All Forum Posts by: Tory Sheffer

@Dusty Laurin Yes, I’d rather buy it ASAP.

@Tim Delaney that’s very good insight thank you! My plan was to do Environmental’s and all normal DD as if I’m purchasing as well. One thing with this route is the all lease payments would go towards the eventual purchase price. For example $2.5m agreed purchase, $100k annual lease. In 10 years I would owe $1.5M to seller.

@Kelly I. Yea I have my attorney do all the paperwork. Good call on having all the kids sign as well.

@Evan Polaski it would be set purchase price at time of contract. For example, $100k annual lease, $2.5M purchase, lease payments to be credited towards purchase price at closing. I know the area well, extremely close to home, location not a concern at all.

@Richard Cumberbatch Inherited property goes right to market value for cost basis to whoever is the beneficiary so there wouldn’t be capital gains at that time.

Multifamily scenario, looking to see if anyone has had similar deals/experience with this strategy.

Original developer 1965-1990 (phased construction) still owns a great product I’m trying to buy. Market rents are 70% higher than current tenant base. Owner is in his mid-80’s. Not interested in selling at my price due to capital gains. Kids inherit the money or the property. Cost basis becomes market value at inheritance and the kids wouldn’t have to pay capital gains. Only selling advantage is to no longer manage the asset. The kids end up doing all the maintenance, they’re not in the business and don’t have high interest. Planning to sell at inheritance point.

My latest offer was a lease-option. I lease the property with closing set 10-15 years, or on passing of original owners. I take over everything and pay them roughly 80% of annual cash flow. No debt at acquisition, would only require cap ex reserves and operating funds.

The owners kids seem interested in this strategy. Makes sense for me because very low cash out, rent pays master lease, I’m highly confident I can bump as-is rent and increase annual cash flow with low cost. (I own 2 similar properties nearby and achieving 2x rent comparable)

I would plan to own this asset forever. I love the location. So 10-15 years before closing is fine with me. Also this gives me great runway to own this 100% without investors and I have ability to close the purchase on my own when closing inevitably happens.

Looking to hear thoughts and feedback on this strategy and if anyone here has done something similar. Thanks!

@Paul Moore that’s incredible. Good work. Exactly what I was looking for!

This a multifamily property so 27.5 year tax life. Rough property value excluding land was $1,800,000. We also have construction in progress. There was more expense determined by my CPA that could be used as deduction, pure cost seg was around $550k year 1. 

I don't think that it's big news, but I would challenge you to go to the next available Investor Meetup and ask around who uses cost seg. Very few that I have met that are starting out in RE or with smaller properties have used this tool or even know it exists. This includes investors who own many smaller properties that they have owned for 10+ years. I'm not a writer, just wanted to share my experience and hear from others on the topic. 

@Michael Plaks I look forward to seeing the trophy and appreciate the seal of approval. You’re correct it is a small group of investors who are all able to benefit.