Anyone have experience selling an entire portfolio?

Question

Curious if anyone on here has first hand experience with selling a decently sized single family portfolio to a single buyer. I have 32 doors currently and my business partner is looking to retire and free up the equity we have grown. We were at 65 units and have slowly sold our way down to 32 doors, but I am hoping to have better success finding a portfolio buyer. I have 5 properties that I think it would be in my best interest to fix and flip them, but the remaining 27 include 3 duplexes and single families. We understand to appeal to an investor we are prepared to offer the package at a good discount, but wondering if anyone has successfully found that buyer and how you went about it.

David Stott · Answer

I would be interested in more information on this. Reach out to me here

Thanks

Chris Seveney · Answer

We recently did this as the buyer (slightly smaller portfolio) and it went very smooth as seller had a lot of data on each property. We had local contractor go through each to assist in process. Closing took around 90 days due to all the DD but it went well (as we were cash buyer as well)

Dave Van Horn · Answer

Sure thing, Justin. Happy to help. And it made sense to my buyer cashflow wise "as is". Everything was taken "as is" except sewer inspections which one township where 1 or 2 properties were located required that (and I believe we split the costs, if any, based on the results of the inspection).

My buyer knew the area and the type of properties, so that surely helped with the "as is" sale.

You have to assume a new buyer will raise rents when leases expire so not sure it would make sense for the long term tenants to have their rents raised now and then have the new buyer raise them again. Also, SFR appraisals are based on comps not just an income approach - so raising the rents would likely do little for value.

Justin Sheley · Answer

Thank you Dave, I had a similar thought to holding a note on the portfolio. I think we would be willing to hold up to 20% and that should give investors a chance to put very little down using a commercial loan. When you sold did you feel your portfolio made complete sense cashflow wise to the buyer, or was there work to do on their end to get the rents up. We are definitely operating under market rents and have alot of long term great tenants, but certainly at a new higher price point their rent will need to go up. Debating if we need to spend time getting all rents up to attract a buyer, or if we can price with the understanding that new management will need to raise rents.

Dave Van Horn · Answer

@Justin Sheley

I did this with a similar amount of doors. I had someone find me first through BiggerPockets, actually. He was local to me and we even shared the same property manager. Our maintenance guy introduced us and we met for lunches periodically, got to know each other and I didn't have the intention of selling my portfolio when we met but eventually our investing timelines lined up.

So maybe through your property manager (assuming you have one), they can let other clients know you're interested in selling. My manager was incentivized to do that for me because they got to keep the units under management that way. But at most REIA meetings I'd bet you could find someone too.

Being willing to hold some paper on the deal also goes a long way for structuring and attracting buyers.

Happy to talk more about it offline if you'd like or if you have more specific questions.