The Rat Race
At the top of the pyramid was her condo in PQ.
Underneath the condo was a townhouse and a fourplex.
Underneath the fourplex were two fourplexes and three houses.
Mary kept the townhouse, (that she lived in), sold the fourplex, and used the proceeds to purchase two more fourplexes and three homes out of state. Mary went from owning her personal unit to 5. She then went from 5 to 12. She did all this maintaining her own personal residence and acquiring 11 income units.
With the clock ticking on his 45-day time period to identify his up-leg property, we quickly searched through San Diego’s inventory of 2-4 units finding the perfect duplex. With just days to spare on that 45-day timeframe, we presented a solid cash offer with a quick close. Through expert negotiations and communication with the listing agent, his offer beat out 12 others!
Built in ‘88 this duplex has an identical configuration on both sides. The units are spacious 3 bed., 2 ba., 2-car garage townhomes with private yards and ample off street parking.
Our client achieved a higher cash-flow position, reset his depreciation schedule, and was able to defer over $100k in cap gains with his exchange. The property is due for rent raises, creating an even better GRM.
Plus, all of this was completed while the client was out of the country. Trusting in our experience and expertise we closed his transaction in just 14 days.
We determined he had the funds to purchase the Valley Center property without selling his current property. With appreciation still occurring in the market, he’d be better off renting out that original home for a few more years. With this strategy in play, he could gain more equity in the property, enjoy the extra cash-flow in the meantime, and take advantage of the homeowner’s tax exemption tax law in a few years once he decided to sell.
When it came time to list that home, he wasn’t sure where to start with the presale prep. Once his tenant moved out, we assisted with a multi-step process partnering with our trusted vendors for proven cost-effective updates that got our client the best ROI possible.
Our seller received an over asking price offer and a quick close date. He earned cash-flow on the property and utilize the homeowner exemption so his profit from the sale was tax-free.
I suggested he rent it out for the next 2-3 years then sell it after it gained a bit more equity in our appreciating market. Tom purchased a single-family home and moved his family into it.
He rented the Spring Valley townhome for around 2 years. Then, with the homeowner exemption, Tom and his wife sold the townhome for $425k with an increased revenue of about $60k over what they would have made if they decided to sell two years earlier. Keep in mind all of that profit was tax-free!
Once again, Tom told me he wanted to sell his current home. He said his family had grown and needed a bigger home. We talked and I put that idea on pause and suggested he do the same thing all over again. Last year, Tom sold the townhome walking away with $170k which he used as down payment into a newer home in El Cajon. He then rented out his prior home and plans on selling that in a couple of years to use that homeowner’s exemption all over again. Just last month Tom’s wife had their 4th son! He sent me a text message telling me ‘thank you for being a great friend and mentor’!
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