where it's going, everyone's hopeful for the back end of this year. But I'm already starting to see more action, more calls.

I'm getting a lot more calls and scenarios than I was, you know, a couple months ago. Like I thought January was going to be amazing and it was just like nothing. And then the next month it's just like, calls are flying. Can we do this? Can we do that? And so it's, it's moving for sure. And I think everybody's hopeful for the, for the back end of the year, but I think it's really catered to certain areas, those pockets that still have great deals and then even asset types right now and what they can do with them.

Aviva (13:12)
Super interesting. It's a humbling business to say the least. I'll be honest, I am telling people this because I genuinely feel it to be true. I'm just passing my 10th year in the business and I'm looking back and I'm looking forward and I mean, I'm meant to be in this business, I'll do it my whole life.

Chassidy Goolsby (13:20)
Mm-hmm, yes.

Aviva (13:38)
but it is actually extremely difficult. And it's actually, after 10 years of doing it, harder than I ever thought it was, which is funny. You know, I'm always working to level up, to do bigger deals, better deals, harder deals, but I'm looking in the rear view mirror and being like, wow, I was so, I had no idea how hard it is.

Chassidy Goolsby (14:05)
Mm-hmm.

Yes.

Aviva (14:09)
But it's fun and it's like you said, it takes a lot of creativity specifically right now to get deals done, but it's kind of fun to be, you know, I'm a creative. And so actually being able to mesh passions of commercial real estate, you know, creativity, be it in marketing or deal structure, it's...

humbling, but it's rewarding and fun and challenging and you know, here's to the next 50 years. So.

Chassidy Goolsby (14:45)
I know it's,

you seen that meme where it's like, you know, entrepreneurial life or real estate life and it's just like up and down. It's like a roller coaster, you know, and, and I think.

That's what's so great about connecting with people because you can ask somebody, oh, how's it going? How's the market? And a lot of times they're just like, oh, it's good. But when you have those people who are like, they'll tell you what's really going on, you know, how bad it is or how good it is or those are the conversations that I think help us all be like, okay, it's not just me. So yeah.

Aviva (15:15)
Yeah.

Oh, boy, I mean, just to be frank, an issue we're dealing with day in and day out is that how the market peaked out in 2022. And then everybody's got their amazing appraisals from 2023. And now it's 2025 and prices have reset 35 % down, 40 % down. And how do you know, people expect they say, Oh, it's real estate, it's only going to go up in value.

And that's true over a long period of time.

Chassidy Goolsby (15:51)
Yes, yes.

Aviva (15:53)
And three years is not a long period of time in this business. So yes, if you hold onto your property, it will go up in value. Let's talk in 10 years. Let's talk in 20 years. You're going to be okay. But if you're looking for a new price analysis and you want me to compare it to 2023, we're going to have a, you know, it's going to be, it's shocking for people. and I empathize. But.

Chassidy Goolsby (16:21)
I'm

hearing that a lot with brokers is there's just like a big gap between seller expectations and what the reality is because you're right all those valuations of purchases from 21, 22, 23 it's yeah for the first time it's declined right the appreciation isn't there so

Aviva (16:22)
yet.

I know I've got sellers, they want five caps. I've got buyers, they want seven caps, eight caps. And then I say to the sellers who want five caps, say, what would you buy this for? And then they go, ⁓ well, they wouldn't buy it for 5%. You're like, how are you expecting, with negative leverage? Anyway, what a crazy time to be a broker, but.

Chassidy Goolsby (17:01)
Exactly.

Aviva (17:11)
It's times like these where you separate the boys from the men chastity and here we are. Speaking of boys from the men, you know, you and I connected over your excellent marketing skills. Really? You clearly are targeting women, maybe a certain type of professional and then keeping in really, really good touch. Clearly. And now here we are today connecting, continuing to build our relationship.

Chassidy Goolsby (17:15)
Totally, totally.

Aviva (17:41)
Can you tell me a bit about your marketing strategy, your approach, and yeah, how we got here?

Chassidy Goolsby (17:48)
Gosh, where do I start with that? So for one, I'm constantly learning every day right now with marketing and how things are evolving, especially in the CRE space. So I try different things really. Right now I do more video on like my other platforms.

And LinkedIn, I really don't want to really put my video out there yet, because I feel like LinkedIn is still very corporate focused, I guess. And so I'm trying to figure out really what to do with LinkedIn. But at the end of the day, think I've realized it's just my main thing is on education, like bite sized education pieces and trying to find ways to connect with my audience. so something random, you know, that may happen in my life.

that is probably silly to share ends up connecting with people. know, like the other day I had posted about cold calling and I hate hanging up on people who cold call me because I cold call. like the posts, like so many people were commenting, you know, about like how they respond to that. And so it's funny, you don't really know what's gonna take off, but I think the key is just to just keep putting yourself out there and just...

kind of release the control and the fear of being out there. But I think it's definitely helped me in my industry because I'm in the CRE space, which we know is more male dominated, but women are starting to make an entrance. But also in the tax code, which is normally just so boring. And I'm just like, hey, let's have fun here. Let's learn and grow and see how we can help each other.

Aviva (19:40)
Does the IRS change the rules annually or biannually? How does that work?

Chassidy Goolsby (19:47)
You know,

so the IRS rules last they were changed were like 2018 when they took off personal property and only made it, you know, real estate property. I'm sure there's different pieces of it that change, but not in the way that affects the basis, the foundation of the 45, the 180 days, what qualifies as like kind, alternative solutions, which are becoming more popular with owners.

Aviva (19:59)
Hmm.

Hmm.

Chassidy Goolsby (20:16)
you know, nowadays, they were just like, I just went out of the game. I don't want to manage like, I just need something passive. So, know, so finding solutions for that. But other than that, it's they'll post disaster areas. And that's really the only time that they'll extend a rule of like a 45 or 180 day if there was a nationally declared emergency disaster area.

Aviva (20:39)
Hmm.

Do you have any idea what they're doing in California for the wildfires? Out of curiosity.

Chassidy Goolsby (20:47)
They did do an extension, but it's only for the counties that were affected. you can't be outside that county and try to take advantage of the extension, although it would be nice. yeah, the IRS will explicitly state what that is, and that way we'll know and post it to the clients who are in those type of exchanges.

Aviva (21:00)
People always.

That's interesting. yeah, my heart goes out to those folks in California, but at least the IRS has some forward thought in having their back and hopefully they can get past this absolute travesty that is. But I know I digress.

Chassidy Goolsby (21:30)
I I know. It was horrible. talked

to someone the other day and it was funny because he was kind of bringing light to the situation but we were on a Zoom and he was laughing because his lawn crew was behind him and the other, his partner was like, why do you have a lawn crew? Like all your stuff is burnt to the ground. Because he was partly affected but it's, yeah, just.

Very very tragedy a lot of people you know yeah, but yes, I digress as well

Aviva (22:03)
It's interesting.

It's so funny because I feel like with IRS code, like, it can be so black and white, but there's I'm sure that people can get so creative in terms of how they can color inside and outside of the lines that I'm sure you see and hear it all, literally.

Chassidy Goolsby (22:22)
So, so many gray areas, so many

gray areas. And that's what we're constantly on the phone with CPAs and attorneys, because at the end of the day, that's where their liability is on their return. And so very often there's a collaboration of who agrees to do what and what can and can't be done. And so, yes, very, very gray, the 1031 world is.

Aviva (22:48)
I suppose everything I suppose that's this world nothing's black and white but I don't want to get philosophical on everybody and bore everybody to tears. Chassidy, what makes you happy with what you do every day in commercial real estate?

Chassidy Goolsby (23:05)
Probably the people, I would say. For one, I like the constant change. Every transaction's different. You're learning and you're growing and I'm a very curious person. And so with every transaction, I love to learn and grow and see how I can better support the next client. But also the people, I feel like everybody in commercial real estate knows this is a long game. And so I've just met some really great people.

in this industry. So yeah.

Aviva (23:36)
Absolutely.

The feeling is mutual and I'm glad we connected this way. Yeah. Oh, I haven't done anything, but you have to. And I look forward to our next and first transaction together for everybody listening. Where can they find you, follow you, contact you for your next 10 31 for their next 10 31, et cetera.

Chassidy Goolsby (23:42)
my gosh, yes. You've been amazing. You've been amazing.

Yes, thank you so much for having me. This was awesome. yeah, so for everybody, y'all can follow me on Instagram, TikTok at the 1031gal. I'm also on LinkedIn, Chassidy Goolsby, or just search the 1031gal. My name's a little difficult to spell sometimes, but that's where you can find me. And there's links to my website to start an exchange or do a call with me if you just have questions.

Aviva (24:34)
You gotta get on Twitter. I am not joking. The commercial real estate community on Twitter is wild.

Chassidy Goolsby (24:42)
Okay, so I feel like Twitter is such a like my my posts are so long for Twitter I would just be like here's a sentence or here's a quote or like I don't know

Aviva (24:55)
Once you can get past some of the strange intricacies of Twitter, it has a thriving commercial real estate community that I enjoy being a part of. So I implore you to try to dive in a little bit because it's fun. So, all right. Yes. The 1031 gal, Chassidy, thank you so much for your time today and for everybody listening. We'll see you next

Chassidy Goolsby (25:02)
Really? Okay. Really? Okay.

Well, thank you. I will try for sure.