Posted by John Merchant on May 22, 2007 at 16:20:15:
While I wouldn’t presume to try to improve on what Ray Alcorn’s already said, I do have one thought here:
Whatever your allocation now (and by addendum’s legally OK, so long as the Seller and your lender(s) approve of that in writing)you’re going to have to live with those numbers when you sell and are then debating whether to do a 1031 procedure.
And of course for practicality’s sake, the 3 props being different in their values is going to determine maybe how long you keep them, their costs to upgrade and rehab and then resale figures, etc. so that also is going to need to be factored in.
Ray Alcorn sent me over here. I asked this question on the commercial forum.
I have 3 properties under contract. It was a package deal. The initial offer was for all 3 on a single contract and it was accepted. However, the lenders (2 different lenders, one is a conduit loan)will require us to allocate a portion of the purchase price to each property using a separate contract for each property. The seller wants to make sure we don’t just cherry pick and close the best ones, leaving the him the third one unsold.
Does anyone have suggestions for how to accomplish this via an addendum and not negatively impact our ability to obtain financing?