Opportunity to inherit two apartment buildings

[Blake Morgan]

Hi everyone I'll try to be brief and give the pertinent details.

I'm being given the option to take over two apartment buildings from my dad. He is thinking about selling the buildings for around 1.6 mil but will give them to me if I want them. The buildings contain around 30 one bedroom units and bring in $180,000 per year in rents. They are located in Birmingham, AL and were built in 1962. My dad has run these apartments, managing and maintenance, for decades but is now looking to scale back his work load. I'm 24, have recently graduated, and am almost a year into my first job in Atlanta which I like and would like to try a career in.

Right now I see this as a lot of potential money, but also a lot of risk. The apartments are pretty cheap and basic so it's generally lower quality tenants, the buildings are old but pretty well maintained, one has a nice view of downtown.

Does anyone have knowledge of the Birmingham market? Is there a way to hire a company to manage and maintain the buildings while I retain ownership and part of the profits? What about hiring people for those tasks in the existing structure of the holding company? Is this too big or risky of a situation where I should just let him sell and be done with it? Since I'm not putting any money in, is this a good investment of time and energy?

I know this is my personal decision but I feel like this is a very generous offer and I want to explore the options and hear some opinions. Thanks 

[Steve Vaughan]

Wow- quite an opportunity!  Does your dad have other bldgs as well? $1.6m is a lot!

I would probably ask him to 1031 into triple net commercial and wait to inherit. Gift taxes run about 55%. Not a DIY situation.  Get an estate and tax pro involved to do it properly.  Congrats and good luck!