Auto Shop in Chicago selling strategies?

[William Salas]

Hi!  Any feedback/suggestions from more experienced commercial real estate investors would be appreciated!

So my father is nearing his older years and is ready to get out of the business.  He has an auto shop in Logan Square which if you know Chicago you know has changed a lot the last ten years.  The neighborhood is now trendy and property values have skyrocketed and will continue to do so I imagine. The auto shop, the parking lot attached to it and a single family home on the lot we think could go for between 1.4 to 2 million.  

What are his options?  Selling for a flat 1.7 for example would incur a pretty hefty capital gains tax.  My initial idea would be to receive something along the lines of 350k cash and seller finance the rest?  Especially in his retirement years having cash coming in would be really important.  That would also keep him from having to pay all of those taxes at once correct? 

Would love to hear any other opinions/options!

Thanks!

[Joel Owens]

William if your dad is looking to retire than likely wants mailbox money. That would be a retail stnl NNN property with a newly minted 15 or 20 year lease. He does nothing but get a check each month.

Buying an apartment building doesn't usually make sense with 2 million as not enough doors at that price to get passive.

He could 1031 exchange into a DST or TIC but he gives up control of his hard earned money for retirement whereas if he exchanges into a property he owns 100% then he can decide what to do.

You could also look at the owner finance with some down. Your dad would still have to worry about the operator running the asset and paying the note on time. There is not one perfect answer as every strategy has it's own set of pluses and minuses .