8 Houses on 1 Parcel...What are my options?

Question

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!

Steve L. · Answer

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.

Brad Chandler · Answer

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?

Brandon Foken · Answer

@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.

@Stephen S. it was willed to her.

John Rooster · Answer

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.

Jon Klaus · Answer

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?