Wholesaler · San Francisco, CA · Member since 2012 · 259 posts · 147 votes
I got a phone call today from a lady in Hayward, CA that has 8 houses on a single parcel. She wants to sell but is in over her head and does not know what to do. She has gone to the city and to lawyers to try and subdivide the houses into 8 different parcels but hasn't had much luck (not entirely sure the reasons). As someone who doesn't have the funds to purchase 8 houses with 17 total beds and 9 baths, I would be looking to get a wholesale fee from this. A few questions come up:
Do you package this for an investor and basically think of it as a large, multi-dwelling apartment building?
Is there money to be made by subdividing the land and making 8 separate parcels?
As a long-term investor, would this be attractive to you (assuming the numbers made sense)?
Would any discount be given due to the fact you would have to manage eight separate dwellings?
Sorry for the question dump, but this is the first time I've encountered a scenario like. Appreciate the BP help!
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
12y
If the property can't be subdivided, check into setting up a condo regime, where each home could be sold separately. How much does she want for all? How much does/can it all rent for?
Do you package this for an investor and basically think of it as a large, multi-dwelling apartment building?
Is there money to be made by subdividing the land and making 8 separate parcels?
As a long-term investor, would this be attractive to you (assuming the numbers made sense)?
Would any discount be given due to the fact you would have to manage eight separate dwellings?
1. Yes 2. In theory yes, but if it were possible it probably would have been done already. 3. No. 4. Of course, but I assume it is already priced at a discount relative to either 8 distinct houses, or an 8 unit building.
Not something a begineer should spend any time on.
Wholesaler · Holiday, FL · Member since 2013 · 571 posts · 221 votes
12y
Will she hold the loan?
How did she come to own it?
stephen
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Originally posted by Brandon Foken:
I got a phone call today from a lady in Hayward, CA that has 8 houses on a single parcel. She wants to sell but is in over her head and does not know what to do. She has gone to the city and to lawyers to try and subdivide the houses into 8 different parcels but hasn't had much luck (not entirely sure the reasons). As someone who doesn't have the funds to purchase 8 houses with 17 total beds and 9 baths, I would be looking to get a wholesale fee from this. A few questions come up:
Do you package this for an investor and basically think of it as a large, multi-dwelling apartment building?
Is there money to be made by subdividing the land and making 8 separate parcels?
As a long-term investor, would this be attractive to you (assuming the numbers made sense)?
Would any discount be given due to the fact you would have to manage eight separate dwellings?
Sorry for the question dump, but this is the first time I've encountered a scenario like. Appreciate the BP help!
Wholesaler · San Francisco, CA · Member since 2012 · 259 posts · 147 votes
12y
@Jon Klaus that's a great idea about a condo regime. I assume you mean something along the lines of a TIC? The total rent for all 8 houses is $11,150/mo. That could probably be increased a bit, but not by much. She does not know what she wants for it...she has contacted a broker friend of her to try and get a valuation.
@John Rooster I'm interested why you don't think a beginner should spend time on this? I'm certainly not going to spend thousands on marketing and throw away leads that seem out of my comfort level. I'm going to hustle as much as I can to try and find a workable angle. Again, confused why you would recommend just walking away.
Wholesaler And Coach · Springfield, VA · Member since 2011 · 169 posts · 75 votes
12y
If you think it is a killer deal I would get it under contract with a 30-45 day study period and then try to sort through what can be done with it. Why is she selling? What is her level of motivation?
Wholesaler · Holiday, FL · Member since 2013 · 571 posts · 221 votes
12y
Oh yummy! She inherited a "nightmare" that nobody can fix for her. <g>
Well; except you. <g>
You know what the gross is - so figure out what size mortgage will let it cash flow in an agreeable way for you. Subtract out the rehab costs and your built-in fee and get a mortgage amount for her.
Then get on your white horse and offer to solve all her problems, take away all her anxiety and headaches, AND produce an monthly income for her. All she has to do is to agree to hold the loan.
After that is all sorted and you have the 8 houses rented - then you can look into being more creative with adding value to the situation.
Or is that not what you do?
BTW: one common problem with these kind of assembled-deals is the intertwining of water and septic systems. That may be why she can't subdivide. But come back to that later - right now: get the property.
Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
12y
This is probably one of my all-time favorite property types as a landlord.
I own a very similar setup: 9 houses on 1 parcel (2 - 3/1's, 3 - 2/1's, 4 - 1/1's). Each tenant gets their own yard, driveway and garage.
You can get multi-family financing on properties like this and management is far easier because the tenants get no shared walls at apartment prices and stay a long-time.
I would comp it versus traditional apartments and you can maybe get a steal of a deal.