The 721 Exchange “Is an Excellent Vehicle”: Meet Steve Ghoens, Multi-state Landlord Turned Proud Flock Client
Published December 13, 2024Share this article
Over 25 years, Steve Ghoens watched his real estate portfolio grow from a single unexpected investment to eleven properties. Along the way, he faced the mounting challenges of being a long-distance landlord. Managing rentals across three states, he juggled multiple property managers, dealt with difficult tenants, and faced ongoing maintenance issues. But it was the worry about passing on his complex portfolio to his two daughters that ultimately drove him to find a better solution.Steve’s first experience as a landlord, in the 1990s, was unplanned. While accompanying his parents to view a home they were considering downsizing to, he ended up buying the property himself and converting his existing primary residence into a rental. His first tenant, a retired Major League Baseball player who stayed for three years, was a “great experience.” But Steve soon discovered the true challenges of property management. “After that, I’ve had horror stories like everybody else,” he recalls. Over two and a half decades, his investments grew to a peak of eleven properties, eventually settling at eight single-family homes across North Carolina, Georgia, and Florida.The challenges mounted as his portfolio expanded. Early on, Steve struggled with the basics: evaluating tenants, chasing rent payments, and coordinating maintenance. Even after transitioning to professional property managers – one for each state – the headaches didn’t end. He found himself “managing the property managers” and dealing with unreliable contractors. One particularly frustrating incident involved a fire restoration that was scheduled to take six weeks but dragged on for six months, leaving him with a vacant property and mounting costs.But what really kept Steve up at night wasn’t the day-to-day management issues – it was thinking about the future. With two daughters who might not share his passion for real estate, he worried about the burden of his investments falling on them. He was also concerned about the complexities and tax implications they’d face when it came time to sell the properties. “I said, ‘There’s got to be a better way for me to pass this on.’ ”The solution came unexpectedly, when his father received a mailer about Flock’s fund and the 721 exchange. “I’d never heard of it,” Steve says. “It piqued my curiosity.” As he investigated further, Steve saw how Flock could address multiple pain points at once. Not only would it eliminate his property management headaches, but it would also solve his tax concerns – he was facing depreciation recapture on half his properties within 1-4 years and the rest in 7-10 years, potentially triggering hundreds of thousands in capital gains taxes.What really sold Steve on Flock was how it transformed his real estate holdings into a manageable inheritance. “You get more diversification,” he says. “You no longer have to pay for property taxes. You’re no longer dealing with property management or maintenance issues. All you’re experiencing are cash flow opportunities and appreciation opportunities.”But the biggest benefit for him was passing on the value to his children. “Your homes are converted to shares and then I could split it between my two daughters,” he says. “That was very appealing to me.”In May of 2024, Steve made a decisive move, contributing all eight of his properties into Flock's fund. “After meeting the talent and understanding a little bit more about the vision, I decided that rather than contributing one or two that I would jump all in,” he says.For Steve, Flock wasn’t just an exit strategy – it was a solution to decades of landlord challenges and a way to ensure his real estate investment legacy wouldn’t become a strain on his children. “You have to think ahead,” he says. “What about your heirs? Are they really interested in managing property? Do you really want them to do that? Think about those hassles. Think about estate planning. This is an excellent vehicle to solve that problem of not paying capital gains taxes and giving something of value to your children where they can decide to sell it, keep it, do whatever they want with it.”“Don’t put it off,” Steve advises. “Because you have no say in the decision if you wait too late.”Hear more about Steve's experiences with Flock in this video interview.To learn more about the 721 exchange and how it works, read our blog post here.
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