“Do not let what you cannot do interfere with what you can do” John Wooden

The words of the legendary Coach, John Wooden remind us that we all have limitations. Within our limitations there are so many things we can do as apartment owners and managers to make the best of the current situation.

INTEREST RATES California Association of Realtors is predicting interest rates around .. 7.4% declining toward year end to around 7.1%. Keep in mind that the rise in interest rates was in an effort to slow inflation, so as inflation is reduced, interest rates will likely be reduced as well. The Federal Reserve Interest Rate known as the federal funds rate is the rate at which banks and credit unions borrow from and lend to each other has been 4.25 to 4.5% This is expected to move to 5 to 5.25% Higher interest rates discourage spending and seek to reduce inflation. The interest rates we have no control over.

With housing prices expected to drop in California, how will this affect the multi family investment?

SELLER FINANCING. If you are lucky enough to own a building with substantial equity, maybe YOU should be a lender. With a substantial down payment and the ability to foreclose in case of default, carrying all or part of a loan may be a good investment- you would be investing in a property that you have owned and managed for a good while, so you are familiar with the security. Talk to your CPA and your Real Estate attorney and see if this may be a potential path for you.

UPLEG If you do an exchange, and even if the values at the time of sale are lower than what you were hoping for, your next investment, your upleg, will likely also be lower prices. Less likely that you will have multiple offers to compete against, so you may end up coming out of your exchange with more equity than you thought because you were able to negotiate a better deal and maybe better terms.

PUT YOUR BEST FOOT FORWARD After years of a “sellers market” where repairs were not required, over asking price was common now may be a time when the buyer will be able to negotiate on such things as price, condition and even repairs. If you go on the market with a property that looks great on a drive by, your books and records are complete, current and accurate, you have no or very limited deferred maintenance, you could end up with a better price than your competition.

“Don’t wait for opportunity, create it.” George Bernard Shaw

What we at PRS PROPERTIES CAN DO. We can discuss with you the current rents in your area and supply you with comparable rental prices for similar properties. We can also look at your building for other changes that might allow you to get a higher value in order to create value without huge expenses for your building. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, a moratorium or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.