First multi unit sale - Sell vacant or Tenant?

2 Replies

Hi Guys!

I recently flipped a property that has 4 houses on over 1 acre of land. It is here in Kansas City about a mile from the football and baseball stadiums, (Royals and Chiefs).  We planned to renovate them and then run them as Airbnb's.  They are small houses, but perfect for a weekend in town with brand new everything inside and out. (Would sleep up to 20 between the 4 houses)

However, we ended up putting too much money into the properties with unexpected electrical, plumbing and roofing needs. We no longer can cash out refinance to keep them as part of the BRRR method. We aren't upside down but definitely not at 70-75% to manage to hold them. I have never sold multiple units and was curious what an investor is looking for. It is technically a single family home so would you list with a residential agent or sell on your own to network of investors?

If an investor were to buy 4 houses on 1 acre, would another investor be more interested in having it turnkey with tenants in place so I can show them rental income or sell it vacant with an idea of what it could rent or airbnb for? What information would be good know to put on a flyer?  

Thanks! 

Joshua,

Sounds like an interesting project.  You're thinking about this in the right way.  You want to sell your places as the investment that brings you the most money.

1st option, the SFR. What are these worth if you sold as single family homes? This should be pretty easy to determine through comps of similar houses, what they sold for per sqft, then do the math.

2nd option, LTR.  What are these worth as a long term rental?  I am a huge believer in actually renting them to get the best return.  Investors will almost always pay more if rented (for top dollar).  Determine this value by estimating the market rent the defining, then multiplying by the gross rent multiplier in your area.

3rd option, nightly rental.  Make sure this is legal in your area first, lots of places restrict them.  The value here is more tricky, but I"m sure you can find some estimates based on annual net revenue.  Again, you'll need a track record to get top dollar.

Any investor who buys all 4 empty houses without a rental track record will expect to get a discount.  

Good Luck!

Chris

if its a MF, always clean tenants with legit paperwork... means $ flow from day one.

SPlitting into 4 seperate units carries its own costs, headache, all that... get legit answers from the city on this...