6 Single Fam Houses. Sell one at a time? All at once? How?

13 Replies

Lets say you had 6 single family homes in Ferndale MI, valued between 90k-160k each. All currently leased with good tenants, rents ranging from 1k-1,350/month. Lets say hypothetically you wanted to sell them. Without asking for specific agents, what would your approach be? Sell one at a time? All at once to an investment group? Are there people or companies out there that buy blocks of houses? How do those type of companies start their valuations? All based on rent roll, home value etc? Based on your approach, is it a residential broker you are looking for? Commercial?  Is that even a deal a novice like myself can pull off? 

Are they worth more to an investor or to an owner occupant? I suspect the latter, which would mean putting them on the market individually. Your lease situations may be an issue though. Most “package” investors would be looking for a deal, as you would if you were buying a package.

Originally posted by @Wayne Brooks :

Are they worth more to an investor or to an owner occupant? I suspect the latter, which would mean putting them on the market individually. Your lease situations may be an issue though. Most “package” investors would be looking for a deal, as you would if you were buying a package.

I'm sure you are right, owner occ would be valued higher. But I'd think for the simplicity of the single transaction, and the fact that they are turn-key for the buyer, I feel like a deal could be made. I suspect its a fairly regular transaction, I just don't have any clue as to the logistics of it, or where to start.

@Jeff S. I get emails for these types of portfolio deals every so often.  They’re usually from a brokerage who does commercial and residential so I’d start there 

We (SVN) broker SFR Portfolios. Based on the avg rents and values you mentioned, it could very well make sense to sell as a portfolio. I don’t know if the homes are located near a major city (not that familiar with Michigan), but it will most likely be a local, private investor. Large institutional buyers are buying in major markets in the south (“smile of the US”).

Happy to answer any specific questions. Shoot me a DM.

@Jeff S. Will try to help out: 1. It's all about the price, selling as a package will definitely resault in lower sale price 2. How ever - having a single transaction will save you allot of closing costs associated 3. I would create an .xl file to calculate those sencarios and then I will be able to see the whole picture 4. There are marketing firms that specialize in "marketing only" for investment properties Hope it helps

REIT's will buy single family houses in bulk, check with some REIT's.

With the size of your portfolio, I'd recommend aligning yourself with a residentail broker that works with a lot of investors - or find a local property manager that might have other investors in their pocket to sell to. Rely on your market expert to help you decide whether to take income or sales comps approach into your pricing. In my market, Class C portfolios sell quicker than Class B - just more demand and higher ROI. I've closed three portfolios this year between 6-10 units, two groups of which I've represented both parties in transaction - the worst thing about it from a Broker's POV is due diligence period - coordinating inspections with tenants and repairs, if any were requested by purchaser. Lastly, be sure you're working with a good Closing Agent that's familiar with investment sales - sometimes the due diligence period will run it's course (maybe more) and you've got to have someone who knows what they're doing, ordering city/municipal letters and building the closing packages on the fly.

Haven't done this myself BUT have a friend who worked for institutional players and has been on the buyer side for this. Think companies like Colony Capital or Blackstone Group, whom I believe each own tens of thousands of single families across the US. 

You probably want to do this as a portfolio sale - might take a bit of a bit on the price but will save on transaction costs (commissions), and the hassle of each deal. Also, I would look into a broker with significant commercial experience, ideally one who specializes in portfolio sales or multifamily, or just a commercial brokerage outright, because they are more likely to have experience with and access to these larger investors. Of course, there may be local or non institutional investors who are into this deal, but I feel like a package of 6 houses is going to be the sort of thing the bigger players do all the time, depending on your market. 

hello Jeff,

I am a RE agent in Rochester Hills, this deal will be nice to sell as a package of all 6. Since this is SFHs there is no such thing as a commercial broker for this, don’t get me wrong the CB will be more then happy to sell your package. If i were you I would list one on the market and see what kind of offers you get, this will give you the ballpark of all. Or if your making $1000-$1350 rent per then real quick math your package should go for and this is rough numbers but anyway from 705k - 900k.

Also if you were to sell them 1 by 1 it still will cost you the same as selling them in a package. RE agents take a percentage so either you sell one or all the fee will be the same, but as a package you will get less. 1 by 1 will take longer maybe 3-6 months longer but you will get more out of them. It depends do you need the money now or you dont care. 

As for the whole commercial broker these properties are not commercial properties but I can see where you would like to reach out to investors and commercial broker can find you that, but again commercial brokers deal with big boys looking at apartments and strip malls. My father owns strip malls and till this day he still can’t wrap his head around why I buy rental homes. There is a fine line of commercial investors and residential investors. For me as a residential investor I’m on realtor and trulia and Redfin all day, I look at LoopNet (commercial site) once a month.

Also one more thing I can’t even count how many times I fall across a listing in loopnet for single family packages and call the commercial broker to send me details almost all the time they don’t have the information all together from the seller and has very little knowledge on single family rentals, when I turn around and ask them about a strip mall they got power point presentations and love to talk to you! This is my lesson I learned and not dogging any commercial brokers they are great people and when it comes to commercial deals they know their stuff! 

If you like me to review your properties reach out to me I can send you CMAs for your properties as well.

Thanks 

Hey Jeff

I had a similar situation with 11 condos I was selling.  Typically your investor buyers want to pay a wholesale price and are more savvy buyers.  On the plus side a lot of times they have cash and will purchase as is and can close quickly.  Retail owner occupant buyers usually will pay more for your property but then there are lenders involved and possible repairs and concessions to deal with.  And of course multiple closings.  That being considered, in my case I chose to sell my units individually and by doing so netted an extra 150k.  It took 8 months and a fair amount of patience but I think it was worth the effort.  That was my experience.  Hope it helps...