Growing up, my brother, cousins, nephew and I would play Monopoly all night. We would stay up until the wee hours of the morning playing, building our pretend empires, arguing over who was cheating (Dan . . . ).
This past week, I played Monopoly for real. A year in the making, we closed on the sale of a $21,000,000 hotel. One of the more intense projects I’ve been involved with. In the days (really months) leading up to it there were countless things that had to be accounted for, prepared and crossed off huge checklists which seemingly got longer as we got closer to the day we were working towards. Even though the deal was done and we were close to the end there were last-minute side deals that had to be thought out, negotiated and documented as parties jockeyed for position. I found myself up late the night before sitting in my dining room answering emails, proofreading documents and much like the Monopoly marathons I had as a kid, making sure no one was cheating. The morning of the closing was bright, sunny and not as hot as it could have been for an August day on Wall Street. Surely a good sign as we arrived from that far off land called Brooklyn.We came armed with accordion files, computers and cell phone chargers, The room was filled with paper. Lots of paper. Lawyers on phone arguing with other lawyers. Others leaning over laptop spreadsheets mulling over numbers; Title closers running back and forth from a huge copy machine down the hall from this glass cubicle which seemed to hold a hundred people. Everyone in my office worked incredibly hard. It started at 10:00 in the morning and broke up at 5:30 p.m. Business finally concluded 1:00 the next day.
This (The Closing by Jimmy Dyer) is what it looked like:
There is no rest for the weary as we are on to multiple replacement deals spanning from Manhattan to the Hamptons.
As to complexity and magnitude there was a big sense of accomplishment, satisfaction and relief that we got it done. Still not as fun as Monopoly as a kid . . . .
It depends on your comfort level. The reason why you get an inspector when purchasing a coop or a condo is to try to determine, not only the current physical condition of the unit but also the general condition of the building’s structure, mechanical systems and common area. Problems with any of which, could potentially lead to future increases in monthly common charges/maintenance or assessments. These issues may not come up when reviewing the minutes of the board (if a cooperative) and may not be in the offering plan if not the initial offering from the building’s sponsor. Even then, you never know. If you decide to forego an inspection, assume a worst case scenario when contemplating to buy a unit. Even then, you can never anticipate everything.
I admit it. I’m a sucker for watching those shows where people buy properties in different places around the world. It can be in any country. Alaska, Hawaii or the Caribbean. It doesn’t matter. I’m not picky. I have to watch it. It’s not only limited to television nor does it have to be very exotic or far away. It can be another town or another block. If I am in an area that I am not familiar with, I often will take a side trip or purposely get lost, just to see houses. One of my closest friends lives in a very affluent area located on the North Shore of Long Island. The road to go to his house is very winding and passes a number of huge beautiful Victorian homes and large estates. I find myself (much to my wife Laura’s angst) drifting to one side of the road or the other to get a better look. She does’t let me drive there anymore. If there is a private road leading to some mysterious grand estate, I have to become “lost” trying to find a through street. Especially if there is a sign that says “PRIVATE”. How dare they keep me from seeing what is in there. I know, I have a problem.
It is not that I’m unhappy what I have or where I live. I am quite happy where I live and with the house I live in. Realistically, I have absolutely no use for a house with 8 bedrooms and 5 bathrooms. Nor does anyone in my family want to clean them. Whether or not I want it, my wife is a grounding force. On more than one occasion I have heard to the effect, “no Phil we do not need a house with a boat slip”. I don’t own a boat. In the back of my head I am thinking “but I might get a boat”. As I sit here writing, I am trying to figure out why I do this. I don’t get the sense I am jealous or want what other people have. I am quite happy for friends and family who may have a larger house or a more expensive car.
I think it’s what houses/homes/real estate represents. When I was younger, (not that long ago) I guess owning property represented financial security, wealth, continuity and permanency. Growing up, our family moved a lot. As a child, I daydreamed about owning office buildings and maybe even my very own island some day. . . My wife still kids me about the island. As I got older, the need and desire developed a sense of urgency as I needed a home of my own to raise a family. I got the house but that need for continuity continued as I often thought about buying a building to have an office to run a law practice. While traveling, my family often heard the phrase “that building would be a great place for a law office”. Over the years, law school loans, mortgages and college tuition tempered my motivation to get that building. Now that I am planning for my golden years (very far off in the future), my thoughts have once again turned to real estate as a way in which to provide investments as a means to generate income in which to retire. There is a good chance that social security may not be a viable option when the need for it comes. I don’t see me receiving the same kinds of returns from the stock market or lotto as I could get from real estate.
I guess I practice real estate law because of what real estate means to me. That paired with the sense of accomplishment and satisfaction I feel when I put together (and close, most of the time) a complicated transaction or the purchase of a person’s first home. There is a feeling of pride that I have provided my clients (with what I hope is) a valuable service in achieving their goals and/or dreams. Very similar to the ones I’ve had throughout my life.
Investors cannot defer the gain resulting from the sale of a property that was purchased with the intent of rehabbing the property and reselling it. Courts look at a number of factors to determine the purpose of buying the property in order to qualify for deferral of gain under Section 1031 of the IRC. Some of these factors are the use of the property at the time of sale, the business of the property owner, improvements made to the property and how many properties the Seller has sold in the past.
Attached is an article by Marie Flavin, Esq. who is one of the most experienced attorneys when it comes to like-kind-exchanges.