Beverly Hills
Multi-Family
Base Year Reduction - $360,000 in Assessment Saved for Life
A success story featuring a 6-unit apartment complex in Beverly Hills. Discover how our base year reduction approach resulted in an impressive $360,000 assessed value reduction from the sales price, guaranteeing enduring financial advantages for the owner.
History
Purchase Price/Assessed
$2,860,000
Sale Date
04/2019
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Reduced Base Year
$2,500,000
Savings Per Year
$4,700
2019
Purchase
Client purchase and completed a 1031 exchange in 2019, acquiring a six-unit apartment building located in Beverly Hills.
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Amidst the pursuit of a suitable replacement property for their 1031 exchange, our clients encountered a demanding scenario. The constraints of time were pressing, given the urgency of the exchange process, while simultaneously grappling with escalating interest rates during 2018 and 2019. Ultimately, they reached a decision to acquire the property located in Beverly Hills.
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Furthermore, the buyer's broker lacked experience and failed to represent them effectively during the transaction, as they had never dealt with an investment property before and agreed to a sale price near the listing price. Soon after purchasing, the buyer's did some research and concluded they felt they overpaid giving the sales that occured in the months after.
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We thoroughly reviewed the listing brochure and noticed inconsistencies, which led us to believe that the listing price was artificially inflated by about 20%.
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Our resolve was unwavering in presenting a case of 1031 duress, emphasizing the pressing need to expedite the deal's closure to evade property gains tax and a 25 basis point interest rate hike. Moreover, with strict rent control regulations in effect, the projected income stated in the listing brochure would never materialize.
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This research proved crucial in our valuation strategy. As experts in the income approach, we took into account Beverly Hills' strict rent control policy and we presented a case based on the in-place income.
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Our diligent research and expert representation helped overcome a challenging Rule 2 argument, which is notoriously difficult to refute.