Trade my business for a rental unit? Yes please!

[Tim Jantz]

Rookie investor here that just completed a huge deal for my fourth investment.  

It all stated 4 years ago when I listed my landscape maintenance company for sale with a business broker.  After 3 years of unsuccessful attempts to sell, my broker finally found me a willing buyer.  Long story short the sale was falling apart because of his SBA loan qualifications.  Turned out he made too much money to get the loan ha ha!  At what I thought was our last meeting before the deal was officially dead, the buyer said "I have a rental unit that I can sell in October to fund this deal."  Well the whole reason I wanted to sell the company was to go full time into real estate.  When he mentioned this my mind went wild and I started quizzing him on this unit....The shark got a sent of blood in the water and I was going to do anything to keep the deal going ha ha ha.  It turns out the numbers fit well with the deal of buying my company.  Being as I really wanted to be in real estate full time (agent/investor) I asked him if he would be interested in trading now and not worrying about waiting until October to sell.  His answer was yes!  BOOM HOME RUN!  So after a lot of due diligence, lawyer bills, cpa consulting and late night talks with my wife we got the deal done.  Now this is not even the best part of the deal.  It turns out the buyer (of my company, seller of the rental unit) used whole sale numbers to get his valuation of the property.  So the numbers worked out like this: I sold my company to him for a price of $225,000.  This price was based of the sale of his rental unit to me AS-IS at the price of $225,000.  Now my lawyer would stop me right here and explain there was a lot more to it than this simple explanation ha ha but in quick, that is how the deal went down.  After closing I had a lot of trouble with the tenant that resulted in almost eviction.  I finally got him out in January when his lease ended October and turned around and sold the empty and vacant unit for $320,000!!!!!!!!!!!!  This is what I call a home run.  An extra $95,000 for the sale of business?  Yes please!  Now to top this all off, I used a 1031 exchange to trade up to a fully rented duplex  that will net my family $2,500 a month.  I used a 1031exchange to defer 30k worth of tax resulting in another base hit after the home run.  I call it a base hit because this property was purchased more out of placing my money into something I would consider safe.  It doesn't quite meet all the rules for typical investing but it was a perfect buy for me and my family at the moment.  So all in all I was able to trade out of my business into something that will appreciate, and still pay my family monthly income while I start the next chapter of my career.

I'm sorry if this post comes off as braggy or self righteous, I just thoroughly enjoy the art of how this all came together.  I got to start my new career off on the right foot and I am happy and thankful to tell the story.