Trading multiple duplexes / sfr to large complex?

Question

I currently own ~45 rentals all smaller than 3 units and would like to get into bigger investments.  The problem is I'm not sure how to go about finding an investor or 1031 facilitator to convert 30 or so individual pieces of property at one time.  Any experience with this or with finding these kind of investors?  The full 45 properties consist of ~70 units and generate about 42k/month in rent in Wisconsin.

Dave Foster · Answer

@Brian Jackson.  You are wanting to accomplish a consolidation and there's several ways you can go.

1.  You can do what @Joel Owens suggests and sell all to one buyer.  If the contract is written so that all go as one parcel with one closing then it could be considered one 1031 exchange with one fee and one set of time deadlines.

2. You could attempt to sell them in as short a time as possible.  This will necessitate each sale being a stand alone exchange with it's own fee and deadlines but you could combine whatever you can sell within the time lines and combine them into one or a few bigger purchases.

3.  Don't shoot for a home run of 45 into 1 the first time around.  Sell 45 and exchange into 10 - 15 properties and slow down the consolidation process.

4. You could do a reverse exchange and get control of the new bigger property first.  Then sell the other properties and use the proceeds to take title to the new property from your intermediary.

A good qualified intermediary can coach you through any of these scenarios so you can judge the viability of each option.

Happy to chat further with you.

Joel Owens · Answer

You can sell off as a package to one buyer but they will usually want a premium for that. Do you have to sell them all at once??

If you have a lot of equity in some that have just  a little depreciation left then you might want to start with those first.

Yield will be depend on deal size, loan, and the area. I would work the equation backwards. You need at least XX down payment to buy a property at a minimum size of XX. How many houses needed to sell would achieve that goal? If you break out a few at a time you might get more but it takes a ton more time and effort.

It's like someone paying 1,000 to haul all your stuff away and eventually sell it over 3 to 6 month to get 2,500 out of it versus you trying to do that work.

Jason Bott · Answer

@Brian Jackson forgot to mention the most obvious strategy:). I know I have seen some larger single family syndicates based out of Minneapolis here on BP.  Do a search of BP Members in MN.  I am sure you will find some investors who are interested/ willing to refer to others.

Andrew Hansinger · Answer

Hey! I used to live in Sparta, Wisconsin believe it or not! Interesting question.  I believe some of the guests on the podcast have talked about buying large quantities of homes, but if I recall correctly, they were all units in a living community.  I'm sure if you keep looking and poking around on the site, you're bound to find a buyer.

Jason Bott · Answer

@Brian Jackson a few ideas for you.

I have a commercial broker based in Madison who would be happy to discuss with you. Obviously any commercial broker would hope you would then have them help you acquire the larger buildings.

I have a client in LaCrosse who has several hotels and a hand full of rentals who may be interested.  If not, he may know someone.

We have a LaCrosse office and Minneapolis office who I know have relationship a with larger landlords.  It's just a matter of hooking you up with those investors who are interested I working with you.

Cold call some of the larger landlords and ask for advice.  They may be looking to unload some of their buildings and it could be a win win for both of you.

Ramon Jenkins · Answer

Maybe check with the local investors in La Crosse and border of Minnesota

Brian Jackson · Answer

@Jenkins Ramon thank you -- they are in La Crosse & Monroe counties

Ramon Jenkins · Answer

@Brian Jackson welcome to BP nation

Where are the properties located ?  ( city / county wise )