Outline:
A seller, after finalizing divorce, recovering from health issues, and looking to relocate overseas, needed to sell quickly to a qualified buyer with assurance of closing. Conventional bank financing was too slow and too expensive.
A distressed situation became a stable, high-performing commercial investment property with strong cash flow, corporate backing, tax advantages, and long-term portfolio growth.
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In early 2020, a prospective client reached out through Yelp seeking a valuation of his industrial building – a flex space with a warehouse in the rear and two-story office in the front. At that time, the owner was considering whether to sell or hold. After receiving an independent market assessment from the Ivy Group, he agreed to list the property with us.
Just days after the property was listed, COVID-19 lockdowns halted commercial real estate activities. The property sat idle on the market for six months, attracting only lowball offers. Disappointed, the seller withdrew the listing, and both parties respectfully shook hands and agreed to stay in touch.
Half a year later, circumstances had changed dramatically. Recently divorced, recovering from heart surgery, and preparing to relocate to Hong Kong for a new teaching position, the seller needed cash and to sell the property quickly. The window to close was less than three weeks as he had already bought a non refundable plane ticket prior to contacting us.
That urgency created both a challenge and an opportunity: how to structure a deal that met the seller’s timeline without requiring traditional bank financing.
For a typical buyer, securing a commercial investment property requires months of due diligence, appraisal, inspections, and loan approval. A 50–70 day escrow is the norm. This seller was unable and unwilling to wait.
As both a long time investor and a licensed broker, Tim Vi Tran, SIOR, CCIM, recognized that conventional financing would be too slow, and expensive. The obstacle? He didn’t have $1.22 million in liquid cash on hand. Instead, he proposed a direct purchase using seller financing in which the loan is collateralized by the property with a promissory note.
That’s where other people’s money entered the picture.
Instead of waiting for a bank to underwrite the deal, Tim structured a seller financing agreement. Here’s how:
The arrangement benefited both sides. The seller offloaded his property within the three-week deadline while earning interest as a private lender. The buyer skipped the costly appraisal, environmental assessments, and loan fees.
Seller financing bought crucial time, giving the buyer immediate ownership and flexibility to arrange long-term, permanent financing later when underwriting guidelines improved and interest rate became more favorable.
Six months later, when the property was refinanced with a conventional bank, new hurdles appeared. The lender required a larger equity contribution than the initial 30%. Specifically:
Rather than draw from personal reserves, Tim leveraged tenant negotiations. A prospective tenant, competing for the space in a rebounding post-COVID market with multiple lease offers, paid two years of rent in advance — approximately $150,000.
Instead of recording it as advanced rent (which would be taxable as rental income in the year received), the amount was structured as a security deposit. Each month , rent plus operating expenses was drawn down from the security deposit, aligning with accounting strategy and reducing immediate tax liability.
This elegant use of other people’s money — first the seller’s financing, then the tenant’s advanced security deposit — bridged the equity gap without depleting personal savings, leaving more cash available for additional investment opportunities.
Immediately at closing, the property’s warehouse was leased to a solar company, providing partial rental income while leaving the office space unoccupied. This ensured some cash flow to fulfill a short term solution.
Within months, a neighboring business owner expressed interest in leasing the entire property. His company has been around for 80 years and manufactures high power radar equipment for the defense industry and the U.S. government. The lease was signed, but shortly thereafter the tenant sold his company — along with the lease obligations.
The buyer of that business was Teledyne Technologies (NYSE: TDY), a $25 billion publicly traded conglomerate. The lease was assigned and with Teledyne’s corporate guarantee backing the lease, the investment transformed overnight into a trophy asset. Key lease terms included:
This shift represented the “holy grail” for investors: a mid-sized, affordable commercial property paired with a blue-chip tenant, all secured through creative deal-making.
Beyond cash flow, the investment provided significant tax advantages through cost segregation, a specialized engineering study that accelerates depreciation, in the first year of ownership.
Without cost segregation: Commercial building improvements depreciate evenly using the straight line method over 39 years.
With cost segregation: Components such as roofing, carpeting, and plumbing are reclassified into 5-, 7-, or 15-year depreciation schedules, thereby shortening the 39 year timeline.
In this case, approximately $300,000 in components were identified for accelerated depreciation, resulting in substantial tax write-offs for the first year and subsequent years, significantly reducing taxable income.
Cost segregation allowed Tim, the investor / buyer / landlord in this deal to offset rental and commission income and reinvest tax savings into portfolio growth – accelerated depreciation and maximized after-tax returns. Strategic tax planning and cost segregation dramatically impacted long-term profitability.
Tim has been a commercial real estate investor for more than 30 years. He was buying commercial investment property for years before he became a licensed broker, and later with the SIOR, CCIM designations. Tim’s dual role as both investor and broker played a critical part in the success of this deal:
Over time, this combined perspective has allowed Tim to serve clients more effectively while also building his own long-term real estate investment portfolio.
This case underscores several principles for investors in commercial investment property:
What began as a simple phone call and a distressed circumstance under intense personal deadlines evolved into a model of creative real estate investing. By using other people’s money — first through seller financing, then through tenant security deposits — Tim Vi Tran, the broker-turned buyer / investor, and then the landlord, transformed urgency into a lucrative opportunity.
The result was ownership of a stable, income-producing commercial investment property located in the heart of Silicon Valley, occupied by a Fortune 500 tenant, delivering both strong cash flow and significant tax advantages, and most of all the long term, steady appreciation in property value.
This case highlights how expertise, creativity, and trust can converge to produce extraordinary outcomes in commercial real estate.
The Ivy Group is a commercial real estate brokerage specializing in sales, leasing, and investment advisory and representation in Fremont, CA, Silicon Valley, and across the greater San Francisco Bay Area.
When you need to sell, buy, or lease a commercial property, the Ivy Group is ready to help you reach your goals with more than 100 years of combined experience in real estate, deep market insight, and professional designations including SIOR and CCIM. The Ivy Group delivers strategic solutions for complex real estate transactions with additional expertise in investment, technology and engineering. Contact us with your next real estate needs.
Copyright ©️ 2025 by Tim Vi Tran, SIOR, CCIM. All rights reserved.
