All Forum Posts by: Matt Gilroy

Hello BP!

I might be a bit ahead of myself but I thought I'd check here and see!

I recently came across an older landlord who has several duplexes, SFR and 6-8 unit buildings. He was selling two duplexes next door to each other but when I finally got ahold of him they were under contract. I asked if he had any other properties they might want to sell, he said yes. His hesitation is coming into a large capital gains tax. Currently, the family (Father in 80's, son is likely in his 60's and a daughter unknown age) has these properties in a variety of different names. None are in a holding company or LLC and they've owned them since the 70's (most of them). None have been acquired in the last 15 years.

My hope is that I can pick the properties that would best suit my investment strategies as a package deal and let him sell the rest to others.  Each of them will need some updating as they're long-time holds from the family with no real updates.  

In order for me to even think about executing on a multi-property deal, I'd need some owner financing.  Since the owner(s) are looking to get rid of multiple properties but don't want to pay a huge tax bill, I wanted to bring some creative ideas to the table.  

Hypothetically, could this work:

- We agree to terms on an overall package - likely at a good discount (50-60% of retail) since there is maintenance and rehab needed.

- Owner(s) refinance all of the properties that I want to buy and cash out a large chunk of money suitable for their needs.

- I execute "subject to" contracts with each property, servicing the refinanced debt and collecting any cash flow.

- I update/rehab the properties

- We refinance/transfer title/"sell" or??? to get the properties in my name and out of theirs.

- Their capital gains is limited since they've taken a large chunk of cash out on a refi and the increased value of the rehabbed units covers enough that I can cash flow on the new "full price" after I refinance them.  

Does this work?  Does this make no sense?  Any other thoughts or strategies to try and facilitate a deal and alleviate some tax burden? I'm newer to investing but would love to put a bow on a package deal to accelerate my portfolio.

Thanks!

Matt 

Hi Charlie,

In addition to what @Jeffhornberger and @DanG said, we've seen a lot of activity coming to the downtown core.  The Downtown Spokane Partnership has been bringing private investment to focused areas.  Washington State University, Gonzaga and the University of Washington have all expanded here.  WSU now has a medical school for students to remain in Spokane, Riverfront Park is in the middle of a $40M renovation and update, crime has decreased and like a lot of growing areas there are not enough contractors for all of the construction projects and work.  

Overall our economic forecast looks great over the coming years.  It's exciting to see Spokane take advantage of our great regional and geographical qualities and enhance the city and surrounding areas, even if it comes with a bit more traffic.  Greater Spokane Inc. (chamber of commerce) has some great events coming up that expand on the details of what's driving economic growth here.  

Cheers,

Matt