Advice on best approach to sell a group of multifamily.
#1 Multi-Family and Apartment Investing Contributor
I have 6 duplexes (12 doors) that I want to sell. They are clustered in a small neighborhood (a 2-block cul-de-sac street with two 1-block side cul-de-sac streets), duplexes are all same age, 2 repeating floor plans, very close in size, all require some degree of repair/renovation. The duplexes are all on the main street. The 6 duplexes comprise more than half of all the properties on that street, so we've been able to control, to a degree, the feel and look of the neighborhood (quiet, clean), set the rent rate for other rentals in the neighborhood, and negotiate maintenance and repairs by the number and proximity of properties. Other than two owner-occupied sfh, all other properties in the neighborhood are also rental duplexes.
The neighborhood is in a central area in Austin about 10 mins from downtown; until 5 years ago it was mainly warehouses and non-retail commercial. Since then, major employers have come in, there are new condos, townhouses and a smallish sfh neighborhood, new convenience stores, a handful of trendy restaurants and a new community college annex. No HOA and no restrictions on short-term rentals. At least 2 duplexes in the neighborhood are currently STRs/Midterm, charging around $3,900/ mon, and fully-renovated duplexes rent for $37,500/year/duplex. Property taxes are lower than similar properties in the area.
I understand the value all the above and I know that an investor would do well to buy all 6 properties to take full advantage of the "economy of scale" opportunity, type of property, convenience of proximity and growing location. Of course, I would like to simplify my life and sell them as a group but i also want to get the best $$ for them. There is current duplex listed (not mine) at mid $500s and recently sold duplexes in the high $400s in neighborhood/area.
One realtor proposed selling the properties "auction style" whereby offers are received for 2 days and then sold to highest bidder, but holding a reserve price. Im not convinced. I'd love to hear other ideas and your advice, please.
Most Popular Reply
Selling them as a package is probably not your best option. I don't want to be too dramatic but don't take advice from anyone who hasn't done this before and isn't operating in the current Austin market. Don't sell them auction style either.
We're down 20-25% from the peak. Most everything that's sold doesn't cashflow with long term rents and frankly hasn't for many years. Investors generally want to at least break even while they hold for upside and someone buying a portfolio will be wanting to rent these long term which won't work at the market values because unfortunately rents are also depressed right now.
What's going to net you the most @Greta Clav is selling each of them individually, ideally with one unit of each duplex either vacant or MTM so an owner occupant buyer can buy them. They'll be able to get in there with a low down payment and get creative with STR, MTR or roommates to make the numbers work.
Otherwise if you just want to press the easy button I represent the largest duplex buyer in Austin. He pays cash, closes in a week and makes it really easy. He doesn't pay the highest price but it sure is easy. He has faith in the long term potential of Austin as I do and is buying as many as he can to hold long term.
Austin is in a rough spot right now with prices down, rents down, interest rates high and high property taxes to boot but my bet is that within 5-10 years we're going to be in a really good spot. We have an enormous amount of development and business moving this way because we let people build! Unfortunately we let them build so much that they oversupplied the housing market, but it will be back.
- Jordan Moorhead
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