Now What Do I Do?
 

(The following is a real example; however, the names have been changed.)

Here's my theory. For a lot of apartment owners, particularly owners up in years, the building sort of acts as a mistress for the male owner. It is a place where he can go and get away from the noise of the family and command attention and respect. 

So, often as I sit down with my clients, I see the pained look on the wife’s face as she usually is the one that says,” Honey, let’s just sell it and enjoy the rest of our lives!”

She may want to go on a cruise or spend extended time with the grandkids without being tied to the building. Part of him agrees with her. But, he is focused on two issues. If he sold the property(s), what would he do with his time and how will they replace that income? Because of the fantastic run-up in prices over the recent years, I can tell you the pressure to sell on the hold-out spouse have increased dramatically.

I thought I would pick up the phone and talk to a recent client who hired me to sell their property. I thought I would get his take on what they did and how they are doing now.

I called Mic Blackwell. He and his wife, Marge, sold their 60 units about 3 years ago. They were getting too old to take care of the units. “We were doing the management of the property and you know the usual; bad checks, dealing with the tenants, etc.”

Marge and Mic hired me and we found a buyer for their building. They did a 1031 in a TIC (tenants in common) replacement property and ended up owning 10% of a commercial property in Las Vegas. Mic said, “We received 7-8% on our money during the time it was being held and, after it sold, we received a huge windfall on the building which was MORE than the initial investment. I could not be more pleased.”

I remember going over to the property when both Marge and Mic were running it. I didn’t see the hassles, but I saw a husband and wife working together as partners treating the tenants as family. They knew everything that went on in those 60 units and kept a tight rein on the tenants. They scolded the kids when they misbehaved and chit-chatted with the parents as they were waiting for the kids to come home from school. To their credit, they had taken a gang-ridden dump and little by little, improved the tenants and quality of those buildings so it was a safe and comfortable place for all of their tenants to live.

I asked Mic what life is like now. His response was, "Jim, I have no pressure now. Before, I had the pressure of collecting the rents and making the mortgage payment but now I manage my mailbox. I walk to the mailbox and collect my check. Now it seems like we are being rewarded for all the hard work that Marge and I did for so many years.”

Mic is now diversifying his real estate investments by doing 1031 exchanges into Oil and Gas lease holdings and looking at higher potential returns. “I am really enjoying this phase of my life,” he said. I asked him why he didn’t do it earlier and he said he should have. “Jim, you were the only one who was able to put the numbers together and it wasn’t unil we sat down with you that Marge an I decided to just do it.”

Mic and Marge are typical of many sellers. While they were in the pre-sale phase they thought that their world would end and their time with the “mistress” would also end. In reality, both are busier now than when they were involved in the day-to-day minutia of owning Southern California apartment buildings. They wish they had made the decision sooner because they are both happier with what is on the other side.