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Mining a Market Segment

Mining a Market Segment. Patrick G. O’Healy, SIOR, CRE O’Healy Commercial Real Estate Services Los Angeles, CA 562-492-9234 pohealy@ohealycommercial.com. SIOR Brokers Always Innovating!. A Rich Target Market. Property Owner Characteristics Age: 70+ Owned property 20 years or longer

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Mining a Market Segment

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  1. Mining a Market Segment Patrick G. O’Healy, SIOR, CRE O’Healy Commercial Real Estate Services Los Angeles, CA 562-492-9234 pohealy@ohealycommercial.com

  2. SIOR Brokers Always Innovating!

  3. A Rich Target Market • Property Owner Characteristics • Age: 70+ • Owned property 20 years or longer • Likely fully depreciated • Possibly management intensive

  4. A Rich Target Market • Relatives Co-Owners • Divergent objectives • Older partners risk adverse • Younger partners seeking: • Greater return • Willing to accept more risk • More leverage • Expanded asset base

  5. Depreciation Laws • All real estate 1981 to 3-16-84 , 15 yrs • 3-16-84 to 5-8-85 , 18 yrs • 5-8-85 to 12-31-86 , 19 yrs.  • Residential real estate (MACRS) 1-1-87 to current , 27.5 yrs. • Non residential real estate (MACRS) 1-1-87 to 5-12-93 , 31.5 yrs ,  5-13-93 to current 39 yrs.

  6. Depreciation CalculationBy Purchase Date • All real estate purchased prior to 1986 is fully depreciated • Residential real estate (MACRS) purchased after 1987 has depreciation left • Non residential real estate (MACRS) purchased after 1987 has depreciation left

  7. The Approach • Sell the Asset • Divide the proceeds • Older partners • Un-leveraged investment • Charitable alternatives • Seeking maximum wealth transfer • Seeking predictable after tax income

  8. The Approach • Younger Partners • New leveraged investment • New depreciation schedule • Likely doubling of net after tax income • Shelter makes net after tax cash flow go up

  9. The Plan • Property owner target list • Develop alternative structures • Develop hypothetical outcomes • Tailor packages to seller specifics • Leverage for younger partners • Safety and charitable alternatives for older partners • Develop upleg alternatives for prospects • Linkage with charitable entity • Preparation for targets and knowledge of possibilities

  10. Differentiation From Competition • Targeting specific segments • Developed plan • Understanding the target market • Satisfying market needs • Showing new alternatives

  11. Two Pathways to Success • Linkage with the charity • Sale of the asset for the owner • Sale of the donated asset for the charity • Referrals to other donors • Sale to younger partners • Immediate transaction • New relationships developed • Ongoing transactions and referrals

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