All Forum Posts by: Rich Jordan

@Leonard Young happy to hear it helped!

@Ronald Rohde well done! Doesn't look like that was an easy close. Seeing the down units, was this a flood-effected property?

That's great info @Mark Creason! 

Thanks for clearing that up. So 1031s are more concerned with *value* of the new property being greater than or equal to the *value* of the sold property. I had always thought it was the relationship of the equities, not the values. Gamechanger for me. Thanks!

@Jim S. For HMLs in particular, and especially if they've reached out to me, I'm looking for positive reviews and referrals showing that they are legitimate. I'm also extremely skeptical if they aren't interested in me and my performance/experience or the deal, but focused primarily on receiving their upfront fee. If that's the case, chances are pretty good that they're full of it and looking to rip you off.

I'm almost never as far east in NC as Jacksonville anymore, but I do pass-through the Raleigh/Durham area on 85 a few times a month - generally on either end of a weekend. Maybe I could catch you flying in or out of RDU? Would be happy to sit down if we could make it work.

@Dave Foster Thanks for your response. Want to make sure I'm interpreting this correctly...

Are you saying that if all proceeds from sale are invested in next property through 1031 and formerly refi'ed funds were invested in like-kind property, then it's all good?

Further laid out:

Equity from Sale - Refi Equity => Equity in next property

+

Refinance Proceeds => Equity in another like-kind property (previously)

=

Thumbs up from IRS?

@Jim S. Nice job! Sounds like a good deal and that's a great MSA to be invested in.

Glad to see you're taking the time to vet the lender - there are a good deal of sham lenders out and about looking to collect your upfront fee and run. I've stumbled across at least one in the past and he was referred to me by a well-meaning agent!

CPAs of BP,

If I cash-out refinance one of my apartment buildings in, say, year 2...

...does that change my basis if I attempt to 1031 Exchange down the road, say, in year 4?

If not, am I expected to come up with that equity that I had already pulled out and deployed into other projects?

I imagine this is a simple answer one way or the other. Trying to make sure my repositioning and exit strategies are actually viable. Thanks.

Yeah, not a chance. That has to be one of the most egregious fee structures I've seen. Asset setup, financial services, and disposition fees being the largest red flags.

Caveat emptor for Western Wealth Capital, folks!

Sounds like a good deal. Congrats!

One word of caution: value-add and forced appreciation really only apply to property 5-units+ that are valued based on the income approach. 3 unit deals generally don't benefit from this.

That said, I'm sure the value of the property will indeed increase due to your improvements. Best of luck!

Investment Info:

Large multi-family (5+ units) commercial investment investment in North Carolina.

Purchase price: $500,000
Cash invested: $150,000

18 Unit C-Class Apartment Building (purchased in November 2018)

What made you interested in investing in this type of deal?

Below market rents, poor management, 83% occupancy, good location.

How did you find this deal and how did you negotiate it?

Loopnet. Submitted two separate LOIs - one with a lower offer, the other with higher offer but more favorable buyer terms. Higher offer made it to best and final and was ultimately accepted.

How did you finance this deal?

Conventional commercial financing through Regional Bank. Bit of a pain-in-the-neck to work with, but we were able to get it done with favorable terms.

How did you add value to the deal?

Removed on-site property manager and implemented professional 3rd party management (at lower cost). Filled vacancies (now operating between 95-100% occupancy). Bringing rents to market rate as leases renew and tenants turnover - in just 4 months of ownership we've been able to increase gross income by 34% (!!!).