All Forum Posts by: Ash Patel

I own several commercial and mixed use properties in and around Cincinnati.  I am mostly a value add buyer but sell the finished product at 10 caps.  Like everywhere, deals are getting harder to find. 

I would think a family partnership would need the longer document.  In my last partnership, my partner did not believe in 50/50.  He insisted that there be a clear decision maker when there is an impasse and made me a 51% partner.

Also all of my partnership agreements have a buyout clause.  If one partner wants to buy out the other, they present a written offer.  The receiving partner then has the option to buy out the initiator at that same price.  This alleviates the buyout price arguments. 

Here is a video they sent me to "educate myself" on this whole deal.  170 exchange

At the 6:00 min mark they explain how they are able to appraise properties so high.  This seems so simple and so easy to replicate that everyone should be doing it.  I guess that kind of answers it!  As @Bill Exeter and @J Scott Hamilton pointed out, there are just too many details that are untested and can come back to bite you well down the road.

Thank you all!!!!

@J Scott Hamilton  I had my CPA look into this and a pretty effective pitch.  I first had an "analyst" call me on a listing that was previously on loopnet but I took it down.  The analyst asked several questions and told me that if his company liked what they saw, they would pursue an offer.  

A week later I get an email stating they want to make me an offer for just under my asking price of $650k.  They send me a long email stating they are the middle man for non-profit that is purchasing investment property.  They tell me the net proceeds from my building will be $617k  The non-profit would put down roughly $70k in cash but they would appraise the property at roughly $1.1m.   The difference between what they put down and the appraised value would be my charitable donation.  

All of this sounded legit when you read through their documentation.  They would give you a form 8283 that states the appraised value of the property.  The kicker in all of this is that after you sell your property and begin to write off the charitable donation, what happens if the IRS contests your appraised value.  If that value goes down after an audit, you are out several hundred thousand dollars.  

Not worth it in my opinion.  

I received an offer on a commercial property today.  The buyer is using a company called welfont group to do a 170 exchange.   I searched through BP and didn't find anything about 170s. 

I would appreciate any insight on this.   Specifically:

Can I get the funds at closing or do I have to wait?

Can I 1031 the proceeds just like any other?

What are my tax implications compared to a normal cap gains sale?

If no one chimes in, I will run it by my cpa and report back.  

We are pleased to bring you an offer for the property located at 1014 State Route 125 with net proceeds estimated at $615,372.

I have attached the offer with the LOI included. Because our buyer is a nonprofit entity, and this property is ideal for a 170 Exchange*, our clients offer is very strong (valued above list price). This offer provides cash at closing with the balance of the proceeds guaranteed by State and Federal Governments.

For a more detailed explanation of a 170 Exchange please review this video: (Understanding a Sect. 170 Exchange) and then pass it along to your client with the offer. The video will be invaluable to them in understanding the 170 Exchange and will be easy for them to share with their CPA, etc., if so desired.

I look forward to reviewing the offer with you in detail and answering any questions you or your client may have.

Please call me at your earliest convenience or email me with a good time for me to call you.

*Our clients have closed on over $150 million worth of transactions using a Sect. 170 Exchange. More than 60 properties in the last two years alone.

@Shane H. We have a CPA, Clinical Massage Therepist, recording studio, music academy, background check company, 2 photographers, tutoring, and the last tenant hopefully will be an IT group.  

The residential was a deal breaker because the city now requires sprinklers for rentals.  We are selling the building and if an owner occupant wanted to live there, they would not need sprinklers.  

Good luck with your project and again, keep trying different marketing tactics.  In our case, the $10 for rent signs were most effective.

Ash

We did it!!!!  In two months we filled the entire building.  It was a team effort and required Hustle every single day.  Everyone said the big problem with that building was location.  The realtors could not get any traction on the building for five years.  This Sat, we will sign our last tenantant fill the space.  

We filled the space with relentless marketing.  Craigslist got some traction.  The giant banners that historically worked so well on other buildings failed here.  Word of mouth failed.  We lit the building up at night with a ridiculous amount of lighting, that failed.  What worked was simple home depot for rent signs.  People were so used to driving by this vacant building for 5 years, they never noticed the 10 ft banner on the building that read "space available".  Simple for rent signs with a bunch of small american flags by the sidewalk got it done.  Lesson learned here, adapt to each property!  

I have a commercial property for sale that will likely net $70k in short term profits.  I will do my best to close on the one year + one day mark but that is four months away.  I would love any advice on reducing my tax burden.  I know how vehicles write-offs work with depreciation and leases write-offs.  What I don't know is can I purchase a vehicle for this one property between now and the sale date, then write off the entire amount when the building is sold?  I own other properties if that makes a difference.

I too have gotten screwed by Realtors, car sales people, lawyers, landscapers, mtg companies, hell even my sixth grade principal wrongfully suspended me.  But each time, I learned and was more prepared for subsequent occasions.  By now, I have great realtors, ins co, banks etc.  If you have gotten screwed in "hundreds of interactions", you may want to take @Brandon Stevens advice and find a realtor at your church. 

I am not a broker just an individual investor.  I pay the almost $3000/year fee for Loopnet.  I check it around 5-10x per day.  If you get the jump on one deal that closes, it pays for itself.