Single family homes to apartment complexes

2 Replies

I've listened to podcasts where David Greene has talked about taking 50 or so single family homes that he has BRRRR'd and then using them to purchase an apartment complex. Does anyone have any experience in doing this? How is this done? I was thinking maybe you would sell them all and then take the proceeds to purchase the apartment complex but this seems like too much money wasted on capital gains taxes. Can someone please explain the best, most efficient way to make this happen?

Hi Jonathan, 

On Podcast 238 I described how I did 1031exchanges of one little rental property at a time for apartment complexes.  I started with 10 little rental condos in 2011 and traded them all in, one at a time for apartment complexes.  Now I am a principal owner in 143 units and if this 57 unit complex closes in the next week or so I will be at 200 units.

I always leave my phones available for BP members.  Especially during the summer, when I am off my day job as a P.E. teacher.  Go to my profile and reach out to me.

I love this stuff!!

Swanny

@Jonathan Trimboli you can sell them off one at time or as a package and do a 1031 like @Michael Swan mentioned or you can refi each house pulling out equity and use that as the down payment. This only works if you have enough equity and the houses still cashflow after refi.

Another option would be to cross collateralize. Some local and regional lenders will allow you to use a property or multiple properties as collateral for the loan in a larger property. These will likely be shorter terms with a balloon but could be a good strategy to get some deals closed and refi later if you want to hang on to the SF properties.

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