Best Way to Sell Portfolio of Single Family Homes

[Mauny Tabar]

Hi all,

I’m Mauny, my brother, Neema and I began investing in real estate at a young age, purchasing our first rental property at the age of 18 in Tucson, AZ in 2003, using the money we had saved up working through high school as the down payment. We ended up purchasing 3 more rentals in Arizona while going to university, back then doing 80/20 no down-payment loans. We purchased the last one in 2005, started our corporate careers with Deloitte & Touche, and stopped buying more when we felt the market was going crazy. We still have those properties to this day and after a couple of refinances, they all now have 15 or 30 year mortgages on them.

3 years ago after feeling the market had “bottomed”, we looked into purchasing more rentals in Arizona but after looking at the deals, felt the prices there had gone up too much. We did a lot of research on other cities and states looking for factors such as values, rental rates, employment and population growth and came across Atlanta, specifically the south Atlanta market. We purchased the first rental in August 2012 and aggressively bought 6 within 6 months wanting to take advantage of the market. Quickly, we realized there was only so much we could do living in California at the time having a corporate career, and purchasing real estate in Atlanta. We quit our corporate jobs in February 2013, exited the rat race, and moved to Atlanta to be full time real estate investors doing what we love.

We purchased over 40 properties in Atlanta since then and have recently started new ventures into Furnished rentals and Assisted Living Facilities given our recourses on the ground here. We are now looking to sell the single family homes, specifically a portfolio of 13 homes that we acquired in 2012 – 2014, to allow us to focus on our new strategies. The rest of our single family homes have debt that we acquired through B2R which has pre-payment penalties, therefore we will be keeping those for another 8-9 years.

Does anyone have any recommendations on how to sell a portfolio of properties? What are the Pros and Cons to selling them as a portfolio or individually?

Look forward to hearing your feedback.

Best Regards,

Mauny Tabar

[Brian Burke]

@Mauny Tabar, I think that you'll likely find that you can net higher proceeds if you sell the houses individually. So where you go from here depends on your objectives. Do you want to maximize proceeds or do you just want to liquidate with a single transaction?

Selling in bulk will limit your buyer pool.  Fewer groups are buying in quantity to hold than there were in 2010-2014.  Selling individually gives you a far broader buyer pool.  There aren't a lot of brokers that have experience selling bulk, but there are plenty of competent agents to sell individually.  Selling individually is a pain and a lot more hands-on.  So...lots of advantages & disadvantages to each approach.

By the way, your B2R loan is very likely assumable, so if you did want to liquidate those homes, you could...you'd just need to sell that group of homes together to a buyer willing to assume the loan. Check your loan docs to confirm.