Real Estate Investment Case Study

多案例研究

1031 Exchange + Arranged Financing

Verona Apartments (16 Units) to Roseland Apartments (30 Units)
时间轴
2019 -现在
接触类型
1031 Exchange + Place/Invest Cash
bat365app手机版下载的作用
Listing Agent, 1031 Exchange Coordination, Buyer’s Agent, 抵押贷款 Broker
Investor Cash/Capital
$991,423 (1031 Funds) + $646,680 (Cash)
客户端
约翰B

投资者的概要文件

As of 2019: 客户端's current investment property portfolio includes small/mid-size apartment complexes and a mixed-use property. 客户端 primarily utilizes professional property management to manage the day-to-day operations of his properties. The objectives moving forward are continued wealth (capital) growth, increased cash flow and the consolidation of invested capital into fewer/larger high quality assets.

约定的目标

Execute a 1031 Exchange and combine these funds with cash-on-hand to acquire a larger asset.

过程

The process had two parts, find a Buyer for the property our client wanted to sell and identify a 1031 replacement property. 幸运的是, Realty Yield had another client that was selling one of his properties and the property to be sold was a perfect fit.  It was a win-situation.  一个内部购买 & Sale Agreement was executed with a flexible closing date until a replacement property was identified for the Seller.  

Many 属性 were both financially and physically screened from January through March 2019. The list of prospective acquisitions included multi-family properties of $4-$7 million located both throughout 俄勒冈州 as well as the secondary markets of Spokane and Bellingham Washington. The Medical/办公室 and Self-storage property types were also being considered.

The Chosen Opportunity (the property ultimately acquired)

一个质量, 新建筑, 30-unit multi-family project met the criteria and standards of what our 客户端 was looking for.  The subject property was in an up and coming area of close-in SE 波特兰, could be managed cost effectively by a third-party property management company and was a good fit for the capital available.  This was going to be a lower leverage purchase; hence also met the cash flow target our client was seeking.

的挑战

The primary challenge was simply negotiating a mutually acceptable sale price.  The secondary challenge was going to be securing a satisfactory loan amount since the property was not yet fully leased-up (vacancy still about 23%). NOTE: lenders only underwrite on the current "in-place" net operating income so the loan-to-value (LTV) was going to be limited to some degree.

执行

最终, this lending challenge worked in favor of our 客户端 during price negotiations since the down payment (capital) requirement took many other interested parties out of consideration. A mutually agreed upon price was negotiated over a period of a couple of weeks and a Purchase & Sale Agreement was drafted with a flexible closing date until the subject property reached a vacancy level of 10% or less so the loan could fund.  

The Result (1031 Exchange Completed)

Relinquished property sold for $3,625,000. Replacement property final negotiated purchase price was $5,250,000. The 1031 Exchange was easily completed within the timeline required by the IRS.  

Realty Yield Comments & 更新:

6/2019: It should be noted that many mutually beneficial transactions occur privately (in-house) between clients of a single real estate brokerage firm. It is very common for a property that no longer fits for one client is ideal for another.  These types of transactions usually occur between experienced investors that have a good understanding of property values and hence are willing to execute a deal without putting on the open market.

Roseland Apartments, Acquired (through 1031 Exchange), June 2019 - $5,250,000. Realty Yield arranged acquisition financing.
Roseland Apartments, Acquired (through 1031 Exchange), June 2019 - $5,250,000. Realty Yield arranged acquisition financing.
Verona Apartments, Sold (1031 Exchange), May 2019 - $3,625,000
Verona Apartments, Sold (1031 Exchange), May 2019 - $3,625,000