Case Study 1 – Increasing Cash Flow:
Exchanging Residential Rental Property for Commercial Rental Property

A client came to us at Financial Management Group with two residential rental properties in her portfolio: a single-family residence and a condo. The annual pre-tax cash flow from these two properties was approximately $24,000 and the combined equity was about $1,500,000. The residential market had peaked so FMG recommended selling the properties and exchanging the equity for a newly constructed industrial distribution center with a ten-year lease.  

The client’s new annual pre-tax cash flow increased from $24,000 to $108,000 and is now guaranteed by an investment grade tenant, as well as sheltered by the depreciation of the new building.

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