What is the most interesting transaction we've been involved in?
There have been a lot! The neat thing about real estate is it's all individual. Every piece of property is different. Every person's goals and objectives are different. Every investment, the way you can do it, is almost unlimited. I guess the most interesting ...
We did an investment some number of years ago for a group of clients who were in a 57% tax bracket. We had an attorney come to us and say he had just gotten about 4.5 acres of commercially zoned land in the median strip of Route 301 just outside Bowie. He wanted to know if we wanted to buy it and we said no. He says, "What if I was willing to sell it to you for considerably less than it was worth?" and we said no. He says, "How about a lot less than it's worth" and we said, "Well, what are you talking about?" He says, "Well, it appraised for 2. I'd sell it for 120." we said, "Well, how about 104?" He says, "All right."
We put together a joint venture of doctors in high tax brackets and we bought this piece of ground that was zoned commercial in the median strip. By the way, we named the venture the Brooklyn Bridge venture because it was so flaky. About 8 months later, Parris Glendening, who was the Chief Executive for PG County at the time, decided he wanted to down zone all the land in the median strip to residential. All of a sudden we have 4 acres of land in the median strip that is only going to support housing and who in the hell is going to own a house in the median strip of Route 301?
We went to the State Road Commissioner, and we said, "Hal, how about if we give you this piece of ground for the State Road Commission at the appraised value as commercial land before the down zoning occurs?" He says, "Well, sure you can do that." So we had it appraised. It appraised for 500. We added in our fee and we gave it to the State of Maryland and they accepted the gift of 350. My clients were in a 57% tax bracket, so they wrote off $550,000 in instant taxes. Their accountant said this will never hold up and 4 years later, after it held up, we got a framed picture from all of the clients involved of the Brooklyn Bridge and we hang it proudly in the open area of our office.
That's the highest yield investment we ever did for a short period of time because it more than quadrupled the money because it was leverage property in a period of a little over a year, so that was the “Brooklyn Bridge Deal”.