Total Realty Group recently represented our client in a successful 1031 Tax Deferred Exchange. During the midst of the Pandemic our client reached out to us regarding a non-paying tenant in a single-family home at 3715 Westside Ave in Leimert Park. We assisted our client in arranging “Housing is Key” application from the state and received the rent that was due. After the state program ended, the tenant continued not to pay rent and caused a few headaches for our client. They decided to sell the property and list the property for sale with Total Realty Group. Our team generated several offers but with the tenant in place we could not close the deal. We were then tasked by the Seller to negotiate a Voluntary Vacancy Agreement/Cash for Keys Agreement. After a successful negotiation the tenant vacated the property and TRG successfully sold the property to a qualified Byer represented by an outside agent.
To avoid any capital gains tax payments our client needed to perform a 1031 Exchange. Along with the amount of proceeds our client also identified several buying criteria requirements such as location, number of units, and income. Before the close of the close of the down-leg Total Realty Group set up searches for new listings and called owners looking for off-market deals. 1458 W 36th St. came to market and our client was initially interested in the property, unfortunately at that time we had not closed yet on our down leg and the Seller of 1458 W 36th St. went with another viable offer. We continued to track this property while searching for an up-leg. The property fell out of Escrow and our team quickly pivoted to put in a new offer right away. We secured property and placed it in Escrow within a couple days of the property coming back to market.
We represented our client in all aspects of the transaction from coordinating the physical inspections, organizing reports and disclosures, financial analysis, and arranging all other aspects to close the property. One unique aspect of the transaction was navigating a difficult loan market. Total Realty Group represented our client on the origination of a purchase money loan to close the property. As we searched for a lender for a 50% LTV loan, we found that many banks and financial institutions are weary on lending on commercial properties. After not being able to find financing through a conventional lender we pivoted to private money and secured a deal to close on the up-leg property. Another surprise that came up during Escrow was obtaining Insurance. We found that many insurance providers are rolling back coverages in California and that insurance premiums for commercial properties have risen significantly.
At the end of the day, we helped our client further secure their financial future for themselves and their family. We sold a non-performing SFR asset that needed capital upgrades to secure market rent and exchanged our client into a cash-flowing 5-unit apartment building with upside future rental potential near the USC area. Our client’s plan going forward in the future will be to add-value through property renovations and refinance the property after interest rates level back out.