How I Closed 6 properties/ 11 units in one day.
Let me start by saying "today was a good day" LOL!!! Well it was good because of the obvious of course; I CLOSED 6 DEALS IN ONE DAY!! But not only that I've managed to offload 6 properties from 3 different tired, retired and burnt-out landlords. Ever heard the saying "you've got to know when to hold them, know when to fold them?" well it was definitely time for these sellers.
So I reached out to each seller at different points and times to see if they were willing to sell. The first investor owned a SFR in a B neighborhood which we picked up back in May 2017. Problem here is that this property was a rooming house. Not many investors are familiar with this type of investment so that deterred many potential investor and therefore I could not entice anyone to even take a real look at this deal. The cash flow was meager at best and the owner would be on the hook for all utilities, furnishings, appliances and everything else you can think of. Way too much liability for what the property was generating. So there's that deal.
Next there was a 4 property package deal of duplexes. This seller was a bit savvier and understood that he bought at the right time, fixed the properties up, rented them out and making great cash flow. But he owned the properties for 8-10 years and was getting older thus looking to exit the deals. Man!! These were some great properties that were cash flowing like no one’s business. So there's that deal.
Lastly, there was a 2/1 duplex in a bit of a rougher neighborhood with the lower tenant moving out and a single bedroom tenant on the upper unit paying $400 per month. Not the most appetizing scenario... but here is how we put it all together.
Because we knew the single family rooming house would not sell as a rooming house, I spoke with the owner to see how we can make this deal make sense. We thought raising the rent which would boost the NOI would do it. Then I thought nah, the expense liabilities are still there. So an investor who was interested in the property said "I'll buy it if the tenant pays the water, electric & gas. A light bulb went off and I asked the seller if he'd be willing to convince the current tenants to join forces and become one tenant on one lease. Seller asked the property manager who presented two options to the tenants “either face eviction or become one tenant on one lease agreement with the responsibility for all utilites”. The alternative would mean eviction for the tenants. And oddly enough the tenants spoke among themselves and said "sure, we'll do it" as they all enjoyed living in this house and in this area. Both the seller and I could not believe it!!! The seller said, Man if I would have known that I would have modified the tenant agreement 3 years ago. Amazing!! The 4 duplexes were an easy sale. Those were gone before I could finish telling people about them. The tougher sale was the 2/1 duplex as one unit was vacant. So for this deal I asked the seller if he can add into the purchase contract "property will be delivered occupied at closing at $600 per month with security deposit" and he said sure!!! Man was I surprised at that reaction. This deal was a bit tricky as each potential tenant candidate had to be screened by the buyer. We must have gone through 6-8 tenants before finally, 4 days before closing, the buyer picked a winner.
So while all of these behind the scene discussions were happening, false starts, and stops were killing, rebirthing each deal over and over, the title company is working on the title searches. I get a call from the title company and 4 of the properties were "cleared" which was great. However the problems was the properties that cleared were two of the individual sellers property and two properties from the package deal seller. The package deal seller was under the impression that there was one buyer for his package. It would not have looked good to have two separate closing on two separate days for the "same buyer". At this point a bit of panic emerges....So I decided to go to all of the current buyers and ask if they were interested in adding one more deal to their purchase. I was pretty sure that each was cash strapped after paying cash for their respective deals. But again, to my surprise, two of the investors were interested. However there was a catch!!!! I swear both buyers said the same thing "Soooo do you think I can get a significant discount on the price?" I knew that was coming. But without any immediate buyers ready to pull the trigger, I was out of options and had no real leverage. Let’s just say both investors got some pretty good discounts…….
So finally all of the title searches were returned without defect for all 6 properties and they all closed on the same day! 4 different investors, 3 different sellers and all investors were from different states in the U.S. It's still hard to believe that I pulled it off but somehow it was done.
I just want to end by saying never doubt your ability and always, always remain persistent and you will WIN!!!!
I want to thank you for taking the time to read this blog which is based on real events in my REI journey.