If you’re selling an apartment building or investment property, one thing to keep in mind is that the process is far more complex than selling ahome or a single rental unit. Here’s a guide to the selling process to help make sure you’re doing everything the right way.
Work with a broker
With the high investment involved in an apartment building, it will not be as easy to find a buyer for it as you would for a home. You will need to reach out to the correct buyers or investors who will evaluate your property for its profitability more than anything else.
With their extensive network and client database, a broker who specializes in investment properties can help connect you with potential buyers not only within your community, but also with investors from various parts of the country.
Your broker may list your property online, but if you prefer to keep the sale confidential, they will work with you to develop a more appropriate marketing strategy.
Your broker’s services will also be invaluable in helping you appraise the value of your property, including its potential profitability – a crucial factor in pricing and marketing your property.
Have your property appraised
An accurate appraisal is essential in pricing your property right. You can work with a professional appraiser or with your broker. Some things to consider in appraising the property are:
- Age and condition of the building
- Number of units
- Present occupancy and profitability
- Future developments – for example, if there are plans to build a shopping mall or a new park in your area, this could significantly add value to your property
Inspect, upgrade, and improve the property
Work with your broker in determining where refurbishments, repairs and improvements may be needed. One of the things to consider is curb appeal. You may need to spruce up your landscaping or the building’s exteriors to make the property more appealing.
Other things to look closely into are security and safety devices, such as smoke and carbon monoxide detectors. Make sure they work and are compliant with standard requirements.
Your broker may suggest a redevelopment or repositioning. This could involve a large investment but may bring in better profits. Your broker can advise you on how to come up with the financing for the project, such as through syndication or a bank loan.
Prepare due diligence documents
Buyers will want to look into your building’s financial documents, including P&L statements, rent roll, and utility bills. These will help them assess your property’s desirability. Be sure to be ready with these documents when buyers ask for them. Not having them at the proper time could instantly kill the deal.
Study your options
Property investors may come up with various types of offers, including an outright sale or a co-ownership or equity sharing. With the latter, you get to maintain some kind of ownership of the building, depending on the agreed terms with the buyer. Look into your own needs and preferences, and learn about arrangements that can help you achieve these.
Other factors to consider include the terms of payment. Will you ask for an all-cash transaction or agree to other terms? A trusted broker will help you review your choices and situation so you can be guided in making your decision.