$1,276,000 Portfolio Sold - $76,000 Commission - BP found Deal

[Riley Place]

Hello BP Members,

Today we will share a shortened "Case Study" of a deal recently closed worth 1.2 Million, netting a $76,000 Commission Check. While the BP podcast and website are great sources of information, they never seemed have any listings for my local market. The interesting part about this portfolio is that it was found on the "Find Deals" portion of Bigger Pockets, located 2 cities away. 

The portfolio was a combination of Single-Family Homes, Duplexes, Triplexes, and one mixed-use building. In Total, there were 25 Units, with around $13,310 in gross cashflow coming from residential rents. The portfolio also included a laundromat that had huge upside with some TLC. Most properties were in good shape with long-standing tenants. 

A reason for this post is to share with other agents and investors the trials and tribulations that come forth when selling a portfolio such as this. While this may seem like a quick process from this post, it took around 5 months from signing listing papers, to final closing day. 

A useful piece of advice to anyone selling a large portfolio of houses is to split them up if possible. This seller wanted to sell them all at one time, which creates a small, niche market of buyers that can possibly pull something like this down. Many buyers wanted to see them all together in the same city, which they were not. Others that were in the market for this amount of units only wanted to see them grouped together in the format of an apartment complex. The units were split across 4 different cities. While the farthest houses from one another may have only been 45 minutes, this distance was often seen as too far for many residential investors. There were also an average of a one call per day with agents asking to split the properties so they could bring there own buyers into the equation. This created a surprising amount of anger from other agents. 

After a couple of weeks of entertaining buyers, I was brought a local business owner from my broker. We had shared the same loan officer from the same institution, this created an instant form of connection between us.

A word of advice to agents. In select larger markets, some agents have the luxury of choosing residential vs commercial, buyer vs seller sides of transactions. This is not true for most agents, especially for those just starting out, or in smaller markets. A way to build an instant-track record for any transaction in your market is to be an investor yourself. Being a real estate agent, at the end of the day, is a salesmen. If you were selling ShamWow's, but didn't believe in the product and didn't use it, how well can you really sell it? I had sold my buyer and seller both on the fact that I owned 21 units in the market this portfolio was listed in. Not only did it add instant credibility, it also reassured them I knew what I was doing, and was confident in the markets. This isn't to say you need to go out and leverage an apartment complex, but most of us can afford a cheap rental here or there in the markets we are selling in. This rental will go a long way in your conversations with clients. 

After speaking with my buyer, it was clear he was the one to buy this portfolio. It also helped that both sides of the transaction were going to be represented by the same agent. 

But as with most deals, it fell apart a week or so into negotiation, with the buyer ghosting myself and the loan officer. As mentioned above, being an agent is being a salesmen. Whether you want to view yourself as that is a different conversation. But part of being a salesmen is refusing to take no for an answer. Most deals do not require this amount of work and effort to find a buyer, but we were already in a niched, smaller market, looking for the perfect buyer. I called the buyer, and asked if we could meet at his bar on a Friday night. After he agreed, I knew there would be no way I would leave without hearing the words "I'll buy it." Granted, this was my first face-to-face encounter with this gentleman. 

I leveraged hard on the fact I owned a similar amount of units in the same market. Had I not had this to my advantage, I am unsure if things would have turned out. After around an hour or so of objections and conversations, the magic words finally came out. 

A beautiful part about selling real estate is were not selling Herbalife or a pyramid scheme here. These properties were generally a great investment for most people. When you sell someone a cash-flowing property, you know that there really going to benefit from the purchase. One of the objections the buyer had was if the property was going to appraise. While I assured him they would, an appraiser can really kill a deal if they are having a bad day. The properties were easily worth the purchase price, and ended coming in around 1.44 Million. Still, it is a stressful thought knowing your deal rides on one report, especially if your seller is maxed out on his lowest price. 

As I mentioned before, this is a shortened summary of the full transactions. I would love answer any questions about salesmanship, navigating through a deal like this, and what could have been done better/lessons learned. As I said before, I found this deal right here on the BiggerPockets website. The deals are out there. Go out and get after it!