172 Palm Avenue - Artist rendering used in marketing materials for the building

Trade Out, Trade Up

A Case Study on the Challenging Sale of a Mismanaged Property and the Steps Taken to Pull Off a Complicated 1031 Exchange

The Challenge

The value of this multifamily building was substantially depressed due to mismanagement and condition of the property. The building was 50% vacant and the return for the new investor would be quite low. The property had been owned by the same family for many years and was close to the end of its useful life in depreciation for a multifamily building - per IRS, depreciation for multifamily buildings is 27.5 years. The client (the seller) hoped to improve cash flow and reduce management responsibilities

The Solution

With my vast experience in real estate, market knowledge, and connections, I was able to identify the highest probable buyer for the subject property. I formulated a marketing plan with the intent to obtain a buyer who understood that the property was an absolute “Add-Value” asset. Due to its extremely low rent, the buyer would need to com in and either purchase the subject property with “All Cash” or have a substantially large down payment (65%). I proactively marketed the property and was able to obtain multiple offers for the client (the seller). There were several viable suitors, and I diligently interviewed them and was able to conduct the following for the Seller:

  • Select a buyer who was performing a 1031 Tax Deferred Exchange
  • Sold the property in its physical “As-Is” condition
  • Have buyer absorb any/all costs associated with the San Francisco “Soft Story Ordinance” requirements.
“He acted as an expert adviser, was an excellent sounding board and I felt we had a trusting collaborator throughout the entire process. Brian’s overall strategy, positive energy, attention to detail, communication skills and clarity made this sale happen and I am most grateful for his fine work on our behalf”
- Chew Family Trust, Client (Seller of 172 Palm Avenue)

Results Achieved

Brian was able to accomplish the following for the client (the seller) through the sale of 172 Palm Avenue:

  • Sold the building with multiple offers and obtained over asking price
  • Eliminated landlord responsibility on building with 50% vacancy
  • Achieved sale in which the client (the seller) was able to increase income through the purchase of a commercial building that was less management intensive.

Fluent in Cantonese and a broker since 1996, Brian Leung has been a worldwide top producer as well as an innovative marketer and savvy negotiator with a strong emphasis and knowledge of San Francisco Rent Control regulations and tenants’ rights issues. Brian is very passionate about real estate business. He can tailor a marketing plan to attract the right buyer for your property.

Feel free to message me or visit my website, www.brian-leung.com