Seller financing 100+ unit portfolio?

3 Replies

Hello all,

I've been hearing about Biggerpockets for a while, this seems like a really cool place! I'm approaching what could be the largest real estate opportunity of my life, feeling overwhelmed. Here's a summary of the situation:

About me

I've worked in a leasing office for several years, got licensed in Ohio in 2015 and have done 30ish residential sales since, and bought one property which is a duplex that I currently occupy half of. I have read a LOT about real estate investing over the years.

The situation

I have a sales client that owns over 100 doors with several partners total. In addition, the same cooperation owns some commercial assets and manufactured home park. The properties are completely stabilized, there is some room for value add and increased efficiency but overall the properties are well managed and would sell for market value right now. All are located in a County with extremely strong economy. Over the past year I have come to learn these partners are thinking about selling the portfolio and retiring, among other options. My heart truly is in helping them maximize success before my own, I've talked with him about hiring a property manager and stepping away from the business. For reasons I can't state, they suddenly are becoming more serious about Selling. I actually lightly mentioned let's talk about Seller financing before they make any moves, didn't get much of a response. They do have a lot of trust in me, there would be no harm in our relationship in me approaching in a serious manner to see if they would at least consider it before proposing terms.

I feel like creating terms for such a transaction would no doubt be over my head. I can comp out a single property all day long, but less experience putting value together based on income, selling as a package, etc. 

Questions for Bigger Pockets

-Is there a discount expected when buying a large portfolio like this?

-I would need to bring in my own partner with cash or get creative. Even if owners would finance the whole deal at 0% down, I would still want a couple hundred thousand in the bank for capital expenditures, operating costs, etc. I do have a potential investor lined up. Is there a way to structure this so he just takes revenue but doesn't get ownership?

-If Owners say they would consider it, I feel like I would want to build a team to help structure the deal consisting of RE attorney, commercial appraiser, and CPA. Would you guys get anyone else involved on the front end?

-Any reason I couldn't offer on just the properties I want, and list the rest for them?

Approaching Owners

I'll explain to Owners the benefits including the passive income at 10x+ interest rate they'd get from putting money in the bank, benefits of deferring taxes, and benefits of holding assets as security. I need to work on a way to show how clear it is I can manage the portfolio at an extremely high level so they aren't concerned about my defaulting/letting the properties go down hill. This will likely be one of their biggest concerns, getting the properties back after a while with a bunch of damage done. Any thoughts on this matter?

Conclusion

There is SO much more I could write out, but don't want to make a wall of txt no one will read. I think this gives a very brief outline on the situation, maybe enough to start a conversation. I hope some on here might take the time to point this talk in the right direction. Thanks for your time