Zach Haptonstall discusses what a 1031 tax-deferred exchange is, and how he implemented this strategy to grow and scale not only his portfolio but also his investor's wealth while reducing tax liability. Josh and Zach also talk about vertical integration, growing and scaling a business, hiring employees, the importance of social media and so much more! You don't want to miss this episode of the Creative Capital Podcast.

Zach Haptonstall is the Chief Executive Officer and Co-Founder of Rise48 Equity. Zach’s main responsibilities as CEO include overseeing all acquisitions, sourcing capital, and building strategic partnerships. In 2018 he founded ZH Multifamily and grew his portfolio to $35M. ZH Multifamily founded the organization, The Phoenix Multifamily Association “PMA” where Zach hosted 200+ members and held monthly speaking and networking events. In order to scale and add experts to the team, he retired from ZH Multifamily and PMA in 2020 and Co-Founded Rise48 Equity.

Zach has been a licensed Real Estate Agent in Arizona since 2016. He is also an official member of the Forbes Real Estate Council, a Directors Council Member of GPEC, and is a #1 Best Selling Co-Author of “Success Habits of Super Achievers.”

[00:01 - 15:04] Knowing Nothing About Real Estate to Acquiring 100 Million in Properties

• How Zach started in real estate
  • Zach was burned out while working a job in healthcare marketing. He found out about multifamily and syndication after quitting his salaried job in January 2018
  • How he acquired 27 properties worth over $100 million in the Phoenix market since
  • Even though he was earning 6 figures, Zach was tired of working long hours at a stressful job. After reading "Rich Dad, Poor Dad", he looked into real estate and, with a partner, completed a 36 unit deal for $2,500,000
• How Zach scaled his business by bringing in the right people
  • It can take time to find the right partners, and it is important to find partners with complementary skill sets
  • To be successful, it is important to have a strong financial foundation and complementary skills in addition to business acumen

[15:03 - 29:36 ] Incorporating a 1031 Exchange

• 1031 exchanges are a way to transfer property ownership into another property, with the goal of deferring capital gains tax
  • This allows investors to grow their money without paying any taxes while using the benefits of leverage and tax breaks
• Investors can receive a higher preferred ROI and take advantage of depreciation benefits that offset taxable income
• Understanding a 1031 exchange timeline
  • You have 45 days to identify three replacement properties after your relinquished property closes
  • The identified properties do not have to be under contract and you can use an intermediary
  • You have 180 days to close on the replacement property
• Handling the complex paperwork that goes into a 1031 exchange

[29:37 - 44:36 ] The Possibilities of Scaling BIG with a 1031 Exchange

• While investors can do a partial 1031 exchange if they have sold a property and have funds left over, it’s also very complex and risky
• Zach’s competitive advantage
• The surprising majority of positive investor's responses to a 1031 Exchange
  • A 1031 exchange makes sense for long-term growth and stability
• The process of creating relationships and vetting potential investors
• The key to success is providing quality content that drives people to a CTA

[44:37 - 1:00:12] Vertical integration and Creating An In-House Property Management Company

• Learning to adapt or die
• Third-party property management companies can experience high turnover rates due to the low-profit margins of the industry
• How Zach and his team decided to take their business in-house, paying high compensation and offering top benefits to their employees
• The key things to look for in a property manager
• How to incentivize staff and create robust bonus structures

[1:00:13 - 01:13:39] Wrapping Up!

• Zach tells a crazy eviction story!
• Pod Decks Segment
• Core Four Questions

Key Quotes

“All the content that we're doing – the goal is to provide quality content and to drive people to a calendar link to set up calls with us. And these are qualified leads, these are people who are interested.” - Zach Haptonstall

“The benefit of doing a 1031 Exchange is you are deferring the capital gains tax. This doesn't mean that the tax goes away forever, but you're leveraging all those proceeds into the next deal.” - Zach Haptonstall

“Property management is a low-profit margin business, it's operationally intensive. It's a high turnover industry in general. But we wanted to pay the highest compensation, the best benefits to the employee so that we can recruit and retain the best staff – That was our philosophy. So that's what we did.” - Zach Haptonstall

Connect with Zach Haptonstall

LinkedIn: https://www.linkedin.com/in/zach-haptonstall/

Facebook: https://www.facebook.com/rise48equity

Instagram: https://www.instagram.com/rise48equity/

Youtube: https://www.youtube.com/channel/UC0MykmVKnoZVU7cVFPwvcjA/videos

Connect with me!

You can reach and connect with me on Facebook, LinkedIn, Instagram, and Youtube

You can also email me at [email protected]

For more information about Ferrari Capital visit us on our website https://www.ferraricapital.com

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