All Forum Posts by: Peter Lee

I should clarify here.  Say if total cap gains on the deal is $4 million but the buyer doesn't pay the full amount in yr 1, does that mean the seller in yr 1 only owes cap gains on the amount the buyer contributed? 

I was thinking about this potential change of 1031 law w Biden and was thinking to avoid triggering tax (apparently he is thinking about capping the amount that could be subject to a 1031), to spread out payments received by the buyer for a few years to avoid going over whatever threshold he had in mind.

I understand that this is a question for my tax guy but there are a lot of knowledgeable people here with good ideas so wanted to throw it out there.  

Say if you have a project that sells for $5 million but there is some form of seller financing where the buyer pays $2 million upfront and then the rest is paid over a 3 year period.  

Cost basis is say $1 million and for simplicity assume depreciation is zero.  So total profit is $4 million.

Is it true that the seller would only be liable for cap gains for the $2 million if say that was the only amount received for that tax year?

Any thoughts appreciated.

@Paul Moore  yeh this is a tricky one.  Pretty rare at least in my area that a self storage site gets bought out since they usually cash flow so well, they leave it as is.  So not many comps.  I asked the prop manager who's been in the biz for years and she thinks maybe 25-50% would relocate to the nearby facility but she said it wasn't a sure thing.  

Curious to what people think here.  Imagine if you had a self storage facility that was going to be demolished for future development, what % of the tenants you think would try and find a new facility to move to?  Let's say though most of the tenants have been in the unit for years and rent was 30%-40% below most of its nearby competitors (within 5 mi) but there are places that offer rent in that range but they are 20 mi away (a 40 min drive).

So looks like we are going to give this a shot at least in the design phase.  I heard some of the larger companies make you sign a different lease which has some sort of liability waiver.  This we will definitely need to implement as I imagine the possibility of injury isn't low.  Won't prevent people from doing stupid stuff so will continue doing more research on this.  

The tough part is if you carry a box up the stair ladder, you can't hold the rails if it is a big box.

Yeh I'm sure if we listed these lockers, I'm pretty sure we would get a lot of action.  They are pretty hard to find in general.  I don't know other markets well but I would agree these only make sense in high priced markets.

I'm going to take a look at these mezz units this week and get a sense of how they work.

@Zach Quick how do you deal with potential transients/ increased activity with the cheap locker units (which is ok with us as long as it doesn't become a problem but the issue is by the time it is a problem I heard it's kind of too late).  I had one guy suggest only doing a small handful of lockers and doubling up the lockers for 3' x 10' instead of the 3' x 5' we were thinking of of to drive up the unit price.  What kind of demand is there for an oversized locker, not sure.

@Zach Quick Yeh I'm very confident there would be demand for lower priced units.  I guess a bigger concern is liability and potential issues of transients.  Curious as to how this might have worked out for other operators.  I know Public Storage and Extra Space have these units in a small handful of their facilities in the area and plan on taking a quick trip out to them to chat up the managers at some point.

Anyone have experience with these small overhead units?  They are typically accessed by rolling step ladder.  One thing I hear is the major liability issue from ladders tipping or people falling carrying stuff into their unit but we do have a space which is 14'-6" high which is why we are considering building these out.  

Any thoughts appreciated on the risk involved and what people lease these units out per sf relative to the units below.