Challenge

Our client decided that he wanted to retire in Nevada, sell his 12 unit multifamily investment property located in West Hollywood, CA and defer his capital gains tax liability. The problem we soon discovered after completing a value analysis was that the price he hoped to achieve was more than the property was currently worth. The issue was that several of his units were rented far below the market, so his income did not justify his desired price.

Solution

The property offered considerable rental upside. If we could help him increase the NOI by obtaining market rent for a few of the lower-paying units, we could achieve his desired price. To accomplish this, it would be key to contract with a professional management team to help him turn and renovate a few select units. We introduced him to one of our preferred management partners that helped him turn, renovate and lease three units at market rent within 4 months.

Result

With the higher NOI now established, we took the property to market and positioned it as a seller carry investment opportunity offering qualified buyers attractive leverage, interest rate, and fixed period. This proved to be a win/win strategy as we secured a qualified 1031 exchange buyer, achieved the Seller’s price, and helped him defer his capital gains tax. The Seller has now happily retired in Nevada enjoying his passive income from the seller carry and the Buyer has become a Legacy Partner who engages our services to exclusively represent him in his sales and purchases as he continues to build his real estate investment portfolio.