Real Estate Investment Case Study

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Consulting & Advisory - Investment Property/Portfolio Analysis (IPA) + 1031 Exchange + Arranged Financing

Sold Several Smaller Multiplexes (through 1031 Exchange) & Acquired 2 Larger Apartment Complexes (30 Units & 16 units)
2015 - Current
Engagement Type
Consulting & Advisory - IPA, 1031 Exchange, Arrange Financing
Realty Yield Role
Consultant, Listing Agent, 1031 Exchange Coordination, Buyer's Agent, Mortgage Broker
Investor Cash/Capital
Invested Capital (Equity) - 1031 Funds (~$1.6M)
George & Peter

Investor Profile

As of 2016: Clients' current real estate investment portfolio included several smaller residential rentals. Properties have been owned many years and most were paid off (overall LTV of portfolio, under 5%). Clients' were interested in exploring the option of selling their smaller properties and pooling/combining funds to acquire one or two larger properties. Objectives were improved cash-flow, accelerating capital (equity) growth and taking a more passive role in the day-to-day management of owned properties.

Engagement Objective

First, complete an analysis (IPA) of their current real estate holdings to quantify current realized investment returns. Second, explore options that would improve returns. Third, once it was determined a larger property or properties would improve their position, execute a 1031 exchange.


Part 1: Complete Investment Property Analysis (IPA) of current real estate holdings. Review options and strategies to improve investment returns.

Part 2: Once decided, that executing a 1031 exchange was the chosen strategy, properties to be sold were prepared for sale and all were simultaneously put on the market.

Part 3: Begin a search for a suitable 1031 replacement property-s in the $3.5M-$5.5M value range. Many properties were financially analyzed and physically screened.

The Chosen Opportunity (the property-s ultimately acquired)

Part 1: The first property identified was a 30-unit multi-family property located in the core of downtown Medford, Oregon. However, the price/value was only a little over $2M, so a second property was ideally needed to optimize the allocation/investment of capital (equity) available. The search continued for a second property, however, nothing compelling surfaced. Our client decided to proceed in two phases and just purchase the one property at that time.  

Part 2: In the Spring of 2016, our client decided to do a cash-out refinance of their Medford, Oregon property and pursue a second acquisition. The second property targeted was a 16-unit apartment complex located in downtown Lake Oswego, Oregon (affluent suburb of Portland).

The Challenges

The primary challenge was identifying one or two suitable 1031 replacement properties that had a combined value in the target range ($3.5M-$5.5M). At the time, it was very much a Seller's market so there was much competition between Buyers for quality properties in that price range.

The Execution

The timing and closing of the disposition (relinquished) properties was completed about 30 days before the closing on their 1031 acquisition (30-unit multi-family). All 1031 exchange proceeds from the sale of their smaller properties was invested in the Medford, Oregon property. All 1031 exchange rules were complied with and no capital gains tax was triggered.

The Result (Property-s Acquired)

The 1031 exchange acquisition was closed in late 2015 (30-unit, Medford, OR property - Price, $2,095,000) . The second acquisition was closed in the Fall of 2016 (16-unit, Lake Oswego, OR property - Price, $3,055,000). Realty Yield arranged the financing on both acquisitions.

The combined total value of these two properties was a little over $5M (the target range suggested from the IPA). The projected year-1 improvement in investment returns (previously owned smaller properties versus new properties) was over $50K in improved pre-tax flow with projected overall leveraged returns projected in the 18%-20% range versus 7%-8% on what was being cumulatively realized on their smaller properties.

Realty Yield Comments

NOTE 1: 1031 exchange transactions can be a bit complex when there are multiple disposition properties to sell. The timing and coordination requires an experienced guide and Broker. At Realty Yield we have been doing this for more than 20 years and have coordinated/completed more than one-hundred 1031 exchanges without a single failed exchange.

NOTE 2: As of December, 2020 our clients' still own both these properties. Estimated values: Medford, OR 30-unit, $3.25M+, Lake Oswego, OR 16-unit, $4M+.

Investment Property Analysis (IPA) Report Cover
Investment Property Analysis (IPA) Report Cover
Investment Property Analysis (IPA) Wealth Building Summary Page
Investment Property Analysis (IPA) Wealth Building Summary Page