Offered a package deal but I don't want the whole package????

Question

My realtor approached me with a package deal of 4 properties with a total of 6 units. 5 of the 6 units are occupied. These properties have not been listed yet. Realtor says that the seller is out of state and inherited these rentals from his parents. Seller REALLY wants to sell these units as a package. I walked all of the properties with the realtor yesterday. One of the properties is in great shape. It has great long term tenants and honestly I would pay the full asking prices without blinking an eye. Two of the properties are fixer uppers, but I can make them work with a little negotiation on the price. However, the 4th property is a dog. Granted it currently has a tenant that pays rent that is actually above what I would say the property demands. However, it is in a terrible location - on a steep hill with no parking. Further, should the current tenant (a single guy who doesn't mind paneling, worn carpet, old cabinets etc) move out, it would need considerable upgrades. Also, considering the hill and the parking, I think it will be hard to rent regardless.

Generally, if the 4th property was listed individually, I probably would not offer on it (even thought the selling is only asking $19,900). My question is, is it worth buying this property, which may give me a little cash flow but in the long run will definitely not appreciate, in order to get the other properties which are good properties at very good prices. Or should I try to just offer on three of the four and risk losing the properties.

Thanks for any suggestions and/or advise.

Generally, if the 4th property was listed individually, I probably would not offer on it (even thought the selling is only asking $19,900). My question is, is it worth buying this property, which may give me a little cash flow but in the long run will definitely not appreciate, in order to get the other properties which are good properties at very good prices. Or should I try to just offer on three of the four and risk losing the properties.

Thanks for any suggestions and/or advise.

Joe Villeneuve · Answer

See what @Patrick L. said above.  I'll add this too it.  If you buy this as a full package, what does your analysis say if the unit you don't want to buy goes vacant?  In other words, if you paid what your seller is asking for all 4 units, but you only got income from 3.

If the numbers tell you it's still a good deal, then you have your answer as to buying it.  Now follow what Patrick said above.  If the numbers still work buying all 4, then I would sell the 4th one to REI that is looking for dogs.  Sell it at face value and break even on that one unit.  That would increase your overall profit still.  Sell it for more than face value and have a great day.

...or. just keep renting it until it's vacant, then sell it.  You get the cash flow up until you sell it, and it's easier to sell to a REI looking to do extensive rehab if there's nobody living in the unit.

Patrick L. · Answer

This is how you get good deals in real estate, by solving a problem for the seller.   Seller wants to sell as a package so if you want the best deal you should buy as a package.   You can negotiate the price but at the end of the day the seller's goal is to sell all of them and be done with it so that's the one criteria that you should try to meet.    Just because you're buying them all doesn't mean you have to keep them all.  If you aren't interested in the 4th property then sell that one after you buy them.   It should be an easy sell at that price with a tenant already in it.

I bought a package of 3 properties last year and all I really wanted was one of them and there was one in there that I didn't want at all and that the seller really wanted gone (I'm probably going to have to tear that one down).   The seller wasn't going to sell me the house I wanted unless I took the entire package so I made an offer for the 3 that was only slightly higher than the max I would have paid for the 1 I wanted.

Bruce Clark · Answer

thanks for the advice  @Joe Villeneuve.

Bruce Clark · Answer

@Patrick L. Thanks for the advice. I didn't even think of just listing the 4th unit myself. I guess that's what this site is for.