Real Estate Investment Case Study

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Out-of-State Buyer Investor

Acquired Wellington Square Apartments (27 Units, 2012) & Grant View Apartments (80 Units, 2018)
TiMeline
2012 - Current
Engagement Type
Acquisition-s, 1031 Exchange, Arrange Financing
Realty Yield Role
Buyer's Agent, 1031 Exchange Coordination, Mortgage Broker
Investor Cash/Capital
2012: ~$700,000 (1031 Funds), 2018: Part 1- $1,890,000 (1031 Funds) + Part 2- $883,835 (1031 Funds)
Client
Eric A

Investor Profile

Professional California investor was looking to reallocate some capital that was invested in the high price Northern California marketplace into the more attractive and affordable Portland, Oregon MSA. Investor objective was both continued capital (equity) growth plus improved cash-flow. Client also owns and operates a professional property management company and directly manages his own properties.

Engagement Objective

2012: Complete 1031 Exchange (place proceeds from the sale of a California owned property and acquire an apartment complex in the Gresham, Oregon sub-market of Portland, Oregon).

2018: Complete another 1031 Exchange from the sale of another California owned property.

Process

2012: Investor contacted Realty Yield directly inquiring about one of our Listings and asked about any other potential opportunities as well. Investor screened and evaluated several properties in the $1.5M-$2M price range.

2018: Our California-based client contacted Realty Yield again and communicated that he was in the process of selling another California property and wanted to complete another 1031 Exchange (target price range, $5M-$6M). Working with Realty Yield, several potential acquisitions were screened and analyzed.

The Opportunity (the property ultimately acquired)

2012: Investor chose to pursue Realty Yield's listing located in the Portland sub-market of Gresham, Oregon.

2018: Client chose to pursue an 80-unit apartment property that was also located in his preferred sub-market of Gresham, Oregon.

The Challenge

2012: This was a very straight-forward transaction. The size (price) of our Listing was a perfect fit for the capital available from the sale of his CA disposition.

2018: The targeted acquisition fit our client's preference for a property that offered some value-add upside, however the capital needed to complete this acquisition exceeded what was going to be available from the sale of his CA disposition (NOTE: the price was slightly above the targeted price range plus the current loan had to be assumed because of the very high prepayment penalty that still existed). Hence, additional capital of approximately $875,000 was going to be needed.

The Execution

2012: A Purchase & Sale Agreement was drafted by Realty Yield (NOTE: Investor/Buyer chose to work directly with Realty Yield versus seeking outside Broker representation). Realty Yield arranged the acquisition financing.

2018: Though, not considered at the beginning of this engagement, it was decided after considerable financial analysis that our client would sell (1031 Exchange) the 27-unit property he had acquired in 2012 to raise the additional capital needed to acquire the targeted 80-unit apartment complex that was his top choice.

The Result (Property Acquired)

2012: The 1031 Exchange was easily completed in the timeframe required.

2018: A quick and timely sale of his 27-unit Gresham, Oregon property was completed to raise the capital needed to combine with the funds from his CA property sale. The dual 1031 Exchange (sale of 2 properties) was coordinated successfully and we closed on the 80-unit value-add apartment complex shortly thereafter.

Realty Yield Comments

NOTE: As of December, 2020 our client still owns the 80-unit apartment complex, the estimated current value exceeds $10 million up from an original purchase price of $7,750,000 in 2018.

Grant View Apartments, Acquired (through 1031 Exchange), 2018 - $7,750,000. Realty Yield coordinated financing (loan assumption).
Grant View Apartments, Acquired (through 1031 Exchange), 2018 - $7,750,000. Realty Yield coordinated financing (loan assumption).
Wellington Square Apartments, Acquired (through 1031 Exchange), 2012 - $1,825,000. Realty Yield arranged acquisition financing.
Wellington Square Apartments, Acquired (through 1031 Exchange), 2012 - $1,825,000. Realty Yield arranged acquisition financing.