Posted by Dave T on May 06, 1999 at 23:14:32:
You mention that the owner is retiring soon and may be interested in a 1031 exchange. In general, a 1031 exchange allows the seller to defer paying capital gains taxes on the sale of investment property when replaced with like kind property.
Since the seller’s chief objective seems to be deferral of income tax, a 1031 exchange may do nothing to provide additional cash flow for his retirement. Similar reasoning would also make a L/O offer less appealing. A L/O provides short term cash flow, and does not defer capital gains when the option is exercised.
Find out what the seller’s intent really is. Perhaps, the seller wants to minimize his capital gains tax bite and at the same time provide a long term income stream. If this is so, the seller can have all this without landlord headaches if you offer to buy with owner financing. An installment sale provides a steady income stream, spreads out the capital gains tax bite across several years, and eliminates the landlord headache.