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Business Owner Buys Real Estate

The Situation
A wealthy businessman sold his business and invested his proceeds directly in real estate. Over a period of time, he purchased several significant commercial real estate assets which he operates himself with the help of an administrative assistant and independent leasing and management professionals. No family members are involved with his real estate holdings.

Now in his seventies, with no children or other family member to take over his role once he retires or passes away, his portfolio is in jeopardy. He faces multiple property-related challenges including significant capital improvements, market volatility and the retirement of his long-standing advisory professionals.

The Problem
Although he continues to operate the properties in his semi-retirement, the assets are not receiving the attention or money necessary to maximize their financial performance.

The Solution
The following issues are considered as he works with PREF to craft a strategic plan tailored for his personal situation.

  • The current position of his real estate assets in the market.
  • The capital and manpower required to keep these assets competitive. Does he want to make these commitments?
  • Should he sell the properties or let them pass into his estate? What are the tax implications?
  • If he decides to continue ownership of the properties, what is the succession plan?
  • Should he replace these management-intensive assets with more passive investments using a 1031 tax deferred exchange?
  • The financial needs of his family.
  • How does the real estate fit into his overall estate plan?

The Result
PREF works closely with the family's CPA, financial advisor and trust and estate attorney to integrate its recommended strategic plan into the family's long term financial and estate needs. Once the strategy is finalized, PREF executes the plan which could include coordinating the sale of the real estate assets, transferring ownership within the family or taking over the asset management.

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