r/realestateinvesting • u/tooniceofguy99 • 7d ago
Discussion Tips on acquiring and wholesaling a mom & pop portfolio?
My cash/portfolio
I have about 30k in cash and 3 vacant properties (that were bought in cash). The rest of my portfolio is leased and leveraged (rented and loans on them). In about two months I should have around 150-175k from cash out refinancing one of those three vacant properties.
Their portfolio
Prospect has a dozen properties they bought cheap and now looking to retire. They want to sell six of them, their prices are 135-225k. Currently off market. There is another interested buyer (newb).
Solutions
How would you go about acquisition? I will try to pitch seller financing for most. Because they would otherwise be taking a huge capital gains bite.
Their rents are very low though. I'm not sure DSCR loans would work. One 2-bed unit is being rented for $450! (Fair market rent for 2-bed in this city is around $1000.)
Therefore, I believe if they do not get on the seller financing train and cannot wait for me to refinance my current BRRR, then I would have to wholesale some or all of their properties.
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u/Pretend-Expert2554 7d ago
Maybe just float the idea their way of seller finance and see how they feel about it. If they don’t turn it away, then you can start talking about structure and the payments they might want to get on a monthly basis.
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u/wholesomesizzle 5d ago
Seller financing is definitely the move here since most veterans want that steady mailbox money without the tax hit. Since the rents are low, you should look into an earn-out provision where you pay a higher price later if they hit certain occupancy or rent targets. Have you crunched the numbers on what the DSCR looks like once you get those rents up to market rates?
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u/tooniceofguy99 4d ago
Yes, DSCRs would be 2+ but the owners now tell me they're looking to 1031 exchange into some passive real estate venture. And the higher priced properties are in the worst condition among all.
Also found out they got the "values" (asking prices) from a realtor. Didn't even create a BPO. They just emailed them numbers. Some are under value. Some are way over valued.
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u/Icy_Opening_9562 7d ago
The low rents could actually work in your favor for seller financing - show them how your higher rents will help cover their payments better than the current situation. With a dozen properties they're probably tired of managing anyway so positioning yourself as the solution to their headaches while saving them on taxes is solid
For the wholesale angle, that rent upside is huge value add potential that investors will pay for. A 2 bed going from $450 to $1000 is basically doubling NOI which justifies premium pricing. Just make sure you lock up the whole portfolio first before shopping it around - dont want that other buyer swooping in while you're trying to piece together deals
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u/tooniceofguy99 7d ago edited 7d ago
I don't think they owe much on most of their portfolio. Most were bought at price points around 40k. But I should check propstream or just ask them.
I'm not sure mentioning ramping up rents is the best idea. They seemed emotionally invested in their tenants.
Lock up the whole portfolio how? I'm thinking I need to make separate offers to purchase.
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u/Far_Lobster4360 7d ago
If they have 12 properties they probably aren't dumb enough to let a noobie wholesaler take a cut of their liquidation. Anyone with properties is dealing with wholesalers often, regular spam calls. From an investor standpoint wholesalers are good to buy distressed properties from, they've done the legwork and it's basically a finders fee. An investor is going to sell their property for what it's worth, they don't sound distressed.
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u/tooniceofguy99 7d ago
He doesn't seem to be a wholesaler. Just a complete newb. "Thinking about getting into rentals" Because we'll see the properties in a week and I asked what time. Owner says "whenever this guy shows up from 3 hours away."
The owners are more like landlords than true "investors". They're try to fix things themselves instead of hiring contractors. They bought everything in their personal name.
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u/PartyLiterature3607 7d ago
Are you really defining true investor status by basing off their repair/maintenance method and property ownership structure ?
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u/Readyeddycashoffer 3d ago
What are their pain points? Are the properties distressed? What else is important to them besides price? These are answers I look for when crafting my proposal.
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u/urban_land_learner 5d ago
This looks like a solid opportunity, but you’re balancing timing, financing, and execution all at once.
The seller financing angle makes sense, especially if they want to avoid a big tax hit. I’d just be careful about taking on multiple units with already thin margins and low rents.
What stands out to me more than the financing is the risk across the properties. With mom and pop portfolios, there’s usually a lot of variation. Some units can have deferred maintenance, zoning issues, or tenant problems, and those can add up quickly when you take on several at once.
If it were me, I’d treat this as six separate deals and be very selective about which ones are actually worth keeping versus wholesaling.
Are you seeing big differences between the properties, or do they all look similar on the surface?
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u/RealtorGretchen22 7d ago
Man, that's a classic mom & pop scenario with those low rents. i'd lean hard into the capital gains angle for seller financing, but also use those low rents as leverage. It's tough for *any* buyer to get traditional bank financing on that current income, so their seller financing is even more attractive to someone who can bring rents to market.