Case Study: Eliminating Headaches with a 1031 Exchange in Cutler Bay, FL

How RPS Capital Management helped a client transition from a declining property in Queens to a passive investment in Miami with a 15-year net lease.

CHALLENGE

The client owned a declining property in Queens and was now embroiled in an eviction action with a tenant that was operating illegally. The client wanted to reposition his capital into a more passive investment, although not in a secondary market. His primary aim was to ensure that the value of a new property was not weighted heavily toward tenant creditworthiness.

ACTION

The RPS team was called in to develop a strategy that focused on passive investments in primary markets. Our research revealed that the client could achieve his goal of acquiring a passive investment with strong real estate fundamentals by balancing lease term against credit. Ultimately, we guided the client though the sale of his existing property and reinvestment of his capital into a net leased property in Miami.

RESULT

The newly acquired asset is a Habit Burger in the Cutler Bay section of Miami. This single tenant, net leased asset is in one of the USA’s fastest growing markets. The owner now enjoys a passive investment with a 15-year, absolute triple net lease and a corporate guarantee. The below market rate currently being paid by Habit Burger ensures that the client could replace the rent easily if required.

TESTIMONIAL

“Though I have been in the real estate business for many years, the search for exchange property had become overwhelming. Luckily, I was introduced to Rob. Without his advice, assurances, analyses, professionalism, and cautious approach, I don’t believe I could have successfully completed the transaction. Even after the closing he has continued to support my efforts to satisfy some loose ends with the purchase. Thank you so much for your representation.“ - Luis Macari