ACQUISITION CHALLENGES WITH APARTMENT PORTFOLIO DEALS TO TAKE INTO CONSIDERATION.

Many apartment buyers have requirements for minimum amount of units they want to be in an apartment deal. It can be 100, 200, 300 units. At times I have gotten deals that are portfolio deals for apartment complexes. This is where the seller owns several properties and are divesting of them as one full property package. 

Many brokers have pitched me on it. It is a pass however in most cases. 

want to elaborate on some reasons why apartment investors will pass on a portfolio deal despite them totaling the minimum amount of units they have.

1. Different properties have their own individual title as a separate entity for ownership purpose as oppose to one single entity.

2. Different property taxes. Each property with its own individual title will have a separate property tax bill as opposed to one large complex having one property tax bill by having its own title.

3. Hiring different property management firms to oversee different properties increases workload and oversight responsibilities.

4. Location of different properties in a portfolio increases commute time and review time as opposed to a large complex with multiple units on it as one complex.

5. More accounting work for different properties with different titles for tax preparation.

6. Certain properties in a portfolio may not have the minimum amount of units a sponsor wants. For example a property may have 50 units when the sponsor wants a minimum of 100 units.

7. Different cap ex management requirements with different budget requirements for different properties.

8. Setting up different special purpose entities (SPE) for different properties is an increase expense.

9. Different properties may have a different vintage which implies more ongoing maintenance than others.

10. Locations of properties in a portfolio maybe of different tiers such as tertiary, secondary, or primary.  

11. Income levels and economic growth maybe inconsistent for different areas.