Portfolio of 9 condominiums vs. single multi-family property

[Mark Soreco]

Any thoughts on a portfolio of 9 condominiums (good moderately upgraded condition, Class B area in Midwest) vs. purchasing a single multi-family of similar number of units? This would be part of a 1031. Obviously would want to verify financial condition of HOA (fees $240/mo each condo). I can see an advantage in flexibility to sell individual units in future (seller claims price per condo based on asking price of package is $25k less than market, but would need run my own numbers of course).

Any other thoughts, pros/cons, gotchas?

[Pierre Guirguis]

I’ve seen both structures work, but they are very different risk profiles even if the unit count is similar.

With 9 condos, you're not just underwriting the units, you're underwriting the HOA. $240 per door is manageable if reserves are strong and there's no deferred maintenance, but one special assessment can wipe out your "$25k under market" advantage quickly. I'd want to see reserve studies, delinquency rates, upcoming capital projects, and the board's history before getting comfortable.

The flexibility to sell units individually is real. That optionality has value. But keep in mind that liquidity works both ways. Retail buyers disappear in tougher markets.

A single 9-unit building gives you more control. Value is driven by NOI, not retail comps. You can push rents, manage expenses, and force appreciation without relying on an HOA. The tradeoff is lumpy capex and no ability to sell one unit to rebalance.

For a 1031, I’d ask:

- What’s your goal: control and long-term cash flow, or exit flexibility?

- How sensitive is each option to rising expenses?

- If rents drop 10% and expenses rise 10%, which one still performs?

If the condo package truly trades at a real discount and the HOA is clean, it can work. If not, I'd lean toward the single multifamily for control and scalability.