My Background Continued...5

I am pleased to announce that on December 3, 2020 we closed on the Warehouse that I am writing about.

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I am currently also representing my Mother in a large RE deal. My extended family is selling some RE and hopefully we can complete all of that by January 2021. I will not write about it until much later.

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Back to the KC- Vancouver Warehouse deal.

Step 1.

We had to re file the 2018 tax return for the KC property. After meeting with the US accountant and explaining the situation, he said that we would have to re-file. It was around September 2019 and he essentially said that if we could re-file our 2018 Tax return by December 2019 then we could register it as a closing and last filing for the KC partnership. If we delayed to January 2020 then we would also have to file for 2019.

The GP was in arrears with his accountant and so I had to pay the accountant to get the work done.

We did re-file and got each of the investors their revised K1's etc and we each had to re-file our US individual and partnership taxes as well.

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Step 2, In the following discussions with the GP to settle our account, we proposed to purchase this warehouse at a discount. The initial proposal was asking price minus $640,000 (there were 4 investors so each investor would be getting back $160,000CDN in equity. The investors did not agree with the asking price of $2.28M CDN as the valuation price so we countered with... lets get a third party commercial appraisal, use that number and agree to a $560,000 discount. ($140,000 CDN return of our investment in KC. ) Each of the Vancouver investors had put up $150,000 USD to buy the KC property. As of today the exchange rate is 1.00 CDN = 0.77 USD so that is just over $200,000 CDN that we invested. I had to think hard about the likelihood of this proposal being accepted and then the likelihood of it actually being completed.

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Step 3

The terms were agreeable to everyone so one of the partners (a retired lawyer) drew up a simple agreement of this proposal and had the GP sign.

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Step 4,

The investors interviewed 4 different appraisers before settling on one and commissioned them to do the work. The appraisal was done in January 2020 and after doing a walkthrough with the appraiser and getting the report, Covid hits full force. The commercial appraisal values the warehouse at 2.06M.