Exiting Multifamily Building – Deferred $4.2 Million Using A Deferred

Ron Anderson is the owner of a small business called "Biosweep" (a smoke odor elimination business). For the most part, Ron is a local. He moved to Colorado as a toddler. He lived in Southern California for just over ten years before relocating to Colorado for the rest of his life. He has been involved in real estate investment, sales, and property management since 2005.

Ron Anderson also works as a Property Manager for a single-family and a small multi-family residential property. Increasing overall portfolio profitability through strategic capital investments. Expertise in increasing top-line revenue. He specializes in Sales, Real Estate transactions, Business Development, Sales Management, Technical Solution Selling, Financial Analysis, and Problem Solving.

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Exiting Multifamily Building - Deferred $4.2 Million Using A Deferred Sales Trust with Ron Anderson

Brett:

I’m excited about our next guest. He is a new client of mine and becoming a friend. He is out of the Great State of Colorado, originally, basically from Colorado, but he's been in the multifamily investment space for some time, as well as the financial space, which we'll touch on as well. He's just going to share his story about the Deferred Sales Trust and this latest transaction for a property out of Colorado. Please welcome to the show with me, Ron Anderson. Ron, how are you doing?

Ron:

Doing well. Thank you, Brett.

Brett:

For our listeners to get to know you for the first time, would you give us a little bit more about your story and your current focus?

Ron:

Sure. Let's see, I was employed as an engineer for probably a dozen years or so in sales for some of that. When I moved back to Colorado in 2002, I started buying some rental property. I bought my first small triplex and ended up getting my real estate license in the process. Through that, I had an offer to join a small group of people to purchase an 18 unit apartment building. My first five years in that partnership were as just a silent partner. Then after five years, I decided to buy out my partners. So for the last 10 years, I've been the owner-manager with my wife of this 18 unit building. Along the way, we've also purchased a handful of other houses and condos. But about two years ago, we realized we were just getting too busy, we were working too hard. I didn't have enough time to play and is about that time, about a year ago, I ran across you on a podcast, talking about the Deferred Sales Trust. That got me thinking that there, there may be a way to make an exit out of at least the apartment building make a little bit more sense. Up until that time, I couldn't wrap my head around a good way to maintain the income and cut my workday a lot shorter.

Brett:

Got it. So, background engineering turned into the real estate world for some small rentals. Then the 18 unit apartment building, had some partners buy the partners out. They were looking like, maybe we're spending a lot of time and energy and stress versus what we could be doing if we had an exit plan. Is that a fair summary so far?

Ron:

Very fair.

Brett:

Excellent. So, I liked the way you put it. You said you were too busy and working too hard and didn’t have enough time to play. It was COVID that kind of taught us or reminded us that our time is short. Like, you can't make this stuff for granted with health or with time or travel with freedoms, for that matter. We've got to liv to live today and not take that for granted. So what was it about the day-to-day management or the management of the management? What was it that you felt like this has taken up too much time and energy?

Ron:

Probably three or four years ago, we started on an upgrade path. As units were starting to come available. We were just doing a kind of a big upgrade - flooring, countertops, just kind of the whole thing. I think I've heard this story with a lot of other landlords that it just kind of snuck up on us all of a sudden, every project was taking more and more time. Instead of just doing what was required to do the turns. We are now spending a month or two months doing the upgrades and it just kind of snuck up on us. All of a sudden we're working all the time. At one point I just got a little bit overwhelmed even in my wife graciously jumped in and started to help me manage some of this. Then when she got involved, she kind of put her own twist on it. We started converting some of our annual monthly rentals into minimum 30-day executive rentals and furnished rentals and that kind of added a little bit to the management time, but it also void really changed the financials of the building quite a bit to the positive. But, it just kind of snuck up on us, to be honest. My experience with property managers was not positive. The net result of that is it between my wife and me, we ended up doing way too much of it ourselves. I'm sure it's a common story, nothing unique there. I wasn't smart enough to get out of our own way.

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