Ross, CA2018-05-16T04:56:54+00:00

Project Description

1031 Exchange | Case Study | Ross, CA

Investor Profile: The Caregiver

The client is in his mid 70’s and owned a single-family home in Ross, CA. Over the past few years, he has developed Alzheimer’s and has been in an assisted living home for the past 2 years. His daughter contacted us to see if it made sense to sell her fathers home or continue to rent it out for $7,000 per month. The property was debt free and represented around 80% of her fathers net worth.

We reviewed 3 different markets. His daughter was comfortable reinvesting in Oregon where the returns were higher than the Bay Area, and there was a growing economy. We reinvested approximately 2.45 Million into a 10 unit building in an A+ area of Portland.

The Problem

The client’s daughter needed more income to cover her fathers assisted living cost each year. They were running a deficit of around 40,000 annually and needed to build up their savings in case of an emergency.

If they sold the rental home without reinvesting the proceeds, she would have a large tax bill of around $350,000 in capital gains. Selling outright would also mean losing the monthly income they needed.

The Solution

A 1031 Exchange is a great solution to this problem. It allowed our client to defer any capital gains taxes otherwise due on the sale while trading up to a better performing property that will help achieve their long-term goals.

Investors Goals

  • Increase Income

  • Lower Expenses

  • Diversify Portfolio

  • Build Wealth

  • Defer Taxes

Triggering Event

  • Investment Planning

  • Father Getting Older

  • Equity In-Balance

  • Property Underperforming

  • Cash Need

Transaction | Details

Property Sold | Exchanged

Ross, CA

This is the original family home.

  • Sales Price: $2,600,000
  • Number of Units: 1
  • Property Type: SFR
  • CAP Rate: N/A
  • Yearly Income: $84,000

Replacement Property 1

Portland, OR

Multifamily residential (also known as a multidwelling unit or MDU) is a classification of housing where multiple separate housing units for residential inhabitants are contained within one building or several buildings within one complex.

  • Purchase Price: $2,400,000
  • Number of Units: 10
  • Property Type: Multifamily
  • Yearly Income: $135,000
  • CAP Rate: N/A

1031 Exchange | Results

+ 1

Properties

$135,000

Annual Income

$250,000

Taxes Deferred

3 Years

Break Even Point

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