Bar Talk: The Musings of Attorneys, Entrepreneurs and Other Interesting People.
Podcast Episode 6
Greg Lehrmann
Brad Parker (00:08):
Hi, I’m Brad Parker, the attorney you want, but hope you never need. And this is another edition of bar talk, the musings of attorneys, entrepreneurs, and other interesting people, a podcast about people who don’t have to be famous. They just have to be interesting. Each episode we’ll tackle the topics big and small, sometimes tiny faced by attorneys, entrepreneurs, and other fascinating people who know every day you wake up, it’s a good day, but it takes a little more to make it a great one.
Today. I’ve got the pleasure of having a good, good friend of mine, Greg Lehrman Greg and I have known each other for about 30 plus years, as well as his wife, Debra Lehrman, who happens to be a Texas Supreme court justice Debra and I practiced law together, Greg and I practice listening to live music and hanging out and having a good time together.
Brad Parker (01:00):
And we’ve had a great relationship over the years. I’m so pleased that he’s here. We’re going to talk about some interesting stuff, but also about 10 31 exchanges and what they are, what they can do for you and save you a bunch of money, Greg. I really appreciate you being here today. You bet. My pleasure. Well it’s kind of a crazy time we’re living in a that the pandemic and everything going on. I know just kind of knocked this out of the way, beginning of how, how you and your wife doing,
Greg Lehrman (01:33):
We are doing great. We had COVID a couple of months ago and now we’re glad we did because all the doctors and immunologists say that we’re like in the top 2% of people that have antibodies. So I think everybody knows that nobody really knows how long the immunity lasts, but we’ve, our doctors are pretty confident. We’ve got some pretty good immunity for quite a while.
Brad Parker (01:57):
That’s great. How, how bad was it when you got sick?
Greg Lehrman (02:01):
I just was there were many days out of about 12 days that I really had a hard time getting out of bed on mother’s day. I started just freezing. I have got chills. I just started shaking, freezing. And the next day my fever started going up by the minute. So while we called the doctors and we went right in and then they called and said, yeah, you’re positive, but just stay home, drink liquids. There’s not really a lot to do unless your oxygen gets below 90. So we just monitored it and just drank a lot of fluids and tried to get through it. It was worse for Deborah. She had it more like three weeks. I had it two weeks. And when I recovered, I recovered when she basically recovered, she still had a minor breathing problem for about three more weeks. Every once in a while her head would just kind of kick back, just sucking in air. So it was quite a deal. I’m sure
Brad Parker (02:53):
It was extremely scary there. For, for a while. Are you having any kind of lingering effects or is it much all resolved? It’s
Greg Lehrman (03:00):
All resolved. Good. Even though they say once you have a virus, it’s always there somewhere. So but we feel good.
Brad Parker (03:07):
It’s kind of like chickenpox. It’s always with you. Yeah, exactly. Yeah. Well, you know I was laughing getting ready for today. I was really looking forward to it and start thinking about, you know, how did we first meet? Do you remember that? I do. I will see if you, dude, you remember where we first met?
Greg Lehrman (03:24):
I just know, I just remember being brand new lawyers at last night and I was Shannon Gracey. And of course she, you were next office to Deborah.
Brad Parker (03:32):
Yeah, well, we, we met before she even came over there because we were over at the keg. You remember the old keg over there on was that commerce street or anyway, it was a young lawyers happy hour or something we met and immediately hit it off. I think it’s because our love for a Joey earlier.
Greg Lehrman (03:50):
That’s right. Yeah. That’s funny. Cause I was thinking something like Billy monitors or something, so I was on the same, same page and we’ve yeah.
Brad Parker (03:58):
Well tell, tell everybody a little bit about your, your path and how, what brought you to do and 10 31,
Greg Lehrman (04:04):
One exchange. Yeah. So when you were at last naked in early eighties, I was at Shannon Gracey and then in 87 I got a chance to go into business. That’s what I decided I wanted to do. I went in the title of business and then I became president of Stewart title Fort worth. And I was at a function in Arlington one time in about 1990. And a couple of realtors said, Greg, why don’t y’all do 10 30 ones. They’re unbelievable. We have investors that sell real estate all day long. They don’t pay taxes on their sales. And I thought, okay, I’ve got an accounting degree and a law degree from UT, why do I not know what the heck a 10 31 is? So that was so valuable that I had that conversation because it totally told me to keep my eyes open for the chance to do that.
Greg Lehrman (04:52):
Now I was busy. I had a full-time job. I couldn’t really do much about it. It just told me to pay attention. So in 93, when I was in Houston at a worldwide Stewart title meeting of just of local presidents of all over the world, steward offices, they announced they bought one of the biggest 10 31 companies in the country and the guy that founded it, got up and explained it. And I was the main one in that room of about 250 presidents who hit the ceiling with excitement. And I thought, Oh my gosh, that’s what a 10 31 is now. I get it. And I know it’s great. So I’m going to start doing that. So within a year, by October of 94, 26 years ago I shifted from running a bunch of closing offices to doing 10 30 ones. Haven’t looked back, love the heck out of it. I do that one thing and I still enjoy every time I get up in front of a group of people and explain it cause they get excited. It’s almost like someone at, as Keith, Keith Richards, how the heck can you enjoy playing? You know, a jumping Jack flash after all these years. And he said, are you kidding? I not to get up on stage and do that. It’s a blast. So I still enjoy doing 10 30 ones, even though I’ve explained the same thing to people probably 30,000 times. It’s just,
Brad Parker (06:07):
Well, you’re, you’re good. Probably need to explain it for all the listeners here. I mean, first of all, who, who should be interested in this?
Greg Lehrman (06:15):
Almost everybody in, which has more of the mini surprises, about 10 30 ones because all of us, anybody that hears about 10 30 ones before they know about it has about the same misconceptions. So even when I first heard about it, I knew it was a great deal. I figured it was just for the top 1% for big commercial property owners or something like that. It turns out anybody that ever owns any real estate. That’s not just their primary residence on say a quarter acre lot or anybody that ever knows anybody like that. You REL anybody, if you know any real estate agents your grandparents own a farm. If you ever know anybody that owns a farm or rent house, all kinds of other things they need to know about this because well back in 1921, this is actually been around almost a hundred years.
Greg Lehrman (07:08):
And what happened was it’s such a simple concept. It sounds complicated. It’s about as simple as it can get in common sense. In 1921, farmers went to Congress and said, look, if we’ve been farming some crops or running some cattle for several years and we’ve built up equity in our farmer ranch, and we want to sell that and buy a bigger ranch. Well, if we sell one ranch and buy another ranch, we’re moving all of our money into another piece of dirt. We can’t pay taxes with dirt. If y’all are going to tax us when we sell a ranch, because it’s gone up in value and we bought another ranch, we can’t do that. And Congress said, that makes sense. We want to allow people to improve their situation for their lot their family. And so they said, if you’re moving all of your money from one or more pieces of investment or business real estate to other business or investment real estate, we’re not going to tax you as long as you keep doing it. So that’s why it’s called tax deferred. And you can defer it as long as you want to invest in real estate. So it’s anybody that has a residential rent house on up to a farmer ranch or commercial property. You can sell it your whole life and never pay tax. And then if you do that, your whole life, we call that you swap till you drop.
Brad Parker (08:31):
So let me be sure I got this clear. Yeah, I, for instance, I own my own building where I were office. I get ready to do something different, slow it down, decide I want to buy a few rent houses and, and kind of get some extra income that way as, as opposed to trying to lease out the office to someone else. Yeah. I could sell this office and then I don’t have to pay taxes on the gain that I’ve seen. So I’ve owned it for 20 years and I could go and invest that money into two, three, four, whatever rent houses and never paid a diamond tax and then be able to collect the rent off the rent.
Greg Lehrman (09:13):
Absolutely. Yeah. If you do that your whole life, then when you pass away, if those properties are in your estate, your air’s going to step up in basis and it goes to the capital gains goes away completely. It goes away. So you can use it yeah. To retire from a business without paying taxes on the real estate part. It’s only on real estate, but that is very broad. There’s really only three words that people need to know. And one of them is kind. And so, and this is a reason why a lot of people misunderstand this is the very fact that you have to use the word light kind. Cause that’s totally misleading. It’s a lot better than that sounds. So what Congress, the tax code says, you don’t have to pay taxes if you exchanged light con property. But that definition that they have given over the years has been very taxpayer friendly.
Greg Lehrman (10:07):
So you can sell this office building where you are, not only can you buy rent houses, you could buy a strip center, you can buy a ranch. You can even buy a place in Aspen anywhere you want to vacation, if you do it right. And that’s sort of the, one of the examples of things we cover when you call me on a case by case, but like a vacation home, you just have to not go there more than 14 days a year. The first two years for vacation, you got to rent it out 14 days or more. And after two years you’re home free. So like kind means, are you selling a real property interest? That’s in the us that you’re either holding for use in a business or for investment in. And if the answer to that is yes, what you get to buy has nothing to do with what you’ve sold, the way I look at it because you get to buy any real property interest in the U S that’s business or investment. About 20 years ago, I was in Duran, Oklahoma, and there is a self-made multimillionaire. He just started investing in real estate, out of high school. Never got any book learning, but he self-taught. And he knows 10 30 ones. And I was giving a class to a bunch of realtors. And after about an hour, he could say, he could see, they were all trying to make this hard. And he just got up and said, people lack kindness means if you, it
Brad Parker (11:28):
[Inaudible] love it. Yeah, absolutely. I bet you’ve used that a couple of times. Yeah. Well, I guess what people really probably need to know too is we were talking before we got on there’s some rules that you have to follow. Absolutely. You just can’t go do this by yourself. You’ve got to follow some rules. Can you just in a you know, overview of what don’t get into the weeds too, but kind of what are the rules?
Greg Lehrman (11:54):
Yeah. So from 1921, till 1991 exchanges actually were as hard as they sound the most people exchange actually ma well you had to find another person to swap with. Well, that’s pretty dadgum hard. So finally the people went to Congress and said, okay, that’s too hard. Make it even easier. They said, okay, we’ll make it easier. We’re going to let you just sell your property to whoever wants it. And as long as you have a third party, hold the funds. You can just go buy what you want and just close on it within 180 days after you closed on your sale. But also you do have to put together a list of properties you’re considering by the 45th day. So all you gotta do is call a third party like us. Make sure you have exchanged documents at the closing. And then when you, but you sell it to whoever wants it.
Greg Lehrman (12:44):
So you’re not working out an exchange with anybody anymore. So not only does lack con not mean like kind exchange doesn’t mean exchange. It’s just a word that has to be in the documents that we have to provide you. And one of the few biggest mistakes you can make with 10 30 ones is closing your sale and then deciding you want to do a 10 31 so that these are, these can be very easy. People are almost always shocked how easy and smooth they are, but that’s as long as you call us before it closes before the sale closes. So I’d say once every two weeks I get calls. I hate to get where somebody calls me and they want to do a 10 31. They’ll say, well, I sold the property. Well, people use the word sold differently. When some people say they sold it, they mean it’s under contract. It hadn’t closed. So that’s great. I can help them. I can help them if they call me the day before closing. But some people, when they say sold, they mean closed. And I got to tell them you’re out a lot. You had to have documents at the closing. And if you just called me a day before I could add documents there, we’d be holding your funds. You find something within 45 days close within one 80 and you don’t pay the tax.
Brad Parker (13:58):
Well, it sounds to me like that. If you, if you’re serious about doing this, obviously you’ve got to get the third party involved like you, but you probably want to start looking at different things ahead of time before you list your property pro and get your big list of different. I mean, are you limited in the number of things you can put on that list?
Greg Lehrman (14:16):
Yeah. And first of all, on the timing, like I say, when I first heard about this, I got excited. And then when the guy who built this company explained it to us and he said, okay, from the date of closing, you got 45 days to identify it. Then I got deflated, right? Oh man, that’s hard. That’s quick. That’s real quick. Yeah. Then I found out how many are done? We do 800 of these a month. We’ve done 200,000 of these in my company. So that told me, okay, people do figure that out. And that’s how they figure it out. Just like you said, Brad you don’t wait till, just start looking for what you want to buy. You can even tie up something contingent on your sale. Any way that you can tie up a property with an option or something is better than waiting until then.
Greg Lehrman (15:03):
And even if, even if no buyer will let you tie their property up, at least be familiar with what’s on the market. And then the second you close your sale. Now, you know, you’re a cash buyer. We’ve got your cash. We’re just like your bank. You just have just with special documents. And then you pull the trigger quickly. There’s three different rules. So that does start to get into the weeds. I’ll just talk about the most common one is the three property rule. Most people who’ve known, heard a little bit about 10 30 ones are familiar with the three property rule. That’s the main one. So if you pick that rule, you can list up to three properties. And then by day one 80, you close on one, two, or all three of those. You never have to close on everything. You list. You just, you got to close within that list and you can switch out your properties during the first 45 days after that.
Greg Lehrman (15:52):
Absolutely not. So there’s a few things with 10 30 ones that are black and white, some are nuanced. That’s what keeps it interesting. One of them that’s very black and white is you do not swap out your properties. After the first 45 days, a couple of people have been tempted. They’ll find a property and they’ve backdated their letter. The ones that have gotten caught fraud, they’ve had to go back and pay a hundred percent of their tax. And the fraud penalty on top of that is another 75% one. Wow. One person that got caught lying about that. They had to go back and pay their $2.1 million tax. And then their penalty was 1.6 million on top of that. Wow. So that’s one of the things that we, we keep people up to that we calculate their deadlines. We don’t just tell them you got 45 days. We tell them you got till November 18th and we call them and we email the heck out of them. And then you do have to close by a day, one 80. So yeah, which is six months. That’s not the problem.
Brad Parker (16:56):
I guess it’s the list. It’s the challenge is the list. Yeah. Yeah. And so you, it sounds to me like if you were really, and you’d get with you and maybe identify some properties before you even close on your deal. Absolutely. You’ve got a little bit more breathing room on that 45 days.
Greg Lehrman (17:13):
Absolutely. There’s another solution to that. That brings in a whole lot of benefits. The market has kind of responded to this challenge and provided people with solutions. And that is there’s two types of property that qualify that you can find at the last minute that are volume that are like off the shelf. So you can buy oil and gas royalties that something almost no, nobody even know CPAs know when you sell this office building bread and you don’t want to do anything at all. You can put this money into Olin gas royalties and get cash flow and not do anything and not be liable off. Obviously for expenses, there are landowners that get impatient and they just want to cash out. So they’ve already leased out their property. Their property is producing. They’re getting monthly checks. They want their money. Now just like those commercials, those for the structured settlements.
Greg Lehrman (18:11):
Yeah. It’s my money. I want it. Now. There’s a lot of people that get monthly checks and they sell to people that, that I know who know how to buy them. Right. And then they sell them to people like you that want to just get out of high maintenance and just want cash flow. So it’s easy to identify at the last second. And also you can put exactly how much you have, like with a building, as you know, you negotiate a price and then that’s a certain price with Olin gas royalties. Exactly how much you have. You just put that in it. Or you may find a rent house or farm and just have some money left over. You can put as little as 50 grand into these deals. So the oil and gas is one of them. And there’s another thing called a Delaware, statutory trust.
Greg Lehrman (18:55):
It’s a fractional interest in a building. The Academy sports and outdoors. The corporate headquarters is in Katy, Texas. And that building is owned by hundreds of 10 31 investors who sold high maintenance real estate. And they buy a one half, a 1% of that Academy, sports and outdoors, corporate headquarters. And they get their share of the rent every month I’ll be done. Yeah. And then the final one, there’s really three, three options. If you want to buy something at the last minute. So it’s the oil and gas and these fractional interests. The third is a triple net lease property, net of taxes, maintenance and insurance, every Walgreens and CVS you drive by and the dollar general, it just goes on and on quick lubes, quick card, all those are owned by older 10 31 investors who never have even seen the building Walgreens and CVS. They don’t own their building. They don’t want their capital tied up in the building. And they get good deals on paying rent because their parent corporation guarantees the rent, but they have to take care of it. And then they just wire the rent to the owner anywhere in the world that the owner is. So that qualifies to, if you wanted to sell this building for 5 million bucks, that’s about how much a Walgreens or CVS costs,
Brad Parker (20:15):
No heartbeat for five. There you go.
Greg Lehrman (20:19):
There’s different prices of triple net lease properties. The Jack in the box, real close to where we are now at Northeast mall. I had a client that did that. That was about 900,000. So you can buy all levels of a triple net lease. So that’s the thing. Not only can you use this to leverage up, to buy bigger property, younger people use this to buy more property. If you’re not paying taxes, you’re buying more property. I know by somebody who’s got a duplex around here and their taxes would be 50 grand. So they can either give that 50 grand to the government now, or they can use that 50 grand to buy more real estate. So whatever how much real estate they were going to buy 50 grand, let’s say that they’re putting 25% down in the next property. That 50 grand that’s deferred adds 200 grand to their buying power. Just on one little residential deal. Yeah. So younger people use this to leverage up and buy more real estate or bigger farms. And then older people, they use it to get out of that without paying taxes and convert it to passive
Brad Parker (21:22):
Cash flow. Well, and like you said, you pass it on to your state, your heirs get a stepped up basis. So you, you avoid everybody’s avoid now.
Greg Lehrman (21:30):
Absolutely. Absolutely. I’ve got an 86 year old rancher outside of Austin. You know, you don’t make that much money as a farmer. Actually. You don’t make that much money, you know, farming per acre. But he’s lucky enough that he bought his farm 50 years ago in Leander, which now is where the development of Austin. Yes. So he’s 86 years old. Somebody offered him 5 million for his dart. He ain’t making $5 million worth of income. Plus he’s got five heirs and he said, you know, some of them are pretty good and some of them are no good. So this is what a 10 31 does for him. He gets to sell that farm. He’s putting it into Olin gas and fractional interests that allows him to stop working increases monthly income by tons. And guess what? In his will, he leaves 20% to each of his five heirs. His heirs don’t have to lock each other. They don’t have to decide when to sell this single family farm. They each have their own percentage of what he bought in the oil and gas or their fractional interest, just unbelief.
Brad Parker (22:47):
That’s fascinating. Absolutely fascinating. Do you find that most real estate agents are familiar with this concept or is it always an edge
Greg Lehrman (22:55):
Process? Always. you know, if you talk to a business consultant who learns about my business, he goes, well, your competition is not your competitors. It’s a lack of awareness that by far, my competition is people not even knowing that they need to be doing this. So that is still in this business. Even after 99 years in this business, the biggest deal is no, a small percentage of people who could benefit hugely from this, including their representatives like realtors and lawyers and CPAs, a small percentage to this day knows about it. So when I give a class and there’s someone, sometimes I give a class and there’s a realtor there. It’s our first day in the, in the business. I’ll tell him, man, this is brilliant. You’re here. And after today, you’re going to be able to do this C, C P people, just a realtor just needs to hear me for 30 minutes. And then they can do this, the rest of their life. Cause they got to call me anyway. They just need to know to bring it up. But that realtor’s first day in the business, when I’m done with them, they’re going to be ahead of most realtors. Who’ve been in the business 40 years. Yeah.
Brad Parker (24:05):
Which I would think would help that realtor in their own business because they’re educating people who are going to come back to them. Because if you do one 10 31, you’re probably going to do another 10 31 down the line.
Greg Lehrman (24:15):
I met with people that they said they’ve used the same realtor for 10 transactions for 15 years. And the reason they did is that realtor brought up at 10 31. I had one guy he said, and Greg, you know, I didn’t even do it 10 31 on that. But the fact that she brought it up, showed me, she knew something and she was looking out for me. And she’s gotten every one of my sales since then. Even in a lot of them handymen 10 30 ones. It’s, it’s a client for life. And all they gotta do is bring it up.
Brad Parker (24:43):
Yeah. Yeah. Knowledge is power. Yeah. Yeah. Well how, how do you get paid on the transaction?
Greg Lehrman (24:50):
Yeah. And that gets me to the third critical rule. So all you need to know is like kind exchange and qualified intermediary. In the first two words, there’s so much better than they sound that when realtors learn what those two words means, it opens up a lot of opportunity for their clients since lack kind doesn’t mean you’ve got to buy the same thing and changed. Doesn’t mean you got to find somebody to swap with the third word. That’s just as important, but not as, not as a scary word, you got to learn this word to protect yourself. If you don’t learn what the third word means, you can lose everything you’re about to gain. And that word is qualified intermediary. So there’s good news, bad news about what Congress did in 91, the good news, like I said, is how much easier they made this to where they said, we’re not even going to make you ask your buyer to do a swap with you. Just say all to whoever wants it and have a third party, hold your funds. So that was hugely good. Here’s what was hugely bad, except for you can take care of it. So it doesn’t matter for people who, who are educated and it takes five minutes to get educated on this, that third, that third party that they mentioned in the code, they called them a qualified intermediary. Well, what’s bad about that. What’s bad about that is there’s nothing qualified about a qualified intermediary. See, none of these words mean what they say,
Brad Parker (26:18):
No, she loved the law.
Greg Lehrman (26:20):
They’re not the actual definition of a qualified intermediary is it includes everyone in the universe. Who’s not disqualified. Everybody. Who’s not disqualified as a qualified intermediary. They do not disqualify Bernie Madoff they don’t, they don’t disqualify people that are in prison right now for none of nobody. None of those people are disqualified. They only disqualify the person’s relatives or agents like their realtor or their lawyer. Their CPA in only means if you’re not gonna pay taxes, your money has to be held by someone independent. It only means independent like a title company. We are very much like a title company. We’re an independent third party. Like a title company is independent between the seller and buyer in those a duty to everybody and has to be neutral. We’re kind of between the pers the property owner and the IRS. We’re just saying, okay, we’re holding the money in accordance with the terms outlined in the tax code about how we have to hold it, but how we have to hold.
Greg Lehrman (27:31):
It just means they can’t just grab it. They don’t say we got to even put it in the bank. They don’t say that we have to have ever read the tax code or that we have any capital behind us. If one of our employees embezzles the funds. So there’s no requirements for knowing what you’re doing or having assets to protect. So, so that’s the problem. So there’s been tons and tons and tons of people who have called themselves a qualified intermediary and they even make meet the definition, legal definition. Sure. And then they walk off with the money. American greed has a whole story on one of the bigger ones. So there’ve been tons of them. So that’s the scary part, but it’s not scary because in five minutes I can tell you, Hey, here’s the way most people deal with that. They just hire RQI. That knows what they’re doing in is owned by a financially secure company. So QIS by their name are not regulated. That didn’t mean you can’t hire a qui that’s owned by a regulated company. So that’s one of the many reasons people hire us is we’re owned by Stewart title.
Brad Parker (28:38):
Okay. So in that regard, if someone’s looking, obviously they need to call you. Yeah. But if they don’t call you, how do they find out if there’s a reputable, qui qualified intermediary or not? Yeah.
Greg Lehrman (28:52):
It’s pretty hard. Now we do have a list of questions. You should ask people. Now it is on our website. And of course, if, if answered properly, it would, it would include us. But also there’s no, no way any lawyer or CPA could argue with these questions. So you can definitely take these questions and ask them of anybody you want to ask. There is a Federation of it’s called exchange accommodators, which is kind of funny because the word accommodator is kind of an outdated word, but we still use it. But you know, it’s got thousands and thousands. So in some are large and some aren’t. So really, it’s just, you, you have to do your own due diligence. Find out who they’re owned by and how financially secure they are. Find out if they put in writing where the money goes.
Greg Lehrman (29:41):
Because like we put in writing that the money only goes in banks and only a Reddit banks, because otherwise some QIS CSUMB QIS, weren’t crooked, some stole the money cause they were crooked. If you want to say that some weren’t crooked, but, but they, they put the money in the stock market thinking that was going to be better for everybody. And then when you hit, when you hit a downturn, they haven’t been able to produce the money. So you want to find out, do you just put the money in the bank and don’t men don’t play around with it. Do you require my signature? There’s not even a law that says the client’s signature has to be on the check. So that’s another way that QIS have spent the money. When they put the money in an account, they just put it in the QIS name.
Greg Lehrman (30:27):
So we put in writing that each person has their own account. It’s in their name and our name, our name has to be one of the names, otherwise it’s taxable, but we, that the tax code allows the client’s name to be on it. And we call it, you know, it’s a fully fettered account. It’s all tied up. So you want it to be in the bank, backed by someone secure and requiring your signature, things like that. And then when for our signature, it actually requires four different people. And as you know, Brad, the embezzlements happen when one person’s in charge of the bank account, exactly. Never goes on vacation or when they do, they stop the mail. Exactly. Yeah. So we’ve got about 12 layers of control like that. Yeah. Well then
Brad Parker (31:15):
Two questions, I guess. Let me break it up. Obviously you need to be careful about who you’re hiring to assist you in the 10 31 exchange. And, and you want to go with a reputable company. Someone’s got a lot of financial backing of that group. How, how, how many are there? And I don’t mean exact numbers, but is there a lot of competition for that business now from the unqualified group? I can imagine they’re out there like thick, thick as thieves, but the, the good guys like lock your company.
Greg Lehrman (31:44):
We take a lot. Cause I keep planning on transitioning into something that’s related and that’s what you just asked. Cause I want, I really wanted to be clear and transparent and say that all the major tile companies have major QIS. So it’s pretty much that world. And there’s a lack, you know, there’s about, there’s some, there’s only like a handful there’s about five or six big title companies in this nation. And that’s so that’s about how many big QIS there are. So yeah. And all of our, all of those competitors of ours are good.
Brad Parker (32:18):
Do you have to use the same title company as the key?
Greg Lehrman (32:22):
Another great point? No, no. You can pick where you close and pick your qui. One of the things that gives me one of the biggest thrills I get is when a closer from a title company that owns their own 10 31 chooses to recommend us because of their prior experience with us. I do want to say all the major title companies again, have good QR in there. Good. so then it’s just down to service and, and relationship and, and knowing that they can reach you on your cell phone, stuff like that,
Brad Parker (32:57):
That was going to lead into my next question. Why do I pick you? Why, why do people pick, pick you Greg Lehrman?
Greg Lehrman (33:03):
Because of the accessibility and the fact I’ve done it 26 years and being a lawyer, you don’t have to be a lawyer to do this because we can’t be your lawyer. So there are a lot, there are people in this business that know a lot about this. You know, that aren’t lawyers, but since I am one, it is an asset. Sure. so, but mainly it’s just because of knowing how fast we are. I’ve, I’ve actually there’s a couple of people I’ve done exchanges for in 35 minutes. They called me from the closing table. So it’s, it’s the, Oh the fact that it’s all that we do, there are some smaller companies that may be pretty good, but it’s not all they do. Okay. So with them, you don’t have as big a chance that they can do it in 35 minutes. They might be somewhere else or worse yet some lawyers do it and they may be been trial. I mean, if they also try to do trial work so really it’s just that this is all we do and we’ve done way over 190,000 and just our service.
Brad Parker (34:02):
Yeah. You know, that’s, that’s what we kind of do here at Parker law firm too. We were very niched and we don’t try to, to do probate and corporate and transactional and real estate. I mean, we’re very, very focused and niched on serious injuries. And the other thing, or a couple of the things that you said. I mean, one of the things that sets us apart is availability and accessibility and providing that knowledge to them. And you know, I give every single one of my clients, my personal cell phone number, they’re free to call me anytime. And I think that really sets, sets us apart. And I, I’m glad to hear, hear you say that you do that as well. Cause I think that’s, that’s important cause I have found, and I don’t know about you clients rarely call my cell phone number unless there’s really a problem. Yeah. They’re not calling just run of the mill questions, but they’ve got it and they know they’ve got it and they know I’ll be responsive. And I think that what’s really sets, sets us apart. Yeah,
Greg Lehrman (34:57):
Absolutely. Absolutely. I had a title company person a couple of weeks ago. She was, well, no, this was pre COVID. Cause it was an in-person deal. But she was at an evening dinner of a bunch of farm and ranch brokers and a good friend of hers who who’s a farmer ranch broker said, Hey, I got a ranch closing tomorrow and it’s a 10 31. And she said, well, who using? He said, what do you mean? She said, well, you got to have a 10 31 company. And he goes, you do, Oh gosh. And she said, yeah, she said, when do you close? And he said tomorrow nine o’clock. And so she texted me at seven 15 from that dinner and got me and we had documents by that close in the next morning. Yeah. That’s phenomenal. That’s phenomenal. Yeah.
Brad Parker (35:44):
I got four. You’re going to say the last one of the last questions about the business of 10 31 is how do you get paid?
Greg Lehrman (35:51):
Oh yeah. Oh yeah. And that’s fairly standard. It’s not regulated like title insurance premiums, but it’s still pretty standard. And it’s a, it’s a great deal if I say so myself, it’s a win-win because we charge a thousand bucks on almost every exchange, no matter how big or small it is, we have a standard fee of a thousand dollars on this sale. And that even pays for up to three purchases. We don’t add charges unless you, if you add a sale, it’s just 200 bucks each. And if you add more than if you go to a fourth purchase, it’s just 200 bucks each. So why is it so reasonable? And that is the win-win comes in like this. You only pay us a thousand, but we make a thousand plus interest. And when, when, when you do 800 a month, I mean, we literally have had times, Oh, interest on the money, your home we’re holding. I mean, we literally have held a billion dollars some sometimes some days. So, so we get paid mainly on the interest, but what’s weird is even as much interest as that sounds like we actually still need a thousand dollars a deal for it to work, especially as low as interest rates are. Yeah, yeah. Yeah. So it’s a great deal. No, no, that makes perfect sense. Does the,
Brad Parker (37:08):
Is that somewhat of an IRS requirement too? I mean, could you could the owner of the property that’s doing the 10 31 collect that interest or
Greg Lehrman (37:16):
They could, they could. And so back when interest rates were a lot higher than we only collected up like a third of the interest, when interest rates went down, a bunch of the QIS went out of business and we had to, we had to go to our customers and say, look, if you want us to be in business, we need all the interest. We will pay a little bit of the interest over certain amounts per account. But that’s the standard deal is we get a hundred percent of the interest because it’s so darn low.
Brad Parker (37:45):
Well, and, and the, the transaction has got to move fast. I mean the longest you’re going to have it at 66 months from the day of the,
Greg Lehrman (37:52):
Well, you’d be surprised and you’d be surprised as hard as we said these time periods are, do you know, our average exchange is like 49 days. There you go. Yeah. So yeah. You’ve got it because you either find it or you don’t. Yeah. Yeah. Like you said, either lining up ahead of time generally or just close on one of these oil and gas deals. And then as soon as you identify one of those, you just, you can close that day. So yeah. Yeah. So that’s it. Yeah.
Brad Parker (38:19):
If you’re, if you own any property other than your homestead and you’re not, and you’re selling anything, any property and you don’t do this, you gotta get your head examined a little bit.
Greg Lehrman (38:30):
Exactly. And on that I had, I had something written down. One more point when you mentioned homestead, there’s something called a split treatment transaction. So earlier when I said who it didn’t apply to, when I mentioned homestead, I’ve mentioned a homestead on like a quarter acre, right? We want to make it clear that if you live on a farmer ranch, that’s part residence and part investment. Yeah. So you can do it. If it’s ribs, residents, if it either has a business with it or enough land to say that was an investment gotcha. Years ago a banker in grapevine, friend of mine, he said that he had this couple and they had 60 acres in South Lake off a one 14. And they, their whole life, they lived in a 900 square foot frame house. They bought like 50 years ago and you know, paid nothing for it.
Greg Lehrman (39:18):
And now there’s a developer out of Dallas that was trying to buy it for like 4 million. And they were all excited until they found out how much tax they were going to pay. And even though this couple never hardly had that much in the bank, they said, no. They said, we’re not about to give uncle Sam that much money, even though they were about to be rich. And so they’re complaining to their banker and they were lucky. Their banker happened to know me. I mean, that’s a small percentage of people. Their banker happened to know me. He called and said, well, what can you do for these people? I said, Oh, this is easy. They can sell that. You can put a half a million in the bank tax free on your home. And then the rest of it, you can do a 10 31 so that people need to know about that too. If they have a homestead on land, that’s worth even more than the primary residence, exclusion, which is a half a million for a couple, about half of those people, they go about a hundred miles out of town. Like these people did. They bought a place in Eastland, Texas. So they bought like a thousand acres for that 60 acres, the other half just do the passive. They just bought them another house. But the rest of it into cash flow, right.
Brad Parker (40:25):
Yeah. Makes a retirement a little bit more pleasurable. Absolutely. Wow. That’s that, that is really interesting. How can people get in touch with you?
Greg Lehrman (40:35):
They can call me at (866) 266-1031 eight six six two six six, 10 31 or greg@apiexchange.com, just G R E G a and then P as in preservation, I exchange.com sometimes when I say Greg and API exchange.com, it sounds like a T to him ATI, but it’s greg@apiexchange.com asset protection as presented preservation,
Brad Parker (41:00):
The preservation you mentioned. Yep. Well then that’s fantastic. Well, let’s change gear few more minutes that we have talk about a couple of other things and that is tell everybody a little bit about what’s going on in your life. And it has been for the last several years, living in Austin and Fort worth. Yeah.
Greg Lehrman (41:20):
That’s been great. I’ve grew up in Fort worth and met Deborah in law school. We came up here and we both start practicing law and well that’s well, she, and then she was an associate judge, I guess, or a prosecutor. And then she went with loss where she, yeah. And you know, that’s a funny
Brad Parker (41:35):
Story. Deborah, not office next door to each other, Joe Shannon. I think I originally hired her and Joe. Oh yeah. Joe of course was a terror County prosecutor who prosecuted Cullen Davis back in the day. And then he started doing family law and Debra hooked up with him and came on board and we officed next door to each other. And I remember Debra would have come in and she’d have some client in there, blue who in, you know, doing divorce work and she’d come into my office and go, do you have any Kleenex left? Okay, got I have a Kleenex kid may cause I got a little bit of accent. Most people don’t know that, but she’d make fun of my accent. I talk on the phone go. Yeah. I’m lawyer would say, yeah, Brad Parker and I’m a lawyer. So it was even funny is that y’all got pregnant at the same time, my, my ex wife and I got pregnant with our first. Yeah. And they were, our kids were born about 10 days apart. Right. You’re so excited.
Greg Lehrman (42:35):
I was born on Christmas day, 1990. Yeah. Haley was born 10 days earlier. Yeah.
Brad Parker (42:40):
On the 15th. But we went through a few Lamaze class passing back and forth on that, but then she, she got on the bed.
Greg Lehrman (42:49):
Yeah. She got on the bench, came in associate judge. And then next thing you know, she was a district judge and then 2010, she got on the Supreme court. Just amazing. And we can’t believe it’s already been 10 years. It’s already been 10 years.
Brad Parker (43:06):
A funny story about that. I remember going to bed the night of the election. Yes. And she was behind. Yes. And I didn’t text or anything. I just thought, it. I mean, it was so close. And then I woke up the next morning and the final boats had been counted and she had won that election. Yeah.
Greg Lehrman (43:25):
Yeah. Yeah. Just amazing bast. Amazing. He was the primary one. That was the PR six person, primary six person, six person that put her in a runoff and then she won that one. That, yeah.
Brad Parker (43:36):
Yeah. And the rest has been history. I mean, I was there for her investiture there at the state Capitol and yeah, that was a great, great time, but how’s it, how’s it been married to a Texas Supreme court?
Greg Lehrman (43:48):
It’s fascinating. It is fascinating to learn all about the court and about the eat each justice and just how they do things, learning how they assigned cases and then how they argue over him and how one of the justices who didn’t draw the case they’ve made right. A descent and then they talk about it. And then sometimes the descent becomes the majority. And then that’s a big thrill for the justice who started out in the minority when they’re able to convince their colleagues. And it’s just fascinating. And I do want to say that a lot of people can be exposed to this by the fact that the oral arguments are online. So at least people can watch the oral arguments, unlike the U S Supreme court, but it’s been fascinating. And you know, when you first get on the court, you know, you’re at the bottom of the totem pole, you’re number nine.
Greg Lehrman (44:37):
And do you know that this Friday another justice is getting on your Vixen leave here and go, go, actually go down there. And that’s putting Deborah she’s one there’s it’s, it’s the chief justice and Eva Guzman and Deborah they’re the senior justices now she’s third in seniority. Third in seniority. Wow. That fast. Another neat thing for the public is the justice system being sworn in puts was going to have a, for women on our court for the first time, unlike the U S Supreme court really we’ve had very few females on the Texas Supreme court and just all of a sudden, so most of Debra’s hurt both terms until a few months ago. It was just Eva Guzman and her. And now all of a sudden they’ve got four and I can’t wait to look at the picture cause it’s going to be perfectly symmetrical. The chief is going to be on the front row and then flanked by justice Guzman in, in Deborah and in, in the back row, the two ends are the new women. Oh, it’s going to be perfectly symmetrical. It’s justice. I know that’s important.
Brad Parker (45:52):
Yeah. Yeah. [inaudible] justice bland. Yeah. This is Rebecca huddle. Okay.
Greg Lehrman (45:59):
She grew up in El Paso and then she practiced in Houston gal. Yeah. Yes.
Brad Parker (46:05):
That’s fantastic. And you’ve got two boys.
Greg Lehrman (46:08):
Well, the boys are both lawyers. One of them is in Houston and appellate lawyer loves it. And the other boy is a Gregory. The one that was born on Christmas has been a trial lawyer in LA. Now for a while, he went straight to UCLA law, undergrad, and then Pepperdine law school.
Brad Parker (46:24):
Yeah. That’s it’s, it’s amazing how fast that time flies. It seems like yesterday we were having a cold beer and enjoying Joey at the caravan of dreams. And actually now the kids, kids are having kids and it’s just it’s just a
Greg Lehrman (46:40):
Oh, but that brings up a shot in the heart painful Jerry Jeff does.
Brad Parker (46:46):
Oh that, that was tough one. And then I guess he saw Billy Joe shaver passed. Oh yeah. And that’s 2020. Yeah. Oh, wow. It’s just a tough year. Right? We’re already for it too. Y’all ready for this be, you know, they always say 2020 hindsight is 2020. Well, I’m, I’m ready for this to be hindsight. Absolutely. Get, get out of here. Well, Greg, I cannot tell you how much I appreciate you spending some time with me today and that 10, 10 31 stuff. I thought I knew a lot about it, but sitting here listening to you, it’s, it’s fascinating. And it’s got my head spinning on, on what I could do and how I could when I get ready to retire, you know, I’ve always thought trying to rent out this building, but maybe it’d be better to sell it and do something else.
Brad Parker (47:33):
At least you can have choices. I have choices when it gives you choices. Yeah. It’s fascinating stuff. If anybody’s got some property that they want to sell or fixing the sale, that’s not a, even if it is their homestead, they definitely need to call Greg Lehrman are some QR qualified intermediary. But Greg I’ve known for 30 years. I couldn’t recommend him more highly a man of integrity, principle and, and honesty and just a darn good guy. But Greg, thanks a lot. I really appreciate it. Thank you. If you lose mutual. Thanks Brad. Take care.
Brad Parker (48:10): I’m Brad Parker, the attorney you want, but hope you never need. And thanks for listening to another edition of Bar Talk, The musings of attorneys, entrepreneurs, and other interesting people. If you like our show and want to know more, check out our website at parkerlawfirm.com or please leave us a review on iTunes, Spotify, or your preferred podcast outlet. See you next time.
