30 Properties turns into 35 properties

[Jordan Murrell]

We are currently working on putting a deal under contract here in Las Vegas. The property portfolio consists of 30 properties.

If you have read my previous posts, you’ll have context and my back story. If you haven’t click here.

https://www.biggerpockets.com/forums/12/topics/910155-30-property-portfolio-and-45-property-porfolio?page=1#p5318603

At first thought, we were going to look to acquire about 4-7 properties. After I posted about this deal in the forums and connecting with great people from BiggerPockets. We are looking at purchasing the entire portfolio.

Now, by no means is this going to be an easy project so it has been all hands on deck. I have been speaking with the seller's family friend who has been managing the entire portfolio. These sellers are quite motivated as they are looking to travel back to their home country. They would love to sell as quickly as possible allowing them to travel back with a nice pocket full of cash. When we received the property list, the estimated value for the portfolio being $10M. Rental income each month is around $55,000. 

I asked the PM, “how did you come up with this $10M number?” 

She flat out said, “I went on Zillow and typed in the property address and saw estimated market value. I input those numbers into my spreadsheet and it came out at this number.” 

I ran some numbers and this is way above market value for the portfolio. With that said, zillow hasn't adjusted all its property values. There are a few in the portfolio that are worth more than what zillow has estimated which looks like a great opportunity. We don’t necessarily want to pay market value for properties that A. Potentially need rehab B. Have tenants in the properties not paying C. I don’t feel the need to offer market value for a seller who is looking to offload their portfolio. But we don't mind paying Zillow's estimated value for the properties that would higher equity. 

She assured me that only 3 aren’t paying and 3 properties are empty. She also miscalculated how many properties are in the portfolio… There are 34 properties and the sellers live in another one of their properties making it 35.

The property manager said that they would be looking to sell individually if they can’t find someone to purchase them all but they want to leave as soon as possible. This sounds like a great opportunity for us. After back and forth with the property manager I said it’s time for us to start negotiations with the seller but there was just one problem. They don’t speak English! So I just said okay and gave up from there...

Well instead.... I reached out to everyone I know. Turns out, my rockstar realtor from Memphis said his wife speaks Mandarin and she may be able to help translate. I jumped on the phone with her and she said she was more than happy to translate.

They were initially stuck at $10M. Then, came down to $9M. Then more back and forth, came down to $8.4. After 15 mins of conversation they were down to $8.14M.

I should have read ‘Never split the difference’ again right before the call because silence was winning. Mirroring their questions was working. They are negotiating against themselves.

The number we proposed was $6.1M. We have been holding strong at this number. We are hoping to get them to about $6.8-$7.2M. 

I have been speaking with a couple potential cash buyers. Originally we were looking to wholesale the whole portfolio but we are looking to acquire them for our portfolio. Use the equity in some of these properties to leverage into more assets, wholesale some of the properties to fix and flippers and then lastly sell the properties to others who may want the rest of properties at a good price.