Challenge

The owner of a duplex in Hermosa Beach, California was looking to accomplish a 1031 exchange by selling his property and replacing it with a larger asset in the South Bay. The relinquished property is situated in the North Hermosa Sand Section just blocks from world-famous beaches and world-class dining and retail in the Downtown area. The owner understood that although his property is considered to be in a “trophy” location that in order to scale and grow his portfolio, he needed to acquire more units by moving into a different city.

Strategy

Through a strategic marketing plan using the Matthews™ platform and the 1031 Exchange Program, the Matthews™ brokers successfully sourced both the buyer for the owner’s relinquished property and the seller for the replacement property.

Results

Thanks to the diligent effort of the Matthews™ brokers, the sale set a record-breaking price for the duplex in Hermosa Beach. The seller exchanged into a ten-unit property in Torrance, California, and achieved an increased cash flow of 200 percent. Additionally, the owner used all of his equity from the sale as a down payment to purchase the new property without having to go out-of-pocket on the purchase. In all, the Matthews™ brokers achieved a successful exchange for the client, deferring capital gains taxes, increasing unit count, and significantly increasing net operating income and cashflow.