Mac McCall

MIAMI—Should you sell now? Hold? If you do sell now, what do you invest in that can provide adequate yield? What about placing your asset on a 1031 exchange?

If you are pondering these questions, read on. caught up with Mac McCall, regional managing director of Franklin Street, to get his take on these issues. Over a 10-year period, he has been involved in more than 450 transactions totaling over $1 billion in dollar volume.

In part one of these interview, we’ll answer three common questions owners have in the current environment. Be sure to come back this afternoon for part two. Sell your asset now?  

McCall: It depends on your situation. Selling your asset depends on what your exit strategy or predetermined objective was when you bought the property. If you were hoping for capital appreciation or the rise in the value of an asset based on a rise in market price, today is a great time to sell. However, if you had planned on long-term cash flow, it would probably not be a good time to sell due to lack of alternative investments.

The most likely buyer for a 1031 exchange is someone who is tired of managing apartments and wants a passive investment like a single-tenant net-lease deal. If you do sell, what do you invest in that can provide adequate yield?

McCall: This is a huge challenge. Many hands-on investors will focus on distressed or foreclosed properties—where they are able to use management or leasing expertise to drive upside. Passive investors who own single-tenant properties may want to buy a property with a longer lease because they want the security of a longer lease. What about placing your asset on a 1031 exchange?

McCall: It all depends on your investment objectives. If an investor wants to avoid paying the higher capital gains tax rate then they will obviously look for a suitable exchange property. If an investor wants to remain in a cash position then they will look to pay the capital gains and move on.   

Come back Tuesday afternoon for part 2 of this interview. McCall will discuss when you should consider keeping your asset for longer than planned, the outlook for 1031 exchanges and other factors you need to keep in mind.