‘Reno has gone viral’: multifamily unit sales thriving throughout Northern Nevada
Uncertainty about 1031 exchanges from the incoming presidential administration has led to a flurry of apartment sales in Northern Nevada. Real estate investors have long used 1031 exchanges to defer capital gains taxes on the sale of commercial properties. In an exchange, investors don’t have to pay taxes on the proceeds of a sale if they reinvested those funds into a similar asset.
The Biden administration in 2020 proposed eliminating exchanges for investors making more than $400,000 a year.
The proposal may not hurt smaller investors swapping a six-unit duplex for another, but it could have a profound effect on well-heeled and institutional investors who purchase large multifamily complexes.
Ken Blomsterberg, senior managing director of investments with Marcus & Millichap, told the NNBW that multifamily sales started strong in the first quarter of 2020 before the effects of the pandemic were fully felt. Sales dried up over the ensuing months before exploding again beginning in September.
Marcus & Millichap put a number of large properties under contract, including Horizon at South Meadows, a 344-unit complex that was built in 2005, and Sundance West, a 350-unit complex off Moana Lane. The Horizon deal, he noted, is one of the region’s largest sales by dollar volume.
“Moving into 2021, we definitely have a substantial pipeline of properties that will probably total close to $200 million in sales, Blomsterberg said.