Solano Real Estate Scene: Jim Porter
Article By: Jim Porter – March 21, 2025
Believe it or not, there are nearly 7 million people older than me in California.
At a recent Women’s Council of Realtors event, Ryan Preston, co-owner of Coldwell Banker Kappel Gateway, gave a presentation and quoted his partner, my friend, Gateway Realty founder, and real estate broker for 45 years, Steve Spencer. During training sessions over the years, Spencer would always say “people that prospect enough never fail in real estate.”
That quote reminded me that I need to prospect a lot more for my team.
At this week’s NSCAR broker tour meeting, Russell Marsan, of IPX-1031, was the guest speaker, and he reminded me about how the 1031 exchange equity share agreement allows investors to defer capital gains taxes on the sale of an investment property by reinvesting the proceeds into another like-kind property, potentially using a shared equity financing agreement to help a child or grandchild purchase a home while maintaining investment ownership.
So now, what all my competitors and I need to do is start prospecting like heck to all the old people around here that own free and clear real estate and convince them to sell and exchange into homes with their kids.
There are thousands of homes in Solano and Yolo counties that are rental properties that have been owned by the same person or entity for more than 30 years. These homes are fully depreciated and, in some cases, have become difficult to manage for the senior citizen investors. If they are 85 to 90 years old, they may want to talk to a CPA, an EA or a tax attorney about why an exchange equity share could not only be good for the senior but it could be good for the heirs too, considering when the old-timer passes away, his share of the house will pass to the heirs at a stepped-up basis.
Grandpa Abe Simpson has owned a rental home on Alamo Drive in Vacaville for 47 years. The house is now worth $500,000 and his super sloppy tenant, Oscar Madison, is moving out next month. His grandson Bart has been pre-approved to buy his first house up to a sales price of $450,000 using the CalHFA down payment assistance program.
Bart and his wife are 28 years old and have two kids, 720 FICO scores and make $120,000 per year combined as schoolteachers. They have a minivan payment of $600 per month and $60,000 worth of student loan debt at $400 per month, which limits them to a max house price of $450K.
Grandpa’s local Realtor has been trying to help Bart find a house, but the inventory is low and the houses at $450,000 are small and most need a lot of work. The Realtor is also Grandpa Abe Simpson’s property manager and after hearing about the exchange equity share, he gives Abe the details. Abe loves the idea and 60 days later Abe and Bart Simpson now own a beautiful $800,000 home in Browns Valley.
Abe owns 55% of the house and Bart owns 45%. Abe’s net sale proceeds were $440,000 after repairs and commissions on his rental and Bart and his wife obtained a loan from a local lender for $360,000 to complete the purchase of their dream home. Bart and his wife pay grandpa 55% of the market rent for the house every month plus the mortgage payment with NO PMI and grandpa pays 55% of the property taxes and insurance.
Bart’s monthly housing costs are about the same as it would have been for a house at $450,000, and Grandpa now has a great tenant and deferred $90,000 in capital gains tax.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
