Case Studies

Client: Buyer
Property: Apartment building
Motivation: Diversify investment portfolio

An investor couple wanted to diversify their portfolio. They had above-average income and liked real estate. They wanted someone who was focused on their success. They selected a buyer broker and, together, considered the neighborhoods that were most likely to accomplish their goals.

They invested some afternoons and weekends in selecting the best possible candidate properties. They wrote offers on more than one building and learned which seller was the most motivated. They put a property into escrow which they believed to be the best deal on the market based on their criteria. That was more than five years ago; they have received positive cash flow every year since. Their equity has roughly tripled.

They have bought more property since then. It, also, has gone up in value.

Client: Buyer
Property: Apartment building
Motivation: Beginner investors looking to expand their investment portfolio

Two law enforcement investors knew the good and bad areas of town. They earned respectable money. They had seen how honest people build wealth. One of their mentors recommended that they work with us. They interviewed some of our worthy competitors, and then they hired an ACI buyer broker team who showed them all the properties they wanted to see. We found them a building in an improving area.

We wrote several offers and negotiated hard on their behalf. We were able to negotiate a small reduction in the price based on what was revealed by the physical inspection and the termite report. The two investors were confident that their chosen property had potential for rental increases and would provide a good return on their money. Before the close of escrow we helped our investors work out a few details with their chosen lender; subsequently, they closed on the deal and became apartment owners. Since their purchase, they have worked hard and smart to improve their building and nudge the neighborhood forward even faster. They expect to reinvest again in a few more months.

Client: Seller
Property: Apartment building
Motivation: Retirement

Mary was almost desperate. Her husband had died and she was not comfortable running the income property without him. She hired an agent from a bigger firm, but he was not able to produce offers close to his fantasy list price. She called us and asked us to sell the building when the other agent’s listing expired.

We did a complete valuation on her property and told her the truth about what the market would pay for it. Within the first six weeks Mary had three offers. She was able to sell for all cash at a price that she had given up on. The buyers approved the physical inspection and proceeded with the purchase without any delays. Mary was happy to sell the building “as-is” without any major repairs. She moved forward with her life without the burden of managing this building.

Client: Buyer
Property: Apartment building
Motivation: Trade up, increase income

Josh and Ruth had some rental homes. The residences were OK, but the cash flow was disappointing. We showed them how to improve their cash flow and gain more depreciation.

They learned they could sell the houses near replacement cost and buy apartments at a significant discount. Josh and Ruth realized that $500,000 in apartments can generate up to 50 percent more rent than $500,000 in rental houses. Moving equity into apartments met their goal to increase income. We were able to structure the transaction in a way that helped them to avoid paying gains on the profit from the sale of the rental homes. We guided them through the process of focusing on the final goal: higher income and more security.

Josh and Ruth moved their equity into a foreclosed apartment building and hired a part-time maintenance person to maintain the apartments. They have a more secure financial future because their income is more diversified by collecting income from more tenants. They also have more income, of which a large portion is sheltered by the extra depreciation.

This story is a common one. There are hundreds of families who can benefit from this strategy. Contact us for more information or read the full article.

Client: Seller and Buyer
Property: Apartment building
Motivation: Exchange up to a better neighborhood

Mike and Bonnie had about 30 units in a working class area. Their cash flow was good. A smart broker told them that they were working too hard and that their equity was lazy, almost retired.

Mike and Bonnie hired ACI to sell their units for a fair price. The strong market brought them a few offers and they accepted one. As soon as they had their building in escrow and the deal looked strong, they started looking for their replacement property. They knew the tax law allowed them limited time to identify their next purchase if they wanted to defer the income on their gain. Within a matter of weeks, they had considered more than a dozen larger and newer properties in their preferred areas. We wrote several offers on properties that could meet their needs. When the dust settled, Mike and Bonnie went under contract to buy about 45 units in a far better zip code.

Within six months of the close of escrow on their new purchase, they had raised the rents 15%; currently, they expect to increase the rents about five percent more before the end of the year. They now have better cash flow, are in a better area, and have more wealth. In fact, the system has worked so well, they are currently disposing of two smaller properties so that they can trade up into more units.

Client: Buyer
Property: Triple net building
Motivation: Retiring landlady

Mrs. Smythe had done quite well with her income property. Yet she had been collecting Social Security for more than a decade and wanted to reduce her management issues. A wise advisor sent her to us.

We were able to help her move her equity, with no immediate tax consequence. We considered looking for apartments in better zip codes, but after further discussion, that was not the right solution. We invited her and her adult son to talk more deeply about the family goals. It became apparent that safety was most important, and good income was second. Dramatically higher income was not worth the additional work or risk.

We discussed several options. She considered paying the taxes and putting the money into corporate bonds. The best alternative was to move her equity into well-secured commercial rental properties, which had no management responsibilities. We helped them locate and evaluate many different low-risk commercial income properties. They became familiar with NNN investments. They had the means of satisfying the higher down payment which these type of investments usually require. Within a few weeks, they selected a building leased by a national firm. The tenant paid all the taxes, insurance, repairs and maintenance. Mrs. Smythe literally only signs and deposit the rent check — the tenant does all the rest.

In this particular case, we were approached before we closed escrow, asking if Mrs. Smythe would sell the property for $100,000 more than she is paying for it. She declined. Both she and her son have been well pleased with the income and the peace of mind that they receive.

Please contact us to learn more about triple net (NNN) investments.