tv Cavuto on Business FOX Business April 17, 2016 8:30am-9:01am EDT
questions and any property stories at email@example.com. i'm bob massi, the property man. i'll see you next week. [ woman vocalizing ] >> i'm bob massi. for 32 years, i've been practicing law and living in las vegas. i help people with all sorts of real-estate problems, from trying to save their homes to closing major deals. eight years ago, 6,000 people a month moved here, looking for employment and affordable homes. little did anyone know that we would become ground zero for the american real-estate crisis. now, it's a different story. the american dream is back. we're gonna meet real people who faced the same problems as millions across america, and we'll dive deep into a city on the rebound because las vegas was a microcosm of america, and now vegas is back. [ woman vocalizing ]
i'm coming to you from the world-famous neon museum, right here in downtown las vegas. it's often said that vegas was a microcosm of the entire united states. and when it comes to the real-estate market, nothing crashed harder or bounced back quicker. but rebuilding your dreams is not always easy. now we're going to 23 1/2-year retired air force veteran grady. thank you for your service and thank you for allowing us in your home today. >> sure. >> and your wife, of course. now, let me ask you, when did you buy the home that we're sitting in right now? >> we moved in in early 2006. >> boy, that's when vegas was booming with building, wasn't it? >> it was. it was the single-story community that we wanted. >> at what point did you realize that you were gonna be faced with a problem as it relates to value and what was owed on the home? >> 2006, 2007 were okay -- all house payments made, everything made on both of the loans that
we had. but then 2008 hit, and the bottom just fell out of the housing market. and so, this house that we purchased for almost $370,000 went from a value of that down to $134,000. >> in a short period of time. >> it seemed like it was overnight. 2008 became a year of exodus out of this community. people were walking out of their homes. they were not gonna pay for it. so, when the new neighbors were moving into the house that other people had walked away from because the payments were so high, they were paying a third of what we were paying. >> so, you have a home that you bought for in excess of $350,000... >> yeah. >> ...that now has a value of maybe around $100,000. so, you're $250,000 underwater. >> absolutely. so, we didn't know what to do. >> did you contact the lender directly? >> initially, the customer-service representative said, "well, there's nothing we can do right now." and they would kind of dismiss my phone calls. well, i continued this over and
over and over. >> you continued calling them. >> yes, because i didn't know where else to go. and finally one of the ladies -- bless her heart. she finally told me. "we got programs for people that default on their payments. but people that are current? we will not help you." >> the banks were generally not willing to work with people who were maybe only slightly delinquent on their mortgages. i think the banks focused more on people who were 60 to 90 days past due and beyond. >> military man, always paid their bills, responsible, a generation that was raised if you sign something, you pay it. how did you cope with the decision? >> oh, it was absolutely awful. it was humiliating. i would have to get to the point of not paying my bills to get attention. it just didn't make any sense to me that i would have to go through that. and i had. i had paid my bills. growing up, coming up in the
military, you don't make a whole lot of money, especially on the enlisted side. but we always paid our bills, every single month, every time, overseas, everywhere, combat zones, all that stuff. we always made sure our bills were paid. but this was something that my wife and i had never experienced, that we were actually gonna have to ruin our credit in order to get the bank's attention. >> how did you feel when that first month came, and you made that conscious decision? >> oh, i felt awful, actually awful. i felt like i wasn't living up to an obligation that i agreed to. it was absolutely terrible how i felt, and it got worse. >> sure. >> we defaulted on the payment. we defaulted on another payment. then my wife and i are saying, "well, what are we gonna do next?" >> eventually, they got a notice of foreclosure. but grady learned that nevada had a mediation program meant to get homeowners and banks to sit down together and try to work something out to save the home.
>> prior to the mediation, their attorney asked for information about what we were looking for in the mediation process. so, i outlined some proposals that we would agree to, and basically it's what i was trying to say in the past year. modify the loan, reduce it to a price we can afford. we'll even pay more than the value of the house, but get it down to a reasonable amount. i said, "the other option is we're gonna walk out of the house like most of our neighbors did." we were watching these people, these big-time people, get bailed out and getting all this free money that was passed to them and getting relief. and here, we're just little people. we're just out here trying to live in a house, and we can't even get anybody to talk to us, much less make a deal, as far as modifying a loan or anything else. you simply could not get anyone to have a conversation with you. i spent 23 1/2 years serving this country all over the world, and it was humiliating to think about what we had gone through
and all the -- why can't you just pick up the phone and talk to somebody? >> work it out. >> when we were in the mediation, they asked me to start, and i told them basically the story that i've just said, talking about here. and the first thing the bank representative said -- "well, we don't want another house on the market, and we want to try to arrange something. she said, "what i can do is i can take $100,000 off the loan, put it at the end of a 40-year mortgage. it does not draw interest or anything like that. it just sits there. but then we can finance what's left of the loan and get your payments down." >> it's called a forbearance. so, did you reach a deal? >> we did. on that particular day, we reached a deal. >> how much was the second mortgage at that time? >> it was about $74,000, right in the neighborhood. >> interest-only payments. >> that's correct. the second proposal was that they would write off $54,000. >> and you thought that came from heaven. >> i did. i thought it fell from the sky.
they said they'd write off $54,000, and our payments would be reduced to $69.36 from over $600. initially, we had the two loans where our house payment was almost $2,500. and by the time all that was done -- the mediation, the second mortgage, to negotiate all that stuff was done -- it went down to about $850. if the banks would have cooperated with us from the very beginning, we would have never missed a payment, they would have continued to have gotten their money, and we would have gotten what we got in the end, anyway, which is a reasonable payment. and that's all we wanted. >> if only one side talks, there's no way there's a winner. >> no. not at all, not at all. but we're still here. as i said, we haven't missed any payments whatsoever in five years. we enjoy our little single-story home. >> good for you. you're a great american, grady. >> hey, thank you very much. >> thank you for your service and thank you for your time today. >> thank you very much, bob.
>> yes, sir. thank you. a few years back, lenders had no way of being consistent. grady got lucky, got a good lender, got a good representative, and was successful. not many properties have drive-through tunnel of love and a pink cadillac, but i'm going to show you one that has both. plus, an owner with a heart of gold. [ woman vocalizing ] ♪ in new york state, we believe tomorrow starts today. all across the state, the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in buffalo, where the largest solar gigafactory in the western hemisphere will soon energize the world. and in syracuse, where imagination is in production. let us help grow your company's tomorrow - today - at business.ny.gov
♪ >> thanks for staying with us. i'm bob massi, the property man. and i want to show you a very unique property. it started basically as just a small box and has grown into the home of more than 800,000 weddings, including those of frank sinatra, bruce willis, and michael jordan. here we are at the little white chapel in las vegas. forty-seven years ago, charolette richards lived in a 600-square-foot apartment with a little chapel. that's what she started this business in, and now literally is a city block in las vegas.
the property, the business is worth millions of dollars, and celebrities from all over the world come here. [ camera shutter clicks ] >> and kiss. kiss, kiss, kiss, kiss, kiss. >> this is the wedding center, where we have wedding gowns, tuxedos, suits, elvis costumes, and all kinds of wonderful things for those people that like to dress up. some people buy them, some people rent them, and some people give them to me because they don't want to take them home. i've done so many weddings during the past few years free because... >> to help people. >> ...i can help people. >> yeah. >> and i've never had anybody that was military pay for the use of this chapel or this grounds. >> thank you for that. that's wonderful. >> no, i love the military people. oh, i'm so glad you're here. i'm honored to have you here. >> thank you very much, ma'am. >> ♪ i won't care at all as long as i have you ♪
>> you may kiss your beautiful bride. i want to comp their wedding -- everything. >> you don't have to do that, ma'am. >> i want to do it for you. i want to do it for you because of what you stand for. >> here you are. >> that's a good thing. >> alive and well. >> yes, sir. >> how many weddings have you done here at the little white chapel? >> oh, my goodness, hundreds. i don't know. i did eight yesterday. elvis is just synonymous with vegas. you'll have some people that are really big fans and just love him, man. it's amazing. he always thought people would forget him, and here we are, all these years later, and someone like myself is making a living doing weddings. [ "bridal chorus" plays ] >> behind me is a drive-through, where you pay to get married, sit in your car, and drive right out onto the old las vegas strip towards downtown as a married couple. >> seventeen years ago, i said, "i want a drive-up-wedding window." so, i told my son, "cut this
wall down and put a window there." he said, "why do you want to do that, mom?" and i said, "so that people could get married." he said, "you mean they could pay first before they get married?" i said, "no, they're gonna get married at the drive-up." he said, "i won't do that. i'm not gonna build you one because i don't think that's right, that people get married in a drive-up." >> sure. >> you know what? it's become the most popular thing there is. and they drive up to the window, and they stop. the minister comes out and says, "do you want to get married?" and they say, "yes." "well, you've come to the right place." some come on motorcycles, all different ways. >> so, if they come up to the drive-through wedding window, how long does it take for them to get married? >> fifteen minutes. people just love this pink cadillac, which i have two of. they love to get married in there. >> oh, so people actually get married in there. >> they get married right here in the backseat. if they have little children, we let the little kids stay up in the front so mommy and daddy can get married back here. >> las vegas, of course, was
ground zero in the real-estate crisis in america several years ago, and it's coming back. but during that period of time, this amazing property still sustained itself. the little white chapel is a great example of an american success story. >> the business was growing and growing, and i lived here 24 hours a day, 7 days a week. i never left here. this, in fact, used to be my living room. >> by the way, is this the first chapel of this whole structure? >> yes, this is, uh-huh. this right here is. >> and you lived literally behind this chapel? >> i lived right here, behind this wall. the chapel was there. >> so, this is where you lived, where the altar literally is. >> yeah. >> and the chapel was over there. and then you switched it up, obviously. >> and then, my sons are contractors, so they tore all this down, and we made it bigger because there were so many movie stars coming in here, and we were getting so many big weddings. people say, "how come you're so successful?" it's because i love people. i want to be honest and faithful to them as well as them be to
me. from then on, it just took off. >> now, when you bought the property, how many square feet was this building at the time? not too big? >> 600 feet, maybe, something like that. >> so, over the years, and you expanded. >> i just kept buying up the property as it came available and then tore all the things down, which was all doctors' offices and stuff like that. i don't know if you remember that. >> this is old las vegas. you built this business your own as a young woman... >> yes. >> ...and built this up. you should be pretty proud of yourself. >> well, i'm not proud of myself, but i'm thankful that i've been given the ability to do what i have done. and not only that, i've worked very hard, and i enjoy every moment of it. >> you're a married man now, soldier. [ laughter ] >> up next, there's a thing called a 1031 exchange. it's a complicated concept of how you save taxes over a period
of time, when we come right back. [ woman vocalizing ] incredible bladder protection from always discreet that lets you move like you mean it now comes with an incredible promise. the always discreet double your money back guarantee. always discreet is for bladder leaks and it's drier than poise. try it. we're so confident you'll love it, we'll give you double your money back if you don't. incredible bladder protection. double your money back guarantee. that's always discreet.
♪ >> welcome back. i'm bob massi, the property man. you know, nothing is more complicated than buying and selling real estate or buying and selling a business. we all think we know so much, but let me tell you something. when you have to deal with the good, old tax code and the irs, you better know the law. there's a thing called a 1031 exchange. it's a complicated concept of how you save taxes over a period of time, but let me tell you something. you better have the right expert to explain it. i talked to rex reese, a prominent attorney who understands and will break down the 1031 exchange. rex, most americans, they sell their home, and they're gonna go
buy another home. but what are the tax implications of just selling a primary residence for the average american? >> well, your principal residence is a capital asset, and the normal tax rules apply. if you've held the property for more than a year, then you get long-term capital-gain rate, which is 20% or less, which is of course a nice savings from ordinary rates, which could be as much as 40%. so, there is an advantage to home ownership. years past, you could do what's referred to as a 1031 exchange transaction with your principal residence. however, about 15 years ago, congress decided that was too complicated, and so rather than forcing people to jump through all the hoops to do a 1031 exchange, they just give them a credit, principal-residence exclusion. >> let's take a home, $500,000. and they sell it for $800,000. primary residence -- how does
that exclusion work? >> so, there's $300,000 of potential gain there, which would be subject to capital-gains rates. under the principal-residence exclusion, an individual's entitled to exclude $250,000. so, the end result is, there's only tax, capital-gains tax, on the $50,000 that's not covered by the principal-residence exclusion. now, with respect to a home that's been acquired a married couple, they're entitled to a $500,000 principal-residence exclusion. double your money. so, in your example, where the couple bought the house for $500,000 and sold it for $800,000, they would have all $300,000 excluded, pay no tax on it. >> what about if the properties you're buying or selling are not your principal residence? that is where you need to be prepared and do it right, usually by doing what is called a 1031 exchange. >> you sell your old property, and you buy a new property. you have to do it within the
180 days, generally. you cannot take possession of the cash that you sold the old property for. you have to engage a qualified intermediary. >> explain to our viewers exactly what they are and what they do. >> the treasury does not want you, as the seller of your old property, to have control over the proceeds from the sale. that money has to be used and poured into your replacement property, your new property. so, you must engage a qualified intermediary to hold the proceeds from the sale. both parties must recognize that this is a 1031 transaction. the contracts have to reflect that. that's about the only thing that the q.i. has to do is maintain control of those funds. now, the q.i. cannot be your broker, your attorney, your cpa, no one that you would have actual or constructive control over, because that would then collapse the transaction if you're deemed to have control over the money. >> if you don't designate in
that 180 days that new property, what's the impact? >> you have to close on the second transaction within 180 days of the first transaction. >> but you have then a 45-window period to designate that new property. >> that's correct. >> have you ever seen it in your experience where somebody hasn't designated it in a timely fashion, and, if so, what's the consequences, a tax? >> the regulations under 1031 are pretty complex, but they're designed to be sort of a safe harbor. and if you jump through all these hoops, and you do it timely, you qualify for the safe harbor. there's a land of limbo out there, however. if you have missed some of these deadlines, but you've still never had control over the money, and the properties were like kind, you might be able to make the case that this was in effect a like-kind exchange. you're looking then for the regulators to give you a pass,
basically. there's no guarantee you'll get that. so, it is legislative grace, and you've got to make sure that you qualify because unless you can prove that you have, you're not entitled to the deduction. >> when we come back, we'll review everything we learned today in the massi memo. [ woman vocalizing ] we were born 100 years ago into a new american century. born with a hunger to fly and a passion to build something better. and what an amazing time it's been, decade after decade of innovation, inspiration and wonder. so, we say thank you america for a century of trust, for the privilege of flying higher and higher, together. ♪ befoburning, the pins-and-needles of diabetic nerve pain, these feet were the first in my family to graduate from college,
raised active twin girls, and trained as a nurse. but i couldn't bear my diabetic nerve pain any longer. so i talked to my doctor and he prescribed lyrica. nerve damage from diabetes causes diabetic nerve pain. lyrica is fda approved to treat this pain. lyrica may cause serious allergic reactions or suicidal thoughts or actions. tell your doctor right away if you have these, new or worsening depression, or unusual changes in mood or behavior. or swelling, trouble breathing, rash, hives, blisters, muscle pain with fever, tired feeling or blurry vision. common side effects are dizziness, sleepiness, weight gain and swelling of hands, legs, and feet. don't drink alcohol while taking lyrica. don't drive or use machinery until you know how lyrica affects you. those who have had a drug or alcohol problem may be more likely to misuse lyrica. now i have less diabetic nerve pain. and i love helping little ones get off on the right foot. ask your doctor about lyrica.
massi memo. earlier, we talked about 1031 exchanges, which is the process of exchanging one property for another without getting slammed with a big tax bill. the detailed step-by-step is on our website, but what you need to know is many people get caught off guard by the tax implications of real-estate transactions. but there are times when you can avoid that by doing a 1031 exchange. an exchange usually involves swapping one piece of property for another through a middle person. and this third party holds the proceeds from your sale and then uses it to purchase the other property. so, technically, you never really make a profit, and it never touches your hands and can't be taxed. now, this is critical. you must designate some potential new properties that you're looking for to buy within 45 days of selling the old one and then close on one of them within six months. that's it for today. be sure to send me your questions or property stories at firstname.lastname@example.org and check out our website at
foxnews.com/propertyman. i'm bob massi. i'll see you next week. [ woman vocalizing ] t coming up. in the meantime, good night from new york. >> announcer: this show has never been solely bin investments. we talked about anything that affected people and their money. from box business head quarters in new york city, the new "wall street week." gargary: welcome to "wall street week." i'm gary kaminsky along with maria bartiromo. maria: