In this episode of Trust This, Joe Seagle interviews Michael Velasco, a qualified intermediary specializing in 1031 exchanges. They discuss the intricacies of 1031 exchanges, including the different types such as forward, reverse, and improvement exchanges. Michael explains the importance of using a qualified intermediary, the regulations surrounding them, and the identification rules for replacement properties. The conversation also touches on tenants in common and Delaware Statutory Trusts (DSTs) as options for investors looking to diversify or exit real estate investments. Throughout the discussion, Michael emphasizes the need for expertise in navigating the complexities of 1031 exchanges and the importance of holding properties for investment purposes.
👤 Who is Michael Velasco Michael Velasco is the founder and Qualified Intermediary for Exchangeable, LLC, with extensive expertise in Standard, Reverse, and Improvement exchanges. Michael is one of less than 100 Certified Exchange Specialist® in the country. Michael has also founded and owned a Scottsdale-based accounting firm, giving him deep knowledge of tax codes, depreciation, and entity structures. His diverse background includes property management, legal expert witness testimony, property rehabilitation, flipping projects, contract for deed and alternative financing, and significant experience with short sales and REO properties for major banks such as Fannie Mae, Countrywide, Bank of America, and Chase.
💬 Connect with Michael: https://1031exchangeable.com/
https://www.instagram.com/1031exchangeable/
https://www.youtube.com/@michaelvelasco7093
Show Transcript
Joe Seagle:
Hey everyone, welcome back to Trust This! Today is a Tactics and Tips Tuesday. I’m Joe Seagle, your real estate asset protection attorney here in Orlando, Florida. I’m excited to welcome today’s guest, Michael Velasco, founder and qualified intermediary for Exchangeable LLC.
Michael is one of fewer than 100 certified exchange specialists in the country, with deep expertise in standard, reverse, and improvement 1031 exchanges. He also brings an extensive background in accounting, property management, short sales, REO properties, flipping, and alternative financing. Michael, it’s great to have you here.
Michael Velasco:
Thanks, Joe. I’m glad to join you. Before we started, we were already deep in conversation about the challenges facing 1031 exchanges today. I’m excited to jump in, share my knowledge, and get into the weeds on some of these issues.
Joe:
Perfect. Let’s start at the very beginning for listeners. What exactly is a 1031 exchange, and what kind of property can be exchanged?
Michael:
A 1031 exchange allows investors to defer taxes—capital gains, depreciation recapture, and more—by reinvesting the proceeds from the sale of one real property into another. Since the 2017 Tax and Jobs Act, exchanges are limited to real property only. The key is that it must be “like-kind,” which simply means real property for real property. That could be land into a single-family home, residential into commercial, or even oil royalties. As long as the property is held for investment and of equal or greater value, it can qualify.
That’s where a qualified intermediary like myself comes in—to administer the transaction, safeguard the funds, and ensure compliance with IRS rules. And it’s important: you can’t use your own lawyer, CPA, or real estate agent as your intermediary, since they’re considered “disqualified parties.” You need a neutral third-party QI.
Joe:
Right. I’ve seen situations where attorneys or title companies acted as intermediaries even when they had conflicts of interest. That’s risky. And I know forward exchanges are the most common, but even those aren’t as simple as people think.
Michael:
Exactly. A forward exchange is the most basic type—you sell your relinquished property, funds go to the QI, then you have 45 days to identify a replacement property and 180 days to close. But those deadlines are tight, which often stresses investors. That’s why some prefer reverse exchanges or improvement exchanges, which provide more flexibility but require more capital and careful structuring.
(…Conversation continues with Michael explaining reverse exchanges, improvement exchanges, deadlines, DSTs, tenants-in-common structures, holding requirements, and exit strategies for aging investors. They also cover regulatory oversight of qualified intermediaries, the importance of bonding and insurance, and lessons from past industry failures.)
Joe:
Michael, this has been incredibly valuable. You’ve given our listeners advanced insights into 1031 exchanges—well beyond the basics people usually hear.
Michael:
Thanks, Joe. It’s been a pleasure. For anyone who wants to learn more, visit 1031exchangeable.com. We have videos and resources to guide investors through the process.
Joe:
Perfect. And for our audience, we’ll have Michael’s links in the show notes. If you need a qualified intermediary, he’s the guy to talk to.
Thanks again for joining us, Michael. And thanks to everyone listening to Trust This. If you got value out of today’s episode, please like, subscribe, and leave us a five-star review—it helps us reach more people who can benefit. Until next time, keep aspiring to a better life.
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