All Forum Posts by: Mike Nas

Thank you to all who have responded. I know its harder trying to sell off market since the buyer pool is so small. The property is somewhat unique for the area given its characteristics (i.e. 80s built, washer/dryer hookups in unit, balconies, high ceilings, stabilized cash flow with room for increases, has some assumable debt at a good rate) so I think a legitimately active buyer would at least consider it.

There are only a few brokers, maybe 5-10 brokers, in the area who have worked similar deals recently so its really not much work checking with them first for any "low hanging" buyers. 

As for why I want to go this route, Im not in any rush to sell but would be willing to accept a fair offer and this is a way to test the market. I worry about listing it in case Im not able to get a satisfactory offer for it in this market and have to take it down which some buyers may not look at favorably down the line. Also sometimes listing the building for sale can stir up the tenants and things have been great so I would prefer not to rock that boat if I don't need to. 

ps. It seem a lot of these MF deals around here offer each broker about 1.5% or 2%. Some of the smaller buildings offer 2.5% but not very often. To incentivize the buyers agent here I would offer the buyers agent a little more $$$ off market than I would be if I listed it. Perhaps 2.0% if sold off market, 1.5% if I list it.

Dear BP family, I am looking for some advice in selling my MF property.

I am a multifamily investor in Southern California. I have 16 unit property I am considering perhaps selling and wanted to explore the option of selling it off market. I am not looking to find a listing broker at this time. My plan is to contact some brokers who recently bought/sold similar buildings in my area to ask them if they have a buyer who perhaps missed out or passed on the comparable property. 

For example "Hello Mr/Ms., I saw you recently [bought/sold] the property on X street. I own a similar building id consider selling and wanted to know if you have any clients who passed or missed out on the property that was sold and looking for something similar?"

There are not many of them so its not a lot of work, but is what I'm proposing reasonable? The buyers broker would of course get a commission for finding me a buyer who actually closes. I have a relative who is a retired broker who is willing to help me close the deal should I locate a buyer, but he wants me to do the legwork. I use to get a lot of calls in the past from people asking me if I wanted to sell my other buildings (doubt they were the actual buyers, more likely cold callers hired by investors). 

Is what I'm trying to do here reasonable or common in the industry? Would brokers scoff at the idea of presenting me with a buyer if they don't get the listing? Is the way Im phrasing what Im trying to do correct? Any other suggestions to sell this property off market? 

Thank you all very much in advance.

Hello BP family, I had question about 1031 and reverse 1031 exchanges. I know this is  an oversimplification, but coming from a legal background Im trying to understand whats going on in a 1031. My impression of the process is that its kind of "informal" in the sense that it really only involves the exchanger and QI with the idea being  that the transaction is being properly documented (such as identifying a prop w/in 45 days) and structured (i.e. making sure the exchanger doesn't receive or control both properties or proceeds) in accordance with IRS rules. Once the transaction is complete you would file your yearly taxes and indicate the sale but defer payment of cap gains taxes on the basis of the 1031. 

With that said, is it correct to say the IRS (or govt for that matter) doesn't get involved unless you're basically being audited/investigated? The documents used specifically for the 1031 (such as the Exchange agreement or writing identifying props to acquire) are not sent or filed with the IRS/govt; they are more important after the fact to demonstrate and prove to Uncle Same why capital gains were not owed on that transaction, should an audit occur? Is it correct to say that there is basically no affirmative "approval" received when doing a 1031; there is really only a disapproval of one in the form of a failed audit.  

How do you manage the environmental/biohazard risk that such a use may present? Is it as simple as getting extra insurance? Just as an example, what if it turns out there was contamination somewhere because the office was careless in how waste was handled? 

@Joel Owens Thank you for that very informative answer. It seems like Im on the right track, but still need to figure out the priorities of all the factors you discussed. 

As for the 1031 exchange, what is the typical order/sequence of the transaction? I did not want to list my property(s) for sale until I had a target in mind. So I would find one or more suitable NNN properties, get it under contract, and then go fishing for a buyer for my multi-family property. I am more concerned with ultimately finding a suitable target property rather than selling my properties quickly. Is this the correct approach? Sounds like I might have it backwards

 With industrial or properties involving hazardous materials (gas stations, medical offices) is the risk of environmental contamination usually covered by insurance (which the tenant would be paying for)?  

@Ronald thank you! That’s a really useful website. Really appreciate it 

Hey everyone! Im a new member here but after stumbling here for another reason Im hoping some people can help with some suggestions. Will try to keep this brief so let me know if you need any more information. 

I come from multi family (MF) property ownership/management of a few properties of various sizes here in Los Angeles. Im looking to exchange the MF properties over time into STNL properties, perhaps in tax-friendly states. I have a pretty good knowledge of the MF business but admittedly not too much in the general commercial space. 

With that said, is there any "gold standard" for STNL? What kind of properties do MF landlords (who are tired of tenants and toilets) like to exchange into (i.e. properties that are good for new CRE investors)? Drug stores and Walgreens in particular seemed very promising until I quickly realized that rent increases were often flat for decades.

I am having trouble understanding how the relationship between risk vs return actually plays out in real life because cap rates and valuations seem to vary so widely. Unlikely, but is it because many of the properties on loop net are priced in way (high) where the landlord just wants to see if there are any bites vs people who are actually motivated to sell. Are off-market listing more common in commercial properties than in MF?