Taking Equities From Over Priced Markets To Growth Markets — What A Concept

Posted @ 12:31 am - Filed under 1031 Exchanges, Purposeful Planning, Selling Income Property, San Diego Property Owners, Real Estate Brokerage, Real Estate Markets, IRS, RE Investment Practice, Buyer's Market

It’s so easy to talk about moving real estate equities from here to there like your rearranging furniture in the living room. In practice it takes real experience, knowledge, and expertise to pull off. Though I’ve ‘captained’ hundreds of tax deferred exchanges (stopped counting), each one has to be executed to near perfection ‘cuz that’s the only thing the IRS understands. It’s not rocket science, which is what so many real estate folk want you to believe. Still, do it with a cocky attitude and you’ll find out in real time what a bad day’s all about.

For the record, Brown & Brown has never, not once, failed to successfully finish a 1031 exchange. How do you know that’s true? ‘Cuz I’m alive, dude! What would you do if an agent messed up your exchange, costing you six figures in capital gains taxes? Exactly.

Let’s talk nuts and bolts first. How do you sell a property in a place like San Diego these days? That’s no walk in the park, as you may have guessed. It’s not like yer able to head over to the parts store like Grandpa used to, when the family jalopy needed work.

Gonna be brief tonight.

When selling property in a buyer’s market, which is also known for it’s relatively high prices, you must be serious. I’ll only talk tonight about the first step, which is simple as pie.

Your property must be as close to relative perfection as common sense allows. Just this past Saturday morning we met with a local client at one of his income properties. It’s a house, located in a desired part of town, but affordable. It’ll sell in the range of $450-500,000. We won’t know ’till we do our research. It’s too soon for that, ‘cuz until it’s ready to sell, i.e., in perfect condition, an appraisal is not worth the effort.

Back to Saturday morning.

The Boss is in charge of transforming rental houses (and larger income properties) into warm, attractive places to live. Back in another life, large developers flew her around the midwest/northeast to advise them on their designs, even though they already had architects on contract. That’s what she does for our clients in San Diego. Saturday, she spent over an hour spittin’ out orders. Even though I’ve seen her do this countless times, it always blows me away. When the contractors are done carrying out her vision for this property, anyone driving up to it will stop and go inside.

The idea is to create the best property in the area, for the most feasibly attractive price. That’s a silly way to say we’re always trying to create a Mercedes in mint condition that sells for a Lexus price. This strategy isn’t selling properties for less than they’re worth. Rather, we offer buyers what they’ll judge as a great deal.

This almost always translates into a market time far shorter than the average, median, or whatever else ya wanna use. The only other pro I know in San Diego using this approach is moving properties in the same market time we experienced in the boom years of 2001-2005. Days, not weeks.

Is that it? That’s all it takes? Well no, not even close. There are literally over 20 more things we do, and yeah, there’s a list. One of those steps is a custom made sign designed specifically for each property we sell. It can only be used for that property — ever. Hundreds of dollars each. They sometimes literally stop traffic — a good thing.

It’s all about results. It’s about skinnin’ cats. Nobody cares about how you skinned the cat — until they know for sure the cat was actually skinned. Repeat — it’s all about results. The how can be interesting, but only if it’s about how you succeeded.

Nest up — What happens once you do the work and your property is now the prettiest gal on the block?

Remember the agenda here: Gettin’ Outa Dodge. Exchanging out of over priced, stagnant markets into vibrant, dynamic growth regions. Can’t begin an exchange without first selling what’s stuck in a stagnant market. Never lose sight of the fact your Purposeful Plan will be the map used for this journey.

If you’re ready to explore your portfolio’s potential for exchange, contact me as soon as possible. (A portfolio runs the gamut. It can be one small rental cottage, or 50 properties spread over God’s green earth.) We’ll talk about your specific circumstances, and then set a time to have some coffee together. Have a good one.

This entry was posted on Thursday, September 4th, 2008 at 12:31 am and is filed under 1031 Exchanges, Purposeful Planning, Selling Income Property, San Diego Property Owners, Real Estate Brokerage, Real Estate Markets, IRS, RE Investment Practice, Buyer's Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.