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Case Study: Net-Lease Investment Closed in Days to Meet 1031 Timeline

oreily

O’Reilly Auto Parts, Yazoo City, MS

August 2019

$326,200

6.25% cap rate

Net-Lease Deal Closed in Days to Defer Capital Gains Taxes

Who knew you could get a lucrative net-lease investment for under $500,000, make around $23,000 NOI annually, and close the deal in a week? At Westwood Net Lease Advisors, anything’s possible! Buyers’ Advisor, Mike Kocur, made it happen for a St. Louis investor who needed to act fast to defer paying thousands of dollars in capital gains taxes using a 1031 exchange.

hand catching money drawn on chalkboard

What Do You Do with Money Left Over from Another 1031 Exchange?

When Kocur got a call from this buyer, he learned that money left over from one 1031 exchange needed to be invested in a second property within a week (to meet the IRS’s strict 1031 timetable) or he’d have to pay taxes on it. Kocur went to work to find the perfect property for the buyer’s needs, perform due diligence, assess tenant financials, present the offer, and close the deal in a matter of days. He utilized all resources and industry contacts to find an existing, financially stable O’Reilly Auto Parts store in Yazoo City, Mississippi, with a great cap rate and favorable lease terms.

A Stable, Income-Producing Investment

Though Westwood likes to recommend NNN lease properties to their clients, there are some exceptions, like double-net leases (NN) that require little involvement from the landlord, like O’Reilly’s. In this case, all the components for a stable, income-producing, low-risk investment were present: great tenant financials and strong sales, a prime location, and a hands-off investment unless the roof, structure, or parking lot need attending. The remainder of the ten-year lease is also backed by a strong corporate guarantee. Kocur felt confident that this NN lease investment was a strong one and his client agreed.

tips for negotiating a commercial real estate deal

Deal Closed with 15 Seconds on the Clock

If you’re at all familiar with real estate transactions, you know there are many steps involved from the property search to closing, but few people realize how much goes into acquiring an investment property. Westwood Net Lease Advisors’ have decades of experience in the net-lease market and offer the following services to help their clients acquire the very best investments for their financial and lifestyle goals, at no cost to the buyer:

  • Objective advice, education, knowledge, and advocacy.
  • Evaluations and risk tolerance assessments.
  • Find the best properties for financial and lifestyle goals from a national inventory of properties; including many off-market choices.
  • Explore the best deals, cap rates, and different classes of investment opportunities.
  • Work to maximize the many financial and tax considerations, like 1031 exchanges and cost segregation depreciation.
  • Evaluate tenant financials and credit ratings.
  • Draft and present a Letter of Intent (LOI).
  • Help negotiate the best price and lease terms.
  • Help navigate the lengthy documentation, which differs from state-to-state and city-to-city.
  • Connect buyers to reputable financial resources, closing agents, title companies, legal counsel.

Given this list, one can see how incredible it was for Kocur to locate and close the deal for his investor in just one week. In fact, the IRS’s deadline was fast approaching, and with 15 seconds left on the clock, the deal was done. The client deferred paying capital gains taxes on $326,200. Instead, that money went back into the economy and continues to work for him, building long-term wealth and providing monthly income.

NNN Investment growth

To Wrap it Up –Utilize the 1031 Exchange & Earn Monthly Income

Nothing outweighs the benefits of a specialized Westwood Net Lease Advisor as a partner when it comes to utilizing the 1031 exchange tax code and investing to earn reliable, long-term monthly income. If you’d like to learn more about net-lease investing and the tax benefits available to you, contact Mike Kocur today, 314-226-2654, for a free no-obligation consultation.

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Tags: nnn investment properties