Every now and then I find a what seems like a great deal while I’m initially looking at it only to find out that it’s a “leasehold” interest, meaning it’s NOT fee simple and only a lease interest. Normally I toss the deal in the garbage, but I thought this deal has some interesting aspects and wanted to give it a quick review for my followers. Morro Bay California holds a special place in my heart because of the vacations I have taken there over the years and some great memories. The area is an amazing place to visit! I remember driving out there back in in the 1980’s to look at a property owned by the late “Cal Worthington” of the great Cal Worthington Dodge who was famous for his commercials with wild animals and his promise to “eat a bug” if he couldn’t “beat” another dealer’s price. I was told that the property was on the water in Morro Bay and that I had to drive up there that night in order to make the deal before Monday morning or it would be sold to someone else. I got in my car and drove from Los Angeles to Morro Bay in record time and wound up looking at one of the most amazing properties I could ever imagine and needed to act fast to get hold of it. It was a Spanish Land Grant that Cal owned for many years and needed to sell it in a hurry for some reason no questions asked. The land was literally beachfront property behind and alone side the BIG ROCK you can see in this picture. Unfortunately, I was not able to convince my client to write the check before the banks opened on Monday and the deal was lost! My Career was packed with crazy and incredible deals back then and looking back I wish I had the money back then to buy them myself! https://www.morrobayca.gov
This Deal will suit someone who doesn’t have heirs or family but doesn’t want to give the IRS money in capital gains. the 34 years left on the lease is enough to satisfy the 30-year minimum requirement for a 1031 exchange so it will qualify. The location of this property speaks for itself and the risk of vacancy is very low. I would grade this deal a B- and offer a 9% cap on existing income and push to get boatslips approved to increase the cash flow. If you have a business concept you want to operate at the property all the better! https://www.irs.gov
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