CrailHuntly

A salve for an aching commercial real estate market

Much is being said about the current deteriorating market conditions seemingly affecting the sale and purchase of commercial real estate.  But, while the concerns driving the apparent impasse between buyer and seller may be real, there is at least one solution that could help bring the parties back to the negotiating table for some transactions.

It's a new, patent-pending program called the "453 Commercial Loan" which was developed by CrailHuntly LLC and is now being licensed to participating lenders.  As a more flexible alternative to a 1031 exchange, it can bridge price gaps, create more favorable financing terms for the buyer, provide tax deferral and return stability for the seller, and generate significant additional revenue for each participating bank.

Visit www.453loan.com to learn more.  Contact us as we would love the opportunity to discuss this program with you in more detail.

453 Commercial Loan- A Powerful Combination

There are several financial programs and products available in the marketplace that can assist individuals in a variety of sale situations.  However, many are just one-sided.  What if there was a more "all inclusive" approach to providing a solution that would benefit multiple parties (buyer and seller)?  This is the question we asked ourselves and our answer is the 453 Commercial Loan.

This product provides the combination of tax deferral for sellers and a reduced loan rate for buyers, all in the same transactions.  Buyers apply for a loan and go through normal underwriting requirements.  Once approved, the buyer should get a rate below normal street rates. Sellers have the flexibility to take as much cash at closing, pay the required tax, and then receive the remaining proceeds as an on-going payment stream, now only paying tax as each payment is received. Plus, sellers earn a tax deferred rate of return on all monies not yet disbursed.  A participating bank is used as the central intermediary to the transaction, acting as the lender to the buyer and payer to the seller.

To learn more about this new tool visit www.453loan.com

For Immediate Release: New Loan Program Announced for Sales of Commercial Real Estate and Closely Held Businesses

Overland Park, Kansas (March 27, 2008).  CrailHuntly today announced the availability in parts of Kansas, Missouri and Iowa of its proprietary and patent-pending program called the "453 Commercial Loan," an integrated buyer loan and seller tax-deferral program for the sale of commercial real estate and closely held businesses.

The "453 Commercial Loan" is a new, licensed program, offered through participating lenders, that benefits all parties to the transaction.  It can create more favorable financing terms for the buyer, provide tax deferral and return stability for the seller, and generate much more revenue for each participating bank than can be achieved through a standard commercial loan.

Contact CrailHuntly to obtain a copy of the entire press release or for more information.  You may also visit www.453loan.com to learn more.

Multiple Owners can have Seperate Exit Strategies

Whether it's a business with multiple owners or a property that's owned by multiple individuals (such as within an LLC), finding agreement on an all inclusive exit plan can be difficult and sometimes insurmountable.

Disagreement is understandable when there are different people with different interests, but it doesn't have to "kill the deal."  Either the 453 Commercial Loan and/or the Structured Sale program can provide the flexibility for multiple owners/sellers to have very different exit strategies, defer taxes and close the deal.

For example, let's assume a property for sale has three equal owners, each in different stages of their life with different ideas of what to do with the money.  Either program could be used to provide three separate exit plans, one for each owner and subject to each Owner's objectives. 

Owner A would like a monthly income for 20 years to supplement his existing retirement plan. 

Owner B would like to defer the recognition of the proceeds for five years until another income source ceases and then begin receiving income from the sale for the next 10 years. 

Owner C wants to defer the recognition of the sale for three years and then request a lump sum balloon payment to reinvest in another development property or similar venture.

If the 453 Commercial Loan program is used, payments to the seller would come from a participating bank.  Plus, the buyer could get a reduced loan rate.  If the Structured Sale is used, payments to the seller would come from a participating insurance company.

For further information on these strategies, contact CrailHuntly.

Supplemental Retirement Program for Business Owners

For most business owners, their business is their "nest egg" with which they have invested and reinvested in for years.  Aside from selling the business, how can a business owner leverage the value of the business today for the benefit of his/her retirement tomorrow?

CrailHuntly represents a special financing program that provides a means to fund a supplemental retirement plan for the business owner or key employees by leveraging the business's accounts receivable, but without factoring, operational interference or any personal guarantees.

The economic benefit is the result of an interest arbitrage between simple interest only finance payments and compound tax deferred interest earnings.  Plus, there are no contribution limits.

Anyone whose business produces accounts receivable can benefit from this program (Physicians, Attorneys, Accountants, Financial Planners, Engineers, Manufacturers, etc.). Current average loans are over $1 million.  It is recommended that the program be implemented at least 10 years before retirement.  As with many programs and products, this is not for everyone, but it is something that many should consider.  Click here for additional information.

Like-Kind Exchange and Structured Sale Combo

The combination of a 1031 Exchange, or rather a Like-Kind Exchange, and installment sale is a clever way to craft an exit strategy that can defer taxable gain, plus allow the Seller to transfer non-taxed dollars into another like-kind property. 

The installment sale portion is typically used when seller financing is needed, and it works well for this situation.  However, by utilizing the Structured Sale program, this method has a broader application and becomes a great strategy for many individuals.  By using this combination a Seller can:

1. Take some cash at closing
2. Exchange for a like-kind property of lesser value, and
3. Use the structured sale to avoid boot at closing and receive a guaranteed income stream

There's just a lot of flexibility to accommodate a variety of situations.  Download Structured_Sale_Likekind_Combo.pdf  to read the entire article for a better understanding of how this works, also included is a numeric example.

Protect your Sale Proceeds: It might be your largest and most vulnerable asset

Upon the sale of a business or property, the Seller is left with two very important decisions: What do I do with the sale proceeds? And, how do I protect those sale proceeds? This writing will focus on the second question.

While the asset was owned it probably had a layer of asset protection, through a corporate veil and/or insurance. However, once the owner sells, he/she has turned a hard protected asset into liquid vulnerable cash. Thus, if the seller were to experience any type of litigation, those sale proceeds are now a very easy target. There are several ways to protect and shelter these monies, some more complex and onerous than others. The use of fancy trusts can provide a means, but there is also a simple strategy that can offer additional economic benefits outside of the protection.

The Structured Sale program, which is a tax management strategy, can provide a layer of asset protection for the Seller.  Under this arrangement the Seller receives guaranteed periodic payments according to the installment sale agreement from the third party assignment company.  Therefore, the Seller never has constructive receipt, thus doesn't own anything.  In other words, the Seller does not have control of the sale proceeds until he/she actually receives a payment; and then it's still only for the amount received, not the balance due.  If anyone wanted to sue for assets, the monies held by the assignment company (those utilizing the structured sale) could not be included in the lawsuit.

For Example:  Tom sells a property and uses the Structured Sale for $1,000,000 of the sale proceeds.  As part of the agreement he is to receive $125,000 each year for 10 years (the $25K is interest). The Buyer transfers the on-going payment obligation and $1 million to a third party assignment company, who then invests the proceeds in a specially designed annuity to match the agreement.  Tom is contractually guaranteed to receive $125,000 per year, but he doesn't own the annuity, the assignment company does, and he doesn't have access to the $1,000,000, only the $125,000 payment stream. 

A year goes by, things are going well, and suddenly Tom is served with a lawsuit by a past associate for $500,000 in damages (you can make up the reason and the outcome).  The point is that Tom's sale proceeds within the Structured Sale are not his property and should be protected from the lawsuit.  It's another great advantage of the program.  Since I am not an attorney, this is not intended as legal advice and individuals should consult an independent legal advisor. 

CrailHuntly's Blog

Welcome and thank you for your interest in our blog.  We hope you find the information helpful. 

The purpose of this blog is to help us serve customers better by providing information, commentary and good old fashion advice on various financial planning issues.  We are not investment guys so you're not going to get the next hot stock tip from us.  What you will get are ideas on how to better protect and preserve your wealth.

Topics Include:
Estate Planning
Exit Planning
Insurance Planning
Retirement Planning
Tax Deferral Strategies

Visit our website to learn more of who we are and what we do.  We hope you enjoy the material posted and that you will visit frequently to see what's new.

www.crailhuntly.com

Information contained herein is not intended or cannot be used to avoid tax.  Individuals should consult an independent tax advisor.

CrailHunlty Talks Structured Sales on Tulsa Radio Show

Bruce Gordon, President of CrailHuntly appeared for the second time on a Tulsa and Oklahoma City radio show "The Future of Real Estate" sponsored by Darryl Baskin Commerical. During this call Bruce talked about some of the exit strategies sellers, buyers and commercial realtors can use in conjunction with the Structured Sale.  The strategy of primary interest during the call was that of combining the Structured Sale with a Like-Kind Exchange (I'll elaborate more on this in an upcoming post). 

Using the Structured Sale to Bridge the Price Gap

Individuals involved with the sale of appreciated assets are familiar with the occurrence of a common scenario- a price gap.  Very rarely do buyers and sellers come to the negotiating table with the same numbers (asking price vs. offering price).  Sometimes it may greatly impede the sale of the asset, creating frustrations for all parties involved.

There is a new tool being used with the sale of appreciated assets called the Structured Sale.  In some cases, it can help bridge the price gap between buyer and seller.

The reason is because the buyer's payment obligation is the present value of the on-going installment payments to the seller. The length of payment deferral and the payout duration will directly influence the spread.  I have put together an example of how this works, which you may download below.   

The Structured Sale is not only just a benefit to a Seller, but a tool that can be used to help facilitate the transaction for all parties- this is much more valuable than just an end product.

Download Bridging_The_Gap.pdf 

For specific questions please contact CrailHuntly.