11 Properties for 325K...What are some options?

Question

I have a friend whose grandmother purchased 11 homes last year for her kids/grandkid (my friend being the grandkid). Its a mix of SFH and MFH. The properties are causing turmoil because...well they can't get along to say the least. They now want to sell. I would love to buy them all but i realistically don't have that kind of cash. Ideally they want to sell them all together. He is a banker himself. He says that fully rented the properties have the potential to bring in 100k/year before expenses.

What are some options I have if i wanted to buy them all? Anyone have any portfolio lenders they would suggest in Hampton Roads (norfolk, portsmouth, chesapeake, Virginia beach) ?   How would I approach someone with a JV for this deal? I imagine i would need 20% (65K) at the least PLUS reserves. All of which i do not have. Just looking for some advice from anyone who has purchased this many properties at once. Thanks

Matt Lawhun · Answer

I would offer 10% down with seller financing over the next 10-12 years and a balloon at the end of that. That gives you more than enough time to pay down equity and bring in a JV anytime within that period.

There is a lot more involved than what I offered in the two sentences above, but the technique is real. I bought 7 rentals for only $5,000 down, 10-years taking the loan subject-to with an additional 3-years seller financing at 0% interest. I have a ballon payment at the end of 13-years for $74,000, will have collected rent for 13-years, got all of the tax breaks and paid down equity (currently at $650+/mo principal) for all of those years.

Just an option....

Best of luck.

Matt

Orkeem Davis · Answer

Due more due diligence and find out what is required from the owners so you can take possession of the properties.  You can do this by setting up a meeting or writing up an informal proposal of how you would like to structure the Deal.  If you get a meeting of the minds, contact your attorney to make it formal.  Money should not be the main concern at this point.  Like I said, I would not mind taking a trip and considering meeting you half way with funds --- but you have to do the legwork.  I have unsecured lines of credit as well.  It might be better for you to go with a hard money lender and go it alone.  More money in your pocket, but having a partner may make sense too.

Tiffany S. · Answer

@Rory Compton They decided to individually put all the houses on the market. Last I checked they were having a realtor out to appraise each property. He wants to sell as a package but cant convince everyone else. I think he will be back though. Just waiting.

Austin Fruechting · Answer

You could look into a master lease or seller financing for a certain period of time if they'd consider it. Set it up for however long it would take to get the balance to 70-75% of the appraised value (with an additional time buffer). Then refinance them with a portfolio lender. Add value if you can during that time too (cosmetic repairs, increase rents, etc). They won't have to mess with them for that time. Their worst case is they get money from you for a while and then sell them again at full price.

Tiffany S. · Answer

@Nick Leboeuf Once i get more information about the properties I will be contacting people. Im definitely open to JVs.

Jason Hirko · Answer

@Tiffany S. If it is as good of a deal as it sounds like, I would find a partner quick and take it down. Better to have half of a screaming deal than none of a screaming deal

Account Closed · Answer

@Tiffany S.   To answer your original post a little late....   The first step I would take is to find out who has title to the property.  I would not be surprised at all if none of the people looking for a buyer have any right what so ever to the property.  If I was the grandmother I would have used a spendthrift trust.

Rory Compton · Answer

@Tiffany S. any updates on this deal?

Clarissa Butler · Answer

Hey @Tiffany S.! I'm also local in Norfolk and have some cash. Would be interested in meeting up to discuss.

Justin B. · Answer

I have experience buying more than 1 property at once, but not 11.  I've found that once you own properties, portfolio loans become more realistic.  But when buying, without something creative (outside of normal banks), I haven't found any banks willing to loan without it being 11 separate loans (with 11 separate closing fees, etc).

Private lending, lines of credit, etc are the options you need to look at if 11 separate loans isn't what you want.

11 Properties for 325K...What are some options?

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