Looking for advice on a portfolio of multi-families

[Mark Swim]

I've agreed on a price with the owner of 3 different properties for an off market deal - one 8-unit apartment building, 3 duplexes on a single lot and 1 duplex on another lot.  I haven't given him the official offer to purchase, yet, and am looking for some advice on the following:

1. We've negotiated the price of each property individually.  Should I submit a separate offer for each property or lump them into a single offer?  Pros and cons of each?

2.  I will be financing these through a local bank.  Does it make sense to carry a separate mortgage on each property or lump them all into a single commercial mortgage?

3. The 8-unit and 3 duplexes are all filled with tenants from the same ethnic group and are a pretty tight knit community.  My concern is that when I need to turn a unit that my pool of potential tenants may be limited.  Has anyone dealt with this type of situation and what was your experience when trying to attract new tenants.

[Jessica Zolotorofe]

Hi Mark Swim I can only really speak as to your first two questions. First, it totally depends on what you're trying to achieve. Would you want to buy just one or two of the properties, or your offer is contingent upon all three offers being accepted? If you're only interested in buying all or none, it probably makes the most sense to make one offer, and you can deal with individual deed prices later. But that way you don't have to worry about negotiating three numbers, just one. If you are willing to buy one or two without the others, then obviously individual prices have more value. With regard to the loan, you should shop around and see if you can get better rates for one commercial loan with the additional collateral. BUT if you do end up with one loan for all three, please make sure that there is a provision included in the loan documents that for a certain paydown amount, you can obtain a release for any of the individual properties. If one or two end up being very successful, and you want to sell the third, you don't want to be forced to refinance the remaining properties. Especially if rates are better now, plus refis are costly and time consuming. And when you're selling and not buying, and otherwise wouldn't have to deal with a loan situation, and likely have added costs of transfer tax and broker fees, etc., it's just a big hassle. There are some other considerations, if you want to chat further, but that would be my primary concern.